The world economy picked pace in FY 2017-18 across developed and emerging markets withfavourable financial conditions and firming commodity prices. According to theInternational Monetary Fund (IMF) annual global GDP growth is expected to have expandedby 3.8% in 2017 and global merchandise trade volume expanded to 4.9% during the same timeperiod. The improvements were driven by revival of global demand especially capitalspending. On the inflation front both advanced and emerging economies witnessed acontrolled increase primarily due to the rise in crude oil prices.
Tax policy reforms in the US is likely to have a positive impact on its economy asexperts project a higher rate of growth in FY 2018-19. During the same period Asianeconomies are expected to grow at 6.5%. The Latin American economies are predicted toadvance at 2.9% in FY 2018-19 on the back of strengthening commodity prices. While theeconomies of the Middle East and North Africa (MENA) are expected to accelerate owing tostronger oil prices.
However despite projections of further economic recovery across the globe a fear ofintensifying trade wars looms across the world.
In line with the uptick in international economic activity India's economy grew at6.7% during 2017-18 (Source: CSO). This was a result of structured capital outlay by thegovernment increased consumer spending improvement in rural demand and ebbing of theeffects of demonetisation. The year also witnessed the roll out of the Goods and ServicesTax (GST) which will facilitate the movement of goods across India creating a onemarket one tax' scenario in the country. We at Indo Rama welcome these policy-drivenmoves by the Government of India and are confident that they will help us chart a newcourse for the organisation.
India's textile industry is currently estimated at around USD 150 billion and is likelyto reach USD 250 billion by 2022. Its overall textile exports during FY 2017-18 stood atUSD 37.74 billion (Source: IBEF). It is furthur expected to grow at a CAGR of 13.58% (E)between 2009 and 2019. The sector has witnessed a spurt of investment during the last fewyears and attracted Foreign Direct Investment (FDI) worth USD 2.82 billion between April2000 and December 2017. Besides government initiatives like allowing 100% FDI under theautomatic route is likely to bolster the segment further (Source: IBEF).
During 2017-18 we navigated several challenges to record our total revenues at '2317.44 crore vis-a-vis ' 2729.57
crore in the previous financial year. The sales for the current year are excludingGoods and Service Tax whereas previous year include excise duty. Our operational EBIDTAstood at ' 60.22 crore in 2017-18 compared to ' 23.76 crore in 2016-17. During the yearunder review we reported a net loss of ' 82.02 crore as against net loss of ' 84.23 crorein 2016-17.
Our business was primarily afflicted by volatility in raw materials prices. As our mainraw materials are Purified Terephthalic Acid (PTA) and Mono Ethylene Glycol (MEG) whichare derivatives of petroleum industry any change in the crude oil prices impacts theirprices.
Raw material markets
During FY 2017-18 the price of Brent crude varied between USD 47 per barrel and USD 69per barrel which led to volatility in the prices of Paraxylene (PX) PTA and MEG. PTAprices were influenced by shutting down of inefficient PTA capacities in China and goodperformance by the downstream polyester industry. While in case of MEG the shutdown ofproduction units in the Middle East and speculative tendencies in China led to significantrise in prices.
We have appealed to the Ministry of Textile Commerce Chemical and Fertiliser forrationalising GST rates on our raw materials (PTA MEG and finished product PSF) to combattheir rising prices. Once the GST rates are restructured they will help augment the ManMade Fibre (MMF) industry and bring overall growth in the textile sector.
We are a people first' organisation with our team members at the heart ofeverything we do. We have a systematic performance management strategy that is based onbest human resource practices which in turn helps us attract and retain talent. We makesignificant investments in upskilling our people and provide comprehensive learningopportunities. At Indo Rama we strive to maintain transparency and a collaborative spiritwith free flow of knowledge across the organisation.
We undertake several initiatives that ensure safety of our people and the environment.We have adopted leading- edge equipment and procedures to recycle waste and involve ourpeople in countless other activities that enhances their safety such as mock drills andawareness programmes among others.
We also engage in several social responsibility ventures that facilitate goodhealthcare services and impart education through skill development programmes.
We are completely prepared to navigate through a challenging operational environmentand create sustainable value for all stakeholders. Going forward we will emphasis on acustomer-focussed and value-driven approach.
On behalf of the Board let me thank all our business associates employeesshareholders and esteemed customers for their support and encouragement. We are confidentthat this continued support will help us soon turn the course of the organisation.
Chairman and Managing Director