Indo Rama to increase capacity utilisation by 125 per cent

Our Corporate Bureau

New Delhi, May 22

BUCKING the slowdown in textile sector, Indo Rama Synthetics is increasing capacity utilisation of its existing plant to 125 per cent in this fiscal.

The company is currently engaged in de-bottlenecking exercise to increase capacity utilisation of Butibari (Nagpur) plant from 115 per cent to 125 per cent in this fiscal with an investment less than 10 crore, Indo Rama managing director OP Lohia said.
The company has put on hold the plan of setting up Rs 1,500 crore greenfield polyester staple fibre (PSF) plant in Karnataka due to high import duty on capital goods.

“With a duty component of over 51 per cent and a gestation period of two and a half year, the project does not make business sense, specially in the light of the fact that import duties will be reduced considerably by 2004 under WTO. We would be having unequal competition with the new projects coming after 2004 with zero to five per cent import duty component,” he said.

“We can invest on any greenfield project only if the import duty on capital goods will be either 0 per cent or 5 per cent,” he said adding that the duty is one of the major road blocks to attract investment in manufacturing sector.

The company has appointed Accenture is to improve its value chain process management initiatives. Accenture has undertaken an audit exercise to recommend measures to strengthen the consumer relationship management (CRM) practices, he said.

As a part of financial restructuring, the company has allotted shares worth Rs 10.27 crore to IFCI, he said.

With the allotment, IFCI’s equity stake in the company has gone up from 3 per cent to 8 per cent, according to general manager-corporate finance & accounts Govinder Singh.

After a gap of three years, the textile major has been able to emerged out of the red by posting a Rs 18.74 crore net profit during the year ended March 2001 as against a loss of Rs 7.65 crore in the previous year.

The company has achieved 13 per cent growth in its turnover at Rs 1,986.03 crore during 2000-01 compared to Rs 1,751.36 in the last fiscal.

The total exports for 2000-01 was Rs 603 crore, up by 46 per cent over the previous year’s Rs 413 crore, he said.