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

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Underutiltsation, Poor Profit

Underutiltsation, Poor Profit Hansavivek INDIAN ORGANIC CHEMICALS could produce last year 2,585 tonnes of polyester staple fibre at its Manali plant, as against its production of 2,423 tonnes in the previous year and its installed capacity of 6,100 tonnes per annum. The installed capacity is based on the, warranty, contained in the agreement with Chemtex Fibres of, New York, the technical collaborator who also supplied the process machinery and equipments. This capacity, however, has not yet been established by a test run. One of the notes appended to the IOCs accounts for the year ended March 1975 reveals that the company is due to allot 19,275 new equity shares of Rs 100 each as fully paid to Chemtex Fibres as payment for certain technical services and partly towards the supply of machinery and equipment to the company according to the supplemental agreement entered into in October 1970. These shares have not been allotted, pending settlement of contractual obligation. The directors' report says that there was little progress in the problems to be resolved by the collaborator and that this mattet continues to engage the directors' consideration. This handicap apart, the company could not achieve capacity because of a more drastic curtailment of power supply -in Tamil Nadu than in the previous year and significantly lower demand for the fibre. B M Ghia, chairman, points out that the major problem facing the polyester fibre industry has been the low capacity utilisation since the advent of the four units. He is of the view that the industry's operations will continue to be unprofitable unless the excise duty on the fibre as well as the excise duty on the further stages of processing is considerably reduced. According to him, the elimination of the recently imposed excise duty of Rs 4 per kg on DMT is not adequate. Meanwhile, the company's Khopoli unit also, which made the major contribution to the 1974-75 profits, has recently experienced a fall in selling prices of its chemicals without a corresponding decrease in costs. This means that the profitability of this unit may not be maintained at last year's level if costs do not decrease. Despite reduction in overseas prices of acetic acid and ethyl acetate, the company is in favour of the removal of the ban on exports and has assured the Government that exports will not prejudice internal consumers. IOC is awaiting Government decision on allotment of land for its distillery project Its application for an increase in the licensed capacity for acetic anhydride, from 600 to 3,000 tonnes, is also under consideration of Government. Govern ment has allowed IOC temporarily to convert filament industry's quota of DMT into polymester chips, which

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