Indo Rama Synthetics (India) Ltd Management Discussions.

Global economy

• The global expansion has weakened. Global growth for 2018 is estimated at 3.7 percent, as in the October 2018 World Economic Outlook (WEO) forecast, despite weaker performance in some economies, notably Europe and Asia. The global economy is projected to grow at 3.5 percent in 2019 and 3.6 percent in 2020, 0.2 and 0.1 percentage point below last Octobers projections.

• The global growth forecast for 2019 and 2020 had already been revised downward in the last WEO, partly because of the negative effects of tariff increases enacted in the United States and China earlier that year. The further downward revision since October in part reflects carry over from softer momentum in the second half of 2018—including in Germany following the introduction of new automobile fuel emission standards and in Italy where concerns about sovereign and financial risks have weighed on domestic demand—but also weakening financial market sentiment as well as a contraction in Turkey now projected to be deeper than anticipated.

• Risks to global growth tilt to the downside. An escalation of trade tensions beyond those already incorporated in the forecast remains a key source of risk to the outlook. Financial conditions have already tightened since the fall. A range of triggers beyond escalating trade tensions could spark a further deterioration in risk sentiment with adverse growth implications, especially given the high levels of public and private debt. These potential triggers include a "no-deal" withdrawal of the United Kingdom from the European Union and a greater-than-envisaged slowdown in China.

• The main shared policy priority is for countries to resolve cooperatively and quickly their trade disagreements and the resulting policy uncertainty, rather than raising harmful barriers further and destabilizing an already slowing global economy. Across all economies, measures to boost potential output growth, enhance inclusiveness, and strengthen fiscal and financial buffers in an environment of high debt burdens and tighter financial conditions are imperatives.

[Source: International Monetary Fund (IMF)]

Global growth pattern (%)

2016 2017 2018 2019 (P) 2020 (P)
3.2 3.8 3.7 3.5 3.6

P: Projections Source: International Monetary Fund (IMF) World Economic Outlook April 2019

Indian Economy Indian Economy

Indias GDP is estimated to have increased 7.2 per cent in 2017-18 and 7 per cent in 2018-19. India has retained its position as the third largest startup base in the world with over 4,750 technology start-ups.

Indias labour force is expected to touch 160-170 million by 2020, based on rate of population growth, increased labour force participation, and higher education enrolment, among other factors, according to a study by ASSOCHAM and Thought Arbitrage Research Institute.

Indias foreign exchange reserves were US$ 405.64 Billion in the week up to March 15, 2019, according to data from the RBI.The interim Union Budget for 2019-20 was announced by Mr Piyush Goyal, Union Minister for Finance, Corporate Affairs, Railways and Coal, Government of India, in Parliament on February 01, 2019. It focuses on supporting the needy farmers, economically less privileged, workers in the unorganised sector and salaried employees, while continuing the Government of Indias push towards better physical and social infrastructure.

Total expenditure for 2019-20 is budgeted at र 2,784,200 Crore (US$ 391.53 Billion), an increase of 13.30 per cent from 2018-19 (revised estimates). Numerous foreign companies are setting up their facilities in India on account of various government initiatives like Make in India and Digital India. Mr. Narendra Modi, Prime Minister of India, has launched the Make in India initiative with an aim to boost the manufacturing sector of Indian economy, to increase the purchasing power of an average Indian consumer, which would further boost demand, and hence spur development, in addition to benefiting investors. The Government of India, under the Make in India initiative, is trying to give boost to the contribution made by the manufacturing sector and aims to take it up to 25 per cent of the GDP from the current 17 per cent. Besides, the Government has also come up with Digital India initiative, which focuses on three core components: creation of digital infrastructure, delivering services digitally and to increase the digital literacy.

Indias growth pattern (%)

2014-15 2015-16 2016-17 2017-18 2018-19
7.3 7.6 7.1 7.2 7

[Source: IBEF]

Global trade scenario

World merchandise trade volume is forecast to grow 2.6% in 2019, accompanied by GDP growth of 2.6%. With trade tensions running high, no one should be surprised by this outlook. Trade cannot play its full role in driving growth when we see such high levels of uncertainty. It is increasingly urgent that we resolve tensions and focus on charting a positive path forward for global trade which responds to the real challenges in todays economy – such as the technological revolution and the imperative of creating jobs and boosting development. WTO members are working to do this and are discussing ways to strengthen and safeguard the trading system.

