Mitsubishi PTA unit wipes out losses

MCC PTA India Ltd, the subsidiary of Mitsubishi Chemical Corporation and one of the biggest Japanese foreign direct investment projects in India, has wiped out its accumulated loss.

The unit went commercial in April 2000. It declared its maiden dividend in the last fiscal after recording profit for two successive years.

Mitsubishi Chemical Corporation, which has 11 per cent world share in purified terephthalic acid (PTA), a key raw material for various polyester products, along with few Japanese trading companies hold 95 per cent stake in the MCPI.

West Bengal Industrial Development Corporation has token five per cent share in the company.

At the end of year ending December 2003, MCPI has recorded turnover (net) of Rs 1236.5 crore as compared to Rs 1019.4 crore, a growth of 21 per cent.

At the same time its net profit (as per profit and loss account) grew to Rs 105.1 crore from Rs 78.6 crore in the previous year, growth of over 33 per cent. Buoyed by the performance, MCPI has also increased its capacity to 470,000 tonne per annum by de-bottlenecking exercise.

At the time of going commercial, it has capacity of 350,000 TPA. But the company has been subsequently adding capacity thereafter.

MCPI attributes the turnaround in the performance to 'rationalisation of resources and cost reduction at levels'. "The net profitability of the company till 2001, was affected due to reduction on spread between primary feedstock paraxylene (POX) and end product PTA, uncertainty in the international market, higher logistic cost and stagnation in the domestic market," the company said.

"However, due to sustained effort, steady capacity utilization, rational production planning and adaptability, the company was able to reap the benefits," it added.

Going forward, the profitability of the company would depend on growth of polyester market in India, implementation of new PTA capacity, global PTA price and POX-PTA spread, the company pointed out.

Experts believe that demand for PTA, key ingredient for polyester staple fibber (PFS) and polyester filament yarn (PFY) is expected to rise substantially after the textile quota regime comes to an end on January 1, 2005.

India, China and Pakistan will be major beneficiary of the new textile regime. No big capacity is also coming up in India till such time IOC's Panipat facility for POX/PTA goes for production.