Morarjee Textiles adopts corrective steps

Ashok Piramal group-owned Morarjee Textiles, which suffered around 11 per cent decline in its third quarter net profit in the current financial year, is taking measures to avoid further losses in its business.

Harsh A Piramal, executive vice-chairman, Morarjee Textiles, said, "We are taking short-term measures for the current quarter". Cotton prices are stabilising at the current levels which has brought us some relief, he added. "We are hedging ourselves on the cotton front so that we have sufficient stock for at least another 12 months. The prices may not slip any further," said Piramal. The company imports cotton from Egypt, the US and CIS countries.

Equal attention has to be given on improving our price realisation per unit(metre) of fabric, he added. "We are improving our product mix to tap high-end customers.While doing so some of the costs may be transferred to our customers," he added.

Despite the fact that the average realisation of the company has gone up by 15 per cent on the quarter-on-quarter basis. Though,efficiency levels of the machineries is adequate, the company is trying to increase it. "We are also in the process of squeezing up the operating efficiency at least by 1-2 per cent. This will also help us in cost reduction and we expect to be back in the business by March in the current quarter," said Piramal.

For the first three quarters, the company's net sales stand at around Rs 155 crore.

The Rs 170-crore company faced the brunt of higher costs of raw materials and power which impacted its December quarter's results.

The net profit declined to Rs 20.3 crore from Rs 22.8 crore in the corresponding previous quarter where as net sales plunged to Rs 420 crore against Rs 546 crore.

The textile firm's 10 MW captive power plant at Nagpur is expected to be commissioned by December 2008. The plant will fully meet the demand of the existing plant at the location.