Weak import demand in Europe and Asia dampened global trade volume growth in 2018 due to the large share of these regions in world trade. If we forget the fundamental importance of the rules-based trading system we would risk weakening it, which would be an historic mistake with repercussions for jobs, growth and stability around the world."

The above-average trade growth of 4.6% in 2017 suggested that trade could recover some of its earlier dynamism, but this has not materialized. Trade only grew slightly faster than output in 2018, and this relative weakness is expected to extend into at least 2019. This is partly explained by slower growth in the European Union, which has a larger share in world trade than in world GDP. Trade growth in 2020 is expected to out-pace GDP growth due to faster GDP growth in developing economies.

[Source: World Trade Organisation (WTO)

Indian textile industry


Indias textiles sector is one of the oldest industries in Indian economy dating back several centuries. Indias overall textile exports during FY 2017-18 stood at US$ 39.2 Billion in FY18 and is expected to increase to US$ 82.00 Billion by 2021 from US$ 31.65 Billion in FY19*.

The Indian textiles industry is extremely varied, with the hand-spun and hand-woven textiles sectors at one end of the spectrum, while the capital intensive sophisticated mills sector at the other end of the spectrum. The decentralised power looms/ hosiery and knitting sector form the largest component of the textiles sector. The close linkage of the textile industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of textiles make the Indian textiles sector unique in comparison to the industries of other countries. The Indian textile industry has the capacity to produce a wide variety of products suitable to different market segments, both within India and across the world.

Market Size

The Indian textiles industry, currently estimated at around US$ 150 Billion, is expected to reach US$ 250 Billion by 2019. Indias textiles industry contributed seven per cent of the industry output (in value terms) of India in 2017-18. It contributed two per cent to the GDP of India and employs more than 45 million people in 2017-18. The sector contributed 15 per cent to the export earnings of India in 2017-18.

The production of raw cotton in India is estimated to have reached 36.1 million bales in FY19^.


The textiles sector has witnessed a spurt in investment during the last five years. The industry (including dyed and printed) attracted Foreign Direct Investment (FDI) worth US$ 3.09 Billion during April 2000 to December 2018.

Some of the major investments in the Indian textiles industry are as follows:

• In May 2018, textiles sector recorded investments worth र 27,000 Crore (US$ 4.19 Billion) since June 2017.

• The Government of India announced a Special Package to boost exports by US$ 31 Billion, create one crore job opportunities and attract investments worth र 800.00 Billion (US$ 11.93 Billion) during 2018-2020. As of August 2018, it generated additional investments worth र 253.45 Billion (US$ 3.78 Billion) and exports worth र 57.28 Billion (US$ 854.42 Million).

Government Initiatives

The Indian government has come up with a number of export promotion policies for the textiles sector. It has also allowed 100 per cent FDI in the Indian textiles sector under the automatic route.

Initiatives taken by Government of India are:

• The Directorate General of Foreign Trade (DGFT) has revised rates for incentives under the Merchandise Exports from India Scheme (MEIS) for two subsectors of Textiles Industry - Readymade garments and Made ups - from 2 per cent to 4 per cent.

• As of August 2018, the Government of India has increased the basic custom duty to 20 per cent from 10 per cent on 501 textile products, to boost Make in India and indigenous production.

The Government of India announced a Special Package to boost exports by US$ 31 Billion, create one crore job opportunity and attract investments worth र 80,000 Crore (US$ 11.93 Billion) during 2018-(Source: IBEF)

Indo Rama Synthetics (India) Limited (Indo Rama)

Indo Rama Synthetics Ltd is Indias largest dedicated polyester manufacturer. Incorporated in 1989, we have an integrated production facility in Butibori, near Nagpur, Maharashtra. Our large product gamut comprises of Polyester Stable Fibre (PSF), Polyester Filament Yarn (PFY), Draw Texturised Yarn (DTY), Fully Drawn Yarn and Textile Grade Chips.

We have an annual production capacity of supreme quality products at 610,050 tonnes. We are also one of the most geographically-diversified producers of spun yarns in the world. Our presence is prominent and ever-growing across major global geographies like USA, France, Germany, Turkey, Russia and Japan, among others.

