The Hindu Business Line : Gangotri Textiles Q3 net up, turnover down

WHILE the net sales of Gangotri Textiles Ltd (GTL) during the current fiscal may not match last year's performance, the company is confident of keeping up the momentum on the profitability front with the net profit in the nine months of the current fiscal already being close to double of last year's net profit.

The company attributes the drop in turnover during the third quarter this year due to the decline in yarn price and is confident that the upturn witnessed in the yarn price since the beginning of this quarter will help GTL to put up a better show in the final quarter of this year.

GTL, which is coming out with its second public offer in the next few weeks, has earmarked 10 per cent of the new equity float amounting to Rs 5.50 crore to the existing shareholders of the company.

According to the unaudited results, the net sales in the third quarter declined by about 20 per cent to Rs 38.01 crore from Rs 46.96 crore in the same period last fiscal.

Raw material cost fell to Rs 23.54 crore (Rs 27.07 crore). Profit before tax zoomed to Rs 1.78 crore (Rs 27.56 lakh), while profit after tax stood at Rs 1.57 crore (Rs 27.56 lakh).

Speaking to Business Line, a company source said the decline in sales turnover has occurred because of the 20-25 per cent fall in the price of yarn.

The company is confident of putting up a better performance in the remaining quarter of the current fiscal since the yarn prices have started to move up.

The raw material cost also had seen a near 25 per cent drop during the first nine months of this year.

On whether the company would be able to match last year's sales performance of Rs 178.83 crore - in the first nine months turnover has been Rs 111.20 crore - he said that the company would strive to do so; capacity utilisation is at 98 per cent.

Even if is difficult, the net profit for the full year would be substantially higher than in last year. In the first nine months, net profit was higher at Rs 6.28 crore (Rs 3.67). Full-year profit in 2004-05 was Rs 3.25 crore.

The source expected the company's second issue to hit the market in the next few weeks. The draft prospectus to raise Rs 55 crore from the market has already been filed with the SEBI.

The company intends to allot 10 per cent of the public issue to the shareholders of GTL. The company is raising capital to part-finance the expansion project expected to cost around Rs 350 crore.

The State Government has already allotted land to GTL in the industrial estate at Perundurai in Erode district and orders for machinery have been placed.

The entire expansion project would be completed in about 1.5-2 years and benefits from part of the expansion scheme would be felt even during its execution.