Bombay Dyeing continues to be hit by lower DMT prices. Inspite of anti-dumping duty imposed by the government, prices of DMT failed to improve because of cutting down of prices by the main PTA manufacturer - Reliance Industries. SS Kelkar, Executive Director of the company said that as the company does not have much control on the prices, its policy is tosell as much as it produces and maintain a low inventory. It is pointless to hold on to inventory in anticipation of higher prices in future, he adds. The DMT plant continues to run at full capacity.

Considering the fact that DMT prices were lower than last year, the contribution of DMT to the turnover would have been lower, which means that the performance of the textile division was substantially better. This is inspite of the fact that cotton prices for the first half were higher as compared to the last year. Exports of the company have improved considerably inspite of the anti-dumping duty imposed by the European Union on unbleached cotton. The company has tapped new markets for its exports. Kelkar says the company will perform much better on the export front in the current fiscal.

Early estimates of cotton crop is that the current season will be better than the previous year, newspaper reports say that the production is expected to be higher by around 15 per cent. This means that the realisation ofthe textile division should be better in the second half. On the other hand, as a result of the declining cotton prices, sales of the synthetic textiles will be further hit. This could lead to problems on the DMT front as polyester manufacturers would be affected with competition from cotton textile producers.

The second half of the year is likely to be better than the comparative figure of the previous year because of a forced shut-down in the previous year. Further, exports as well as lower cotton prices will augur well for the company. On the price front, it is unlikely that DMT prices will improve in the near future. However, for shareholders, there is news to be excited about as the company has already taken the resolution for buyback of shares.

Considering the current value of the share and the cash rich status of the company, a buyback can not be ruled out. However, the buyback will result in cash outflow which would affect the company's other income.