The year 2015-16 saw the Indian economy charting a measured course towards objectivesset out by the Government two years ago. While investment momentum is still muted in somesectors the positives to have emerged are the incremental important steps taken by the
Government in fiscal correction inflation containment subsidy reduction efforts toreinvigorate tax administration and a thrust on increased investment in key sectors.Private sector and industrial capex however remains subdued on account of paucity of fundin the private sector.
The global scenario offers less cause for cheers. The world economy encounteredchallenges at many levels last year. Which include significant volatility Eurozoneinstability and depression in crude and commodity prices currency depreciation inemerging markets and a lingering slowdown in China. India's GDP growth - 7.6% as comparedto 7.2% in the previous year-and reducedfiscal deficit of3.9% sends out encouragingsignals for the future.
I believe that the forthcoming year holds promise of improvement. The Government'sfocus on slew of recent initiatives for Textile sector places your Company in a favourableposition. Our growing specialty product basket with products like super high tenacity PSF(SHT fibre). Optical White (OPW) Optical Bright (OB) Dope Dyed Black (DDB) PSF fibre.Hollow conjugatesiliconised PSF Black and Full Dull POY/DTY Trilobal bright POY DTY& FDY will help us capture new markets going forward.
The polyester industry saw lot of ups and downs during the financial year likeshortage of raw material currency volatility inventory losses due to unprecedented fallin the crude oil prices and consequent raw material and finished goods prices amongothers.
Adverse civil and economic situation in the European region and Central Asia which is abig market for the India posed many challenges to Indian Polyester Industry. Locally thelevy of anti-dumping duty on Purified TerephthalicAcid (PTA) bythe government made rawmaterial expensive and also the manufacturing cost. On the domestic front due to regularbreakdowns in the plants producing PTA has resulted in shortage of raw material andthereby lower capacity utilisation.
However every cloud has silver lining with the polyester prices bottoming out andrupee stabilising business sentiments and industry performance will improve signallingpositive trends and sustainable growth for this industry.
Prices ofmanmadefibre have moved in tandem with cotton yarn prices in past. Whilecotton prices have been revised from ' 35500 per candy in May 2016 to ' 37500 per candyin June 2016 to ' 48000 per candy in August 2016 the polyester prices have not seen therise in tandem with the cotton prices during the same period. This escalation in cottonprices has opened opportunities for manmade fibre producers. Due to pressure on marginsSpinners replace cotton with polyester for manufacturing cotton-blended yarn as themanmade fibre is cheaper than cotton. This trend will help us in increase utilisation ofour resources and better realisations.
There is huge potential to increase the export of MMF-based textiles. Policyinitiatives must be implemented on fast track mode to encourage domestic manufacturers toexpand MMF production optimise their cost structure and export at competitive prices. Weare hopeful that with the package of ' 6000 crores to apparel industry and variousinitiatives for promoting exports and the textile policy announcement in next 1- 2 monthswill further help the industry.
The polyester industry saw a comparatively better year in 2015-16 with the domesticmarket showing an upward trend in terms of higher demand. Moreover crude oil prices werelow during the year. As a result the prices of raw material i.e. PTA and MEG haveremained subdued. Moreover our initiatives during the year which include highercapacity utilisation cost reduction measures and impetus to high value- added specialityproducts are expected to propel the Company on a growth trajectory from now onward.
Despite the challenges we faced in 2015-16 we clocked annual turnover of ' 2535.65crore against ' 2761.38 crore in 2014-15. Our sales volume in 2015-16 stood at 336393 MTagainst 307517 MT in2014-15.0ur net profit stood at' 56.00 crore against net loss of '21.53 crores in 2014-15.
During the year we remained resilient to industry headwinds and enhanced futurepreparedness. Through competitive pricing and quality offerings. We strengthened ourmarketing team to reach out to more customers directly and deliver customised products.Wehave replaced old in-efficient DTY machines with new higher capacity machines. We areinvesting in advanced equipment to modify and help to produce new varieties of value-addedspecialty products to strengthen our margins.
We hope that the GST will become a reality in a few months. Consumer prices might notcome down actually the price of cotton used to be tax free will have higher priceimpactand manmade fibre taxes are already high at 18-20% will not have to bear freshtaxes GST for textile is shield to cover market rates. GST will also help to bring downthe logistics costs.
Although availability of resources and technology play a key role in our businesspeople are the biggest drivers of change at Indo Rama. We have team of go- getters whoare committed to deliver value no matter what the odds are? We are committed to investingin talent and fostering an environment of learning and collaborating. Our goal is totransform Indo Rama from a good company to a great company in the coming years.
Indo Rama recognises its obligations to society and to you our shareholders. It is oursincere endeavour to continue to focus on our businesses environment and communityinitiatives as a part of oursustainabilitystrategy. I am confident that the macro businessenvironment is improving gradually and this is the time to consolidate our strengths andfocus more on opportunities as they emerge on the horizon. We strongly believe we havethe ability to demonstrate and convey this to the world.
With optimistic vision I am grateful to all our esteemed customers businessassociates management team employees and shareholders for their encouragement andsupport.
Chairman and Managing Director