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TT records highest ever profit
May '11
TT Ltd. has recorded its highest ever profit in its nearly 60 years of existence. The 'Only Cotton' company has seen a skyrocketing 297 percent increase in its annual profit for the year ended March 31, 2001 compared to the previous fiscal.

The profit before adjustment for deferred taxes also increased to Rs. 239.5 million in the fiscal 2010-11 from Rs. 60.3 million in 2009-10. The company's profit after adjustment of deferred tax works out to Rs. 152.3 million. Cash profit during the period rose from Rs. 155.8 million to Rs. 352.5 million.

The net sales during the fiscal 2010-11 saw a whopping 38 percent growth to Rs. 4.86 billion from Rs. 3.53 billion a year ago. The company's branded knitwear sales in the domestic market increased by about 50 percent while exports increased by about 40 percent.

The increased demand of textiles worldwide after the 2008-09 financial crisis coupled with the company's focus on value added products that carry higher margins, is the primary reason for such an exponential growth, according to Mr. Sanjay K Jain, the Managing Director of the company.

The New Delhi-based company, however, missed its sales target of Rs. 5 billion for 2010-11 due to two reasons. First was the Government's decision to suspend yarn exports from December 1, 2010 to March 15, 2011. The other reason was the imposition of excise duty on garments in domestic market.

The company had earlier announced its decision to sell its ginning factory located in Gondal, Gujarat for Rs. 187.5 million. This step will not only reduce the company's exposure to cotton fibre, but would also give the company a profit of Rs. 50 million in FY12.

The revenue from the Gondal factory sale would fuel the company's ongoing Rs. 1500 million expansion project, which includes a Rs. 950 million yarn project in Rajula, Gujarat, Rs. 300 million garment unit in Tirupur, Tamil Nadu, Rs. 150 million PP yarn project in Gajroula, UP, and Rs. 100 million for modernisation.

The expansion projects are being implemented under the Technology Uprgradation Fund (TUF) scheme of the Government of India, which makes them eligible for interest subsidy. It also means that the company's competitiveness would increase after the scheduled withdrawal of TUF in March 2012.

During the current year, the company plans to raise about Rs. 400 million through disposal of its idle or less utilized assets. The revenue from such sale would be used for expansion of its value added segment.

Thus, the company is adopting a two-fold strategy of reducing its exposure to volatile commodity business like cotton fibre and maintaining a balance between its export and domestic markets.

As a percentage of sales, exports of the company have declined to 57 percent in FY11 from 65 percent in FY10.

Fibre2fashion News Desk - India

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