Indo Rama lines up Rs 900 cr expansion

Polyester manufacturer Indo Rama Synthetics (India) has chalked a Rs 900 crore project to double its capacity.

The company plans to hike its polyester capacity from 800 tonne per day (tpd) to 1,600 tpd, for both polyester staple fibre (PSF) and partially-oriented yarn, at its Butibori unit near Nagpur.

O P Lohia, managing director, Indo Rama Synthetics, said, "The polyester expansion project is in synergy with our focus on making our operations competitive. We foresee tremendous opportunities available in India with the phasing out of the quota system from January 2005."

Indo Rama currently produces over 300,000 tonne per annum (tpa) of polyester, which will be increased to around 600,000 tpa by 2005.

It has entered into an alliance with Zimmer AG, a German construction and engineering company, for this.

The project is slated to be completed by end-2005. To part finance the project, the company has tied up with German banks and institutions such as Ikband Deg which will provide Rs 470 crore. Domestic banks will lend Rs 110 crore, while the remaining Rs 320 crore will be funded through internal accruals.

Lohia said, "Asia's share in the polyester industry is expected to rise post-2004." "The demand for PSF in India too is expected to rise at a compounded annual growth rate of 8 per cent between fiscal 2002-03 and fiscal 2006-07."

While the domestic demand-supply scenario for PSF is likely to remains fairly balanced, he added.

"We are targeting to achieve a 23 per cent growth in sales in this fiscal to Rs 2,700 crore from Rs 2,200 crore in last fiscal by increasing production, sales and price," Lohia said.

Indo Rama had reported an 87 per cent growth in net profit to Rs 6.70 crore and a 17 per cent rise in sales to Rs 558.2 crore in the first quarter of 2004-05.