In the domestic market, polyester films currently sell for Rs 75-95 per kg depending on the quality of film. As polymer prices have risen by around 8-10 per cent, analysts expect a 10-12 per cent rise in prices of polyester films. ``Anything beyond that is unlikely as internationally prices have not yet shown anysigns of firming up,'' said an industry watcher. But even at that level, Garware Polyester stands to gain substantially. The company is the largest manufacturer of polyester film in India with an installed capacity 50,000 tonnes per annum.

In the past, a slump in the realisations from the polyester film division had taken the sheen out of Garware Polyester. For the 9-months ended September 1998, the company had incurred a net loss of Rs 15.59 crore on a turnover of Rs 58.6 crore. It was not surprising, therefore, that the stock fell below par to Rs 8. Reports of Sumitomo Corporation of Japan picking up 24 per cent stake in Garware Chemicals boosted sentiments in the short-term, but failed to keep the momentum alive. The sale is expected to bring in the much-needed cash; the cost-overrun in setting up the 60,000 tpa DMT plant has strained Garware Polyester's cash-flow position.

Garware Polyester plans to seek approval from financial institutions (FIs) for a restructuring package to tide over its cashcrunch. Financial institutions led by IDBI have an exposure of over Rs 200 crore in the company. Sources say the company is likely to request the FIs for a reduction in interest rates and extension in the repayment schedule. A detailed proposal is expected to be submitted soon. The proposal, if approved, will temporarily ease Garware's financial position. There have also been talks of the Garwares inviting a strategic partner for the polyester film business. However, the company has so far denied such a move.

Garware Polyester had lined up an expansion programme involving an outlay of Rs 300-400 crore. According to sources, this was to take place in two phases over a period of five years. The expansion was to enhance the manufacturing capacity from 50,000 tpa to 1 lakh tpa by the year 2002 with roughly 70 per cent of its production earmarked for exports. The company manufacturers 25 varieties of polyester-type products which can be used in an umber of items ranging from consumer goods to computers. With thestrained cash-flow and rising interest burden, it not clear when the company plans to embark on the expansion drive.