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Sector Focus : Man-Made Fibre

Man-made fibres: State of the industry (2000-01)

Fibres and intermediates: Tariffs, prices and landed costs

	Tariffs (per cent)				Prices (Jan 2001)			Landed costs (Rs/tonne)
	Customs		Excise		Dom- estic		Intnl	Pre	Post
	00-01	01-02	00-01	01-02	(Rs/tonne)		($/tonne)	-budget	-budget
PSF 1.2d	24.8	24.8	18.4	18.4	60,000	1	770	54,110	54,110
AF 1.5d	24.8	24.8	18.4	18.4	98,000	1	1,350	116,688	116,688
VSF 1.5d	24.8	24.8	18.4	18.4	74,000		1,400	83,100	83,100
POY 126d	24.8	24.8	36.8	36.8	84,000	1	970	78,766	78,766
NFY 20sd	24.8	24.8	18.4	18.4	185,000	1	2,156	151,524	151,524
VFY 120d	24.8	24.8	18.4	18.4	196,000	1	n.a.	n.a.	n.a.
PV 48/52	24.8	24.8	18.4	18.4	180,000	1	n.a.	n.a.	n.a.
PC 48/52	24.8	24.8	18.4	18.4	125,000	1	n.a.	n.a.	n.a.
DMT	32.6	24.8	16.0	16.0	29,500		430	27,119	25,524
PTA	32.6	24.8	16.0	16.0	33,250		440	29,105	27,473
MEG	32.6	24.8	16.0	16.0	33,300		500	31,534	29,679
Caprolactam	32.6	24.8	18.4	18.4	76,000		1,250	78,835	74,198
CAN	21.2	19.6	18.4	18.4	49,500		840	48,407	47,783
RGWP	9.7	9.2	nil	nil	28,000		760	39,661	39,473
Paraxylene	9.7	9.2	16.0	16.0	n.a.		440	22,962	22,853

n.a.: Not available, 1 Market prices.

Notes:
1) The landed cost of AF includes an anti-dumping duty of Rs 21,810 per tonne.
2) The landed cost of PTA includes an anti dumping duty of Rs 1,355 per tonne.

Source: CRIS INFAC

• Demand for man-made fibres/yarn is expected to increase due to an increase in the domestic demand for fabric.
• Supply of man-made fibres/yarn is expected to increase marginally with no major capacity expansions under implementation.
• Average realisations of polyester fibre/filament yarn is expected to increase by Rs 2-3 per kg, due to an increase in domestic demand and higher international prices.
• Average cost of production is expected to increase by Rs 6 per kg for polyester fibre/yarn, due to an increase in the international prices of PTA/MEG.
• Margins of PSF/PFY producers are expected to decline as the increase in the cost of production is higher than the increase in realisations. Average margins for VSF producers are expected to increase due to a significant increase in VSF realisations.

Man-made fibres: Budget impact

Impact factors

Company name	Impact	Impact factors
Century Enka	Pos	A, C,
(56.35, 60.80)
Indo Rama	Pos	A, C
(7.50,7.50)
Sanghi Polyester	Pos	A, C
(1.65, 1.65)

Note:
Figures in brackets indicate the closing share prices, on February 27, 2001 and February 28, 2001, respectively.
pos= positive

Source: CRIS INFAC

A: The reduction in the effective customs duty on fibre intermediates, PTA, DMT, MEG and caprolactam (from 32.6 per cent to 24.8 per cent) and on polyester and nylon chips (from 44.04 per cent to 30 per cent), is expected to have a positive impact on the domestic polyester and nylon manufacturers. This is due to the expected decline in the domestic prices, in line with the decline in landed costs. However, for companies, such as Century Enka, the benefit of reduction in the customs duty on fibre intermediates would be partly offset by the expected reduction in polyester chip prices. (Polyetser chips account for around 24 per cent of total sales of Century Enka.)

B: The reduction in the effective customs duty on fibre intermediates, PTA, DMT, MEG and caprolactam is expected to have a negative impact on domestic fibre intermediate producers, such as RIL, Bombay Dyeing and IPCL. This is due to the expected decline in the domestic prices, in line with the decline in landed costs.

C: The reduction of surcharge on corporate tax, from 13 per cent to 2 per cent and the expected decline in interest rates, is expected to have a positive impact on producers.

Rediff-CRISIL Budget Impact Analysis
Budget 2001

Disclaimer: CRISIL has taken due care and caution in compiling this report. Information has been obtained by CRISIL from sources which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of its web site.

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