DMT constitutes around 55 per cent of the total sales of Bombay Dyeing. The company had also lifted huge quantities of paraxylene, the main raw material for making DMT, at a high price. But paraxylene prices have been on a downward slope over the past months. The balancing factor in the results has been the textile division, which has been able to reap the benefits of falling cotton prices in the second half. Hit by high contract prices of paraxylene, the Nusli Wadia major has asked its suppliers to revise the pricing formula, which is based predominantly on contract prices, to 100 per cent spot prices.
Spot prices are, at present, hovering lower than contract prices.
The company has also refused to lift its April-June requirement of paraxylene, thereby drawing charges of violation of the purchase agreement. The sellers, led by Philip Brothers of the United Kingdom and Mobil of Singapore, have rejected the demand made and have instead asked Bombay Dyeing to honour the agreement it had entered into. The plan of action that will follow after the much awaited deferred payment guarantee is received will be to effectuate the naptha cracker contract signed with the Toyo Engineering Corporation of Japan.