Manmade fibre producers may face squeeze in their margins due to high excise duty and rising raw material costs in the current financial year, indicates an ICRA report.
Raw material (fibre intermediates) prices in the short term will remain marginally high matching with global petrochemical and marked up crude prices, on short- term basis.
As a result, the report suggests non-integrated players will return low margins over the period.
Even though the demand for textile fibres is likely to remain strong, in tune with rising global economy, slower growth is forecast for the sector as compared with 1998-2002 growth rates.
Report also states that as new polyester fibre (mainly in China and India) capacities being added will saturate the demand till 2006 that will further affect or decline the operating profits.
During 2005-08, global polyester demand is set to rise 4 percent per annum, which is below 4.8 percent recorded during 1998-2002.
