Raj Rayon Industries slips into loss as rising costs pinch

The company, like the other polyester yarn makers, has been hit hard by sharp surge in costs of raw materials like Purified Terephthalic Acid (PTA) and Monoethylene Glycol (MEG) during the period. The prices of these basic raw materials for polyester yarn registered a steep rise during the period, impacting yarn and fabric prices.

Unlike cotton yarn exporters, the synthetic yarn companies like Raj Rayon, which exports its yarn to around 14 countries, failed to gain from rupee depreciation due to price pressure in raw materials. Price of PTA jumped to an average Rs 72.67 per Kg in the quarter ended September 2013 as against Rs 60.27 per Kg in the year ago period. Similarly, the price of MEG stood at an average Rs 70.07 per Kg in Jul-Sep 2013 as against Rs 57.77 per Kg a year earlier.

The company’s PTY, POY & FDY plants were running partially due to negative margins and Raj Rayon also temporarily suspended production at its Continuous Polymerisation Plant (CP Plant), the commercial production of which had commenced from July 1, 2013.

Apart from the rising input costs, the company also saw its finance costs almost doubling to Rs 1,398.91 lakh in Q2 FY14 from Rs 749.80 lakh in the year ago period. Raj Rayon has approached its bankers for Corporate Debt Restructuring (CDR).

Fibre2fashion News Desk - India