The Thapar Group firm reported a net loss of Rs 87.77 crore in 18 months to September 2013, weighed down by rising finance costs, working capital crunch and lower capacity utilization. The cash-strapped firm, operating in two distinct businesses – cotton, synthetic & blended textiles and nylon filament yarn—has been incurring operational cash losses since the financial year 2008-09, meeting its debt obligations out of working capital, leading to further pressure on capacity utilization.
Capacity utilization at JCT’s textile division remained at just 75 per cent and produced 5.53 crore meters of fabric during the 18-month period ended on 30th September 2013. Increased power rates in Punjab as well as adverse forex fluctuations led to higher input prices for the firm during the period while selling prices increased only marginally, leading to pressure on its margins.
In the Nylon filament yarn unit, the company was hit by prices of Caprolactum which increased from average of Rs 139.67 per kg in 2011-12 to Rs 146.16 per kg during the period. Hit by rising losses, the net worth of the company has also slipped into negative. The company has been barred by the Chandigarh High Court from creating any fresh charge on its assets or selling immovable assets after the company failed to redeem its Foreign Currency Convertible Bonds (FCCBs) on due date April 8, 2011.
Even as the company has restructured some of its debt and is in talks with majority of FCCB holders to convert their bonds of USD 12.93 million into equity shares, avoiding winding-up situation, the going would definitely not get easier as the company still has to revive its discontinued operations to achieve full capacity utilization. Moreover, it also faces competition in nylon filament yarn segment from countries like Vietnam and Taiwan due to their cost advantage.
Fibre2fashion News Desk - India
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