Our core strengths

• Over three decades of rich industry experience

• One of Indias most cost-efficient polyester manufacturers

• Well-defined quality and process management system

• Technological excellence

• Global presence

• Enduring and stable relationship with clients

Production and sales performance

Particulars FY 2018-19 FY 2017-18
Total revenue from operations 16,946 23,137
र (in Million)*
Total exports (र in Million) 3,278 4,186
Electrical power (MWPH) 19.72 23.49
Polyester Staple Fibre (TPA) 83,285 1,25,381
Polyester Filament Yarn (TPA) 77,263 1,16,135
Draw Texturised Yarn (TPA) 56,810 83,167
Polyester Chips (TPA) 987 1,162

*Total revenue from operations for FY 2016-17 and 2017-18 are not comparable since the sales for FY 2017-18 are net of GST

Financial performance (in Million)

Particulars FY 2018-19 FY 2017-18
Total income* 16,994 23,174
EBIDTA (836) 602
PBT (4,167) (1,249)
PAT (2,671) (820)
Book value per share (र) 13.73 27.64
Earnings per share (र) (16.81) (5.45)

* Total revenue from operations for FY 2017-18 and 2018-19 are not comparable since the sales for FY 2018-19 are net of GST but in the FY 2017-18 upto 30 June2017, sales were inclusive of excise duty.

Raw material Dynamics

For Polyester Industry the main raw materials are Purified Terephthalic Acid (PTA) and Mono Ethylene Glycol (MEG). These are derivatives of petrochemical industry. Any change in crude oil price affects the prices of PTA & MEG.

During the last financial year, the price of Brent crude varied between US$ 57 per barrel and US$ 80 per barrel. This led to volatility in the prices of feedstock Paraxylene (PX), which resulted in volatility in the prices of PTA and MEG as well. The price of PX varied between US$ 963 pmt. to US$ 1328 pmt.

Purified Terephthalic Acid (PTA)

The PTA price varied between US$ 779 pmt to US$ 1060 pmt. The price of PTA increased due to firming up of crude oil and feedstock PX prices, shutting down of inefficient PTA capacities in China and elsewhere, as well as good performance by downstream polyester industry. Tightening of the PTA market also resulted in increase in the average PTA-PX Delta to US$ 144 pmt. from about US$ 89 pmt. in the previous year.

The demand supply situation of PTA in India is more or less balanced at present, but it may become tight, going forward, due to delay in restart of IOCL PTA plant, and commissioning of the JBF PTA project.

Mono Ethylene Glycol (MEG)

The MEG price varied between US$ 1012 pmt. to US$ 616 pmt. The MEG-Ethylene Delta reduced to $ 165 pmt. from $ 209 pmt. in the previous year. Significant decrease in price of MEG as well as MEG-Ethylene Delta took place due to easing of the MEG market caused by higher inventory of MEG as well as speculative tendencies in China.

Power business

Indo Ramas captive power plant (CPP), complete with coal-based thermal power of 40 MW capacity and 31.08 MW FO-based DG capacity, is sufficient to meet the Companys demand. The coal-based thermal power source enables an uninterrupted power supply for processes and production. The DG-based power sets are used sparingly to meet contingencies and emergencies. The Companys combined power generation capabilities are integrated into a common power supply pool, wherefrom the required amount of power is fed to different sources for captive power consumption.

The CPP also caters to the demand of processed DM water and steam, through extraction from turbines to production facilities. We import cheaper power by open access on available opportunities during ASD of power boilers and TG sets as well as in off-peak hours.

The Company continues to monitor its power use, internally and externally, to find out avenues for reducing cost of power in polyester production – thereby, contributing to core business profitability.

People at Indo Rama

Our people are the heart of our business and a critical lever for our growth. We implement a systematic performance management strategy, while investing heavily in human resource initiatives to attract and retain the best talent. In order to maximise employee satisfaction, we provide comprehensive learning opportunities and good long-term prospects. We ensure free flow of knowledge across all tiers of the management, in an endeavour to maintain transparency and a collaborative spirit.

Risk Management

A comprehensive risk management process is indispensable for survival in todays capricious business world. With rising globalisation, we continuously evolve our risk management system. It is enabling our business to achieve its strategic objectives; and deliver sustainable, long-term growth and a commitment to responsible business practices. Our risk management system is prudently decentralised to facilitate risk mitigation at transaction levels.

