Indo Rama Synthetics (India) Ltd, polyester manufacturer due to fall in polyester prices and a drop in international demand has recorded a 77 percent drop in its net profit to ₹4.91 crore in the first quarter of 2015-16 compared to ₹22.05 crore earned in the same period of the previous year.

O. P. Lohiya, Chairman & Managing Director, Indo Rama Synthetics, said that volume-wise their sales have actually gone up by 5 percent during the quarter. The lower profits are mainly due to a drop in prices of their product, which is largely because of a fall in international oil prices. This will persist in the next quarter as well, but net sales figures are likely to improve from the third quarter.

The company reported lower net sales of ₹ 627.92 crore in the April-June 2015-16 period as compared to ₹ 705.27 crore in the corresponding period of the previous year. The sales volume for the quarter increased to 79,088 tonnes as compared to 75,573 tonnes in the corresponding period of the last financial year, reflecting an increase of 4.65 per cent on quarter basis.

While domestic sales of the company increased during the first quarter of the fiscal, it was exports that took a big hit. International demand is under pressure. Exports are coming down and impacting margins.

Lohiya said that with domestic cotton prices “bottoming-out’’, Indo Rama is hopeful of higher demand for its synthetic items in the coming months. Higher cotton prices in the domestic market and the steady fall in polyester prices over the past eight months are bound to result in higher demand for their product which is likely to get reflected from the next quarter”

For the quarter ended June 30, 2015, the company’s net revenues stood at Rs. 642.48 crore as against ₹718.47 crore in the corresponding quarter of the previous year. The company’s EBIDTA (earnings before interest, taxes, depreciation, and amortisation) in the first quarter was ₹32.55 crore compared to ₹43.67 crore in the same period last year.