Cheslind Textiles Reported Sharp Decline of 61.11 Per Cent in Its Net Profit

Given the prolonged economic uncertainty, coupled with increase in raw material cost, India-based textile firm Cheslind Textiles saw business taking a hit in the third quarter of current financial year ended December 31, 2013.

Engaged in manufacturing of single, TFO doubled and gassed yarns, the company reported sharp decline of 61.11 per cent in its net profit for the three months ended December 31, 2013 at Rs 0.49 crore from Rs 1.26 crore in the same period a year ago.

During the three months under review, Cheslind, a subsidiary of RSWM Limited, a LNJ Bhilwara group company, witnessed a negative growth due to rise in raw material cost amid inflationary pressure, and increase in capital expenditure.

There were other challenges too, such as unscheduled power cut and subdued demand which had their own adverse financial impact on the company.  

Raw material, which constitutes a significant percentage of the company’s total expenses, increased significantly to Rs 45.96 crore during Q3, FY’14 from Rs 29.77 crore in Q3, FY’13.

During the period, the company incurred a CAPEX of Rs 62.02 crore to improve the efficiency by balancing of machines and changing the product mix by converting carded cotton yarn to combed cotton yarn.

However, good demand in the export market, increased production volumes, and stabilization of interest rates have helped company to improve its sales. The company witnessed 35.16 per cent rise in its net sales which stood at Rs 66.46 crore as compared to Rs 49.17 crore in the same period a year ago.

Meanwhile, total revenue of company stood at Rs 67.63 crore in the three months ended December 31 2013, from Rs 50.50 crore in the same period a year ago, registering an increase of 33.92 per cent.