We have classified various risks and their mitigation process:

Risks Mitigation measures
Cost Risk • The Company procures its raw materials locally driving costs down.
Cost of raw materials fluctuate as polyester making raw materials are crude oil price sensitive • Renegotiating with vendors and alternative sourcing of raw materials has helped the company to optimise cost of raw materials.
• Moreover, the Companys energy audits identified key ways to save on energy costs.
Quality Risk • The Company has stout quality measures in place.
A drop-in quality of products may impair the Companys image • Its fully-equipped laboratory ensures quality of products.
• Our strong technology backup helps in maintaining the quality.
• The company enjoys quality certification – ISO-9001:2008.
• Our fully-equipped quality-control laboratory with contemporary equipment ensures continuous supply of high-standard products.
Employee Risk • Indo Rama follows a uniform and merit-based recruitment process. It is sustained by a structured and precise selection procedure to avoid discrimination.
Inability to attract and retain skilled workforce can have a negative impact on our growth. • Impartial assessment process and unbiased performance appraisal help retain skilled workforce.
• The Company encourages people with rewards and recognitions.
• Arranging employee engagement activities to strengthen relationships and develop a pleasant work environment.
Technological Risk • We have several technical collaborations with technology leaders in Japan, Germany and USA.
Technological obsolescence may hurt our operational performance • Re-engineering and improvisation helps the organisation in optimisation.
• Continuous investment in technology up-gradations has enabled us to stay at the cutting-edge
• A strong team monitors the entire process to ensure stability.
Customer Risk • We maintain a strong sales and marketing team to increase market penetration.
Inability to reach demand pockets and not catering to evolving needs may have a detrimental effect • Indo Rama takes various measures to increase customer satisfaction.
• The marketing department tries to maintain long-term relations with customers to ensure repeat business.
• Market trends are analysed to derive demand trends for customers.
Competition Risk • We are widening customer base and catering to specific needs to gain customer trust
Competition from other players might affect business. • With an expanded value-added product portfolio, we now can address a broader client base.
Forex Risk • Maintaining an equilibrium between exports receipts and import payments, create a natural hedge against currency fluctuations affect.
Volatility in global currencies can impact profit margins. • We encourage forward contracts to safeguard against currency volatility.

Safety, health and environment

At Indo Rama, we believe that an organisations sustainability is directly proportional to the health, safety and environment management. We endeavour to demonstrate environmental and social responsibility at every step.

We are devoted to benefit communities – workforce, public and environment. Our safety, health and environment objectives include complying with all applicable laws relevant to the industry. The management believes in sharing responsibility throughout the hierarchy in conforming to the existing laws.

Furthermore, we believe in enriching the well-being aspects of people around our facilities.

Fire & Safety

• We abide by all statutory compliance as per Factories Act 1948, Maharashtra Factories Rules 1963 and Maharashtra Fire Prevention and Life Safety Measures Rules.

• There is a continuous effort from Management of Indorama for creating awareness on fire and safety among employees including their family members and contractor workers.

• No major fire incidents took place in 2018-19.

• Well-defined and updated on-site Emergency Management Plan to tackle any major emergency inside and outside plant premises.

• Conducted mock drills on various emergency scenarios to ensure emergency preparedness.

• Imparted fire and safety training to over 3500 employees including contractor workers, which include refresher safety training. Topics for safety training includes Safety Management System, Work Permit System, Incident Investigation, General Safety, Effective Use of PPEs, Fire & Safety including on job safety precautions to ensure work safety.

• Conducted awareness programmes for family members of company employees on LPG Safety, Home Safety, Road Safety and other relevant topics.

• Celebrated safety month (4 February to 4 March-2019) to create safety awareness among employees including their family members and contractor workers. Around 400 participants participated in various 14 competitions directly. Safety Day function held on 4th March 2019 where prizes along with certificates distributed to encourage safety culture at work place. Mr. Jayant Moharkar (Additional Director DISH, Nagpur) graces the function as a chief guest.

• Help extended to nearby industries during fire emergencies in their plant by providing fire tender to extinguish the fire in 2018-19. INDORAMA extended help in coordination with government organization.


