Indo Rama Q1 Net Zooms 133%

Indo Rama Synthetics (I) Ltd is expected to close financial year 2001-02 with a net profit of over Rs 100 crore. "We expect a profit after tax of over Rs 100 crore at the end of the year," Indo Rama managing director O P Lohia said here today.

The Indo Rama board met earlier in the day to take into account the company's financials for the first quarter of 2001-02.

While the company's sales turnover increased by 8 per cent from Rs 479.84 crore in the first quarter of 2000-01 to Rs 518.83 crore during the first quarter of 2001-02, its profit after tax jumped by 133 per cent from Rs 8.22 crore to Rs 19.16 crore during the period.

According to Lohia, almost the entire eight per cent sales growth during the quarter came from increased volumes. During the quarter, production of synthetic fibre stood at 86,763 tonne as against 79,106 tonne in the year ago quarter.

Lohia added that the profit after tax for the quarter would have been close to Rs 23 crore but for the provision of Rs 3.83 crore made by the company for doubtful debts. Lohia also attributed higher profits to the new company policy of stopping discounts. "We are not competing on price now and are focusing on CRM," he said.

However, the company's exports fell to Rs 143 crore as compared to Rs 161 crore during the first quarter of the previous financial year. Lohia said this was on account of tough competition in the global markets from other countries, especially Pakistan and Indonesia whose currencies have devalued sharply. "Besides that, there was a financial crisis in Turkey which is a good market for us," he added.

Talking about the ongoing quarter, Lohia said prices of both partially oriented yarn (POY) and polyester staple fibre (PSF) are on the rebound. In the first quarter, POY prices had fallen by Rs 7. On June 15, the company raised its prices by Rs 2.

On July 1 again, the company raised its POY prices by a similar amount. As per Lohia, the company will raise prices by another Rs 2 on 16 July. Similarly, Indo Rama raised its PSF prices by Rs 1.50 on 1 July. Lohia said the company will raise prices further by Rs 0.50 on 1 August.

Lohia expects purified terephthalic acid (PTA), the raw material for PSF/POY, to remain stable during the current quarter. Rising synthetic fibre products and stable PTA prices, Lohia said, will improve the profitability of the company during the current quarter. It is on the basis of this trend that Lohia expects to end the year with a profit after tax in excess of Rs 100 crore.