Key highlights

Net revenues grew by 10% to Rs 161.66 crore primarily on the back of increase in BOPET sales volumes by 75% on y-o-y basis to 25,000MT in Q2FY12 against 14,300 MT in Q2FY11 in spite of awful market conditions.

The operating profit declined by 74% to Rs 14.94 crore as operating profit margin crashed from 38.6% in Q2FY11 to 9.2% during the quarter under review on the back of decrease in sales realization and increase in raw material costs.

Increase in interest costs by 202% to Rs 7.20 crore and rise in depreciation costs by 78% to Rs 6.68 crore coupled with the Forex loss of Rs 3.18 crore due to currency fluctuations together lead to a loss of Rs 1.07 crore during the quarter ended September 2011 as against net profit of Rs 36.71 crore in Q2FY11.

For the H1FY12, the Company witnessed 29% increase in revenues to Rs 331.47 crore on y-o-y basis majorly on increase in polyester film sales (PET) by 34% to Rs 293.3 crore.

During H1FY12, polyester film segment contributed about 89% to the total revenues and the remaining 11% of revenues was from engineering plastics segment. The share of Exports in sales was 44% and domestic sales share was 56%.

The Company has made its entry into new specialty PET resin business. It is a knowledge-based business, which is completely dependent on R & D capability.

The Company stated that around 30,000 tonnes of capacity is available in the polyester segment and it will be utilized in the PET resin business. The capex planned for the business is Rs 12-13 crore towards some modernization equipments .It is expected that it would start generating revenues from the beginning of FY13 and might attain about Rs 150-200 crore in the same fiscal year.

During the quarter, the other expenditure increased by 923 bps to 22% on higher selling and packing expenses etc on surge in the polyester films production on y-o-y basis.

During the quarter, the average price of the polyester films declined by sharp 32% to Rs 108 / Kg and the current price is at Rs 92-95/Kg.

During the quarter, the capacity utilization of polyester films is 90% (optimum) and the capacity utilized for the polyester chips and the engineering plastics stood at 50% and 40% respectively.

As on September 30, 2011, the Forex loans stood close to Rs 130 crore (11 million in Euro terms and 6 million in USD terms). The Rupee term loans stood at Rs 22-25 crore and the working capital is at Rs 72-80 crore.

The Company is incurring losses at the current price of Rs 92-95 per kg of polyester films. The break-even levels will be achieved only when the product prices by Rs 12-15/Kg, without corresponding increase in input costs.

The Company expects higher margin and profits in FY13 on the back of new specialty PET resin business.