Indo Rama regularly organise Health Camps, as part of its health programme to improve and maintain regional healthcare facilities. In FY 2018-19, Indo Ramas health camps and awareness programmes touched over 1800 lives. Listed below are few key initiatives undertaken:

• Conducted several camps for diagnosing and treating diseases like Hypertension, Ophthalmological ailments, Gynecological diseases and so on.

• Arranged for medical examination of school children from class VI to class X. The programme was conducted in IRA School, Nagpur.

• Conducted a camp on ortho diseases by Orth surgeon from ortho relief center Nagpur.

• Celebrated World AIDS Day and organized numerous HIV/AIDS camps for voluntary testing under ELM throughout the year.

• A blood donation camp was organised by Ranbow Diagnostic Centre, Nagpur at our site health Centre.

• Steered several campaigns on Dengue, Swine flu and on Hyper tension.

• Conducted two lectures programme on Tobacco awareness in side plant on shop floor.

• Conducted six lectures on First Aid for Employees and Contractual Labours of various departments.

• Conducted two lectures programme on cancer awareness by experts from Nagpur at CP-1 &.1 meter trg.centre.


At Indo Rama, we adopt several measures to maintain ecological balance in and around our production facilities – particularly with regard to solid hazardous waste management. Polymer and fibre wastes are sold to authorised parties for reuse and we ensure that hazardous wastes reach the registered recyclers. In FY 2018-19, we sustained our efforts to protect the environment in the following manner:

• Reduced hazardous waste quantity, as compared to last financial year

• Increased waste water distribution for recycling waste water through the Common Effluent Treatment Plant (CETP)

• Used waste water in sprinklers systems for fly ash and suppressed dust

• Celebrated World Environment Day on 5th June and organised plantation activity at our premises

• Constructed new rain water drain to avoid rain water clogging in neighbouring factories

• Recycled waste water using the RO plant and converted waste water to raw water

• Continued the rain water harvesting system at the CPP Plant

• Used gravity channels for sewage water at the staff colony and plant, reducing pumping cost

• Conducted internal audits of Environmental Management Systems (EMS)

Information Technology (IT)

Due to obsolescence in technology of IBM server which was hosting ERP SAP, a new server from IBM P8-S824 was purchased by IRSL, and installed in the Data Center -Butibori. All historical data of SAP was also migrated to these IBM servers.

Process developed as per Govt policy, the necessary data is generated from SAP for E-Way bills. Finally this data is uploaded on E-way bill portal.

Control developed in SAP for blocking of customer code automatically in case customer outstanding exceed given limit.

Daily plant maintenance compliance report developed in SAP and being auto generated to the designated users over the mail

Internal controls and their adequacy

Indo Rama has a robust internal control system in place designed to achieve efficacy of systems, processes and controls. Internal audit is carried out by an independent agency and internal enterprise risk management team. All the major areas and processes are covered in the review plan, drawn in consultation with the senior management. Standard operating procedure compliance and management-approved policies are reviewed and areas of improvement, if any, are identified. Internal audit process verifies whether all systems and processes are commensurate with the business size and structure. Adequate internal control systems safeguard the assets of the company with timely identification and intervention to assuage risks. The internal audit report is discussed with the senior management and members of Audit Committee to keep a check on the existing systems and take corrective action to further enhance the control measures.

Statutory compliance

The Chairman and Managing Director makes a declaration at each Board Meeting regarding the compliance with the provisions of various statutes, after obtaining confirmation form all the units of the company. The Company Secretary ensures compliance accordance to SEBI regulations and provisions of the Listing Regulations.

Cautionary statement

The Management of Indo Rama has prepared and is responsible for the financial statements that appear in this report. These are in conformity with accounting principles generally accepted in India. The Management also accepts responsibility for the preparation of other financial information that is included in this report. Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be ‘forward looking statements within the meaning of applicable laws and regulations. The Management has made these statements based on its current expectations and projections about future events. Wherever possible, it has tried to identify such statements by using words such as ‘anticipate, ‘estimate, ‘expect, ‘project, ‘intend, ‘plan, ‘believe and words of similar substance. Such statements, however, involve known and unknown risks, significant changes in the political and economic environment in India or key markets abroad, tax laws, litigation, labour relations, exchange rate fluctuations, interest and other costs which may actual results to differ materially. The management cannot guarantee that these forward-looking statements will be realised, although it believes that it has been prudent in making these assumptions. The Management undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.