We hope the worst is behind textile industry: KPR Mill’s Nataraj

Coimbatore-based KPR Mill Ltd, which put up a strong show in the first quarter of the current fiscal, believes that the worst is over for the textile sector and it would be in a position to extend its positive show to the rest of the current fiscal.

The company, which straddles the entire gamut of the textile chain — from yarn to garments — is entering the manufacture of sugar by commissioning a 5000-tonnes-a-day sugar plant in Karnataka on October 3.

Responding to questions from Business Line , P. Nataraj, Managing Director, said the co-gen-cum-sugar plant in Bijapur district of Karnataka boasted of ‘the highest sugar recovery area’, would have a co-generation capacity of 30 MW and the crushing capacity was 5000 TCD. The project cost was approximately Rs 300 crore.

Explaining the logic behind the foray into sugar manufacture, he said the basic objective was to “attain 100 per cent power self-sufficiency” for the mill through green initiatives — 75 per cent through wind power generation and the rest through co-generation. The entry into sugar was not a ‘de-risking strategy’, he said.

On the larger plans in the sugar sector, Nataraj said the present plan was to have one unit. The KPR Sugar Mill is a wholly-owned subsidiary of K.P.R. Mill Ltd (100 per cent subsidiary) and there were no immediate plans for its de-merger (as a prelude to create a sugar conglomerate).

But the performance of its textile business in the first quarter of the current fiscal has raised expectations that the worst might be behind for the textile industry in the region which has been beset by a number of problems including rising raw material cost, power shortage and demand slowdown.

KPR Mill Ltd in Q1 of the current fiscal earned a net income from operations of Rs 306.48 crore compared to Rs 285.59 crore in the same period last year. Its net profit jumped by nearly 60 per cent to Rs 16.51 crore compared to Rs 10.58 crore in the same period in the last fiscal. This was possible because the cost of materials consumed fell to Rs 215.01 crore as against Rs 247.23 crore during Q 1 of last year.

Nataraj said higher yarn realisation, a fall in cotton prices and higher wind power generation combined to make this performance possible. While yarn and fabric contributed to 75 per cent of the turnover, the garment sector accounted for the balance 25 per cent. While the expansion plans for the textile sector have been completed and the co-gen-cum-sugar project is ready for commissioning, no fresh capex for the current fiscal is on the cards.

On expectations for the current year, he said “it is hoped that the worst is over for the textile sector”. He was optimistic that the “performance of the current year would be better than last year”.

The market appears to be taking cognisance of the performance of the company with the stock hitting a 52-week high of Rs 135.55 on the NSE today before edging down marginally to Rs 130.40 at the close.

COMMENT NOW