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Jindal Cotex slips into losses in Q2
Dec '13
Hit by global slowdown and the weakening rupee, Jindal Cotex Limited (JCL), a flagship company of Jindal group of Ludhiana, witnessed sharp decline in its revenue for the second quarter ended September 30, 2013, as poor demand in domestic as well as western markets and restrictions on export, led to huge accumulation of unsold stocks and eroded profit margins.

The textile manufacturer swung into losses in the July-September quarter with a net loss of Rs 12.12 crore as against net profit of Rs 2.38 crore in same period a year ago, primarily due to crash in prices of cotton and other textile products.

Besides, continued depreciation in the Indian rupee against US dollar and un-availability of good quality power at reasonable prices further hurt company’s earnings. The cost of power has been continuously increasing, adding to the input cost pressure on the company.

The company engaged in manufacturing of acrylic, polyester, and polyester-viscose, polyester cotton, combed and carded yarns, witnessed a decline of 49.95 per cent in its total sales for the July-September at Rs 8.80 crore compared to net sales of Rs 17.59 crore in year ago period.

Textile being a global industry, the company faces competition from various domestic and international manufacturers of synthetic yarn. Globally, it faces stiff competition from large size manufacturers in Indonesia, Korea, Pakistan, Bangladesh, etc.

In the current global meltdown, the non-apparel business continued to experience challenges, including cost hikes reflecting the depreciation of the rupee and escalating labor costs. Moreover, due to a delay in improvement of employment and income, personal expenditures still showed no signs of a pickup.

The Jindal Cotex group currently produces polyester, polyester viscose, polyester cotton and acrylic yarn with a capacity of about 24,000 spindles. The company is now expanding the spinning capacity by building state of art cotton spinning unit bringing machines from the world leaders of textile machine manufacturing companies.

Assuming the demand to revive and input prices revert to a more moderate level, the company is expected to deliver a healthy growth in the next quarter. 

Fibre2fashion News Desk - India

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