ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Higher Production, Lower Profit

Higher Production, Lower Profit Hansavivek GARWARE NYLONS stepped up its total production during 1976-77 by 14 per cent, from 2,331 tonnes to 2,658 tonnes, but net sales looked up only modestly from Rs 16.85 crores to Rs 17.81 crores while gross profit dropped from Rs 3.26 crores to Rs 2.04 crores owing to a steep fall in prices of nylon and polyester yarn on account of depressed conditions in the synthetic fibre industry. Even though there was no tax liability as before, net profit was only Rs 80 lakhs, against Rs 205 lakhs previously. The unchanged dividend of 15 per cent was covered barely 1.2 times against 2.9 times a year ago. But the company's operations during the current year have shown a marked recovery in margins, following impressive advance in sales and increased realisations. The company has been permitted to increase capacity of nylon yarn by 40 per cent and of polyester yarn by 60 per cent. Expansion of the polyester plant has been already completed and efforts are under way to augment capacity of nylon yarn expeditiously. This expansion is estimated to cost Rs 2.5 crores which is proposed to be financed from the internal resources of the company. After this expansion, the capacity of nylon yarn will be 3,352 tonnes and that of polyester yam plant 576 tonnes per annum. The company has already commenced production of polyester chips in its plant which has enabled it not only to save considerable amount which was otherwise incurred for processing DMT and ethylene glycol, but also to utilise the surplus capacity for doing job work for other spinners.

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