Indian cotton export ban to see muted impact on Padini

15 Mar '12

2 min read

Padini Holdings Berhard, a Malaysia-based company involved in the distribution and retailing of its own fashion labels, will have a muted impact of India's ban on cotton exports, as the company had been stockpiling its inventory during the last two years, according to a report.

India banned cotton exports on March 5, 2012, and partially lifted the ban a week later. This would result in supply shortages as India is the second-largest exporter of cotton globally with a market share of about 20 percent, OSK Research Sdn Bhd said in its report.

The report states that the shortage in supply of cotton would directly affect the global garment industry, but Padini would be impacted only to a certain degree as its management decided to pile up inventory in the midst of high volatility of cotton prices during the past two years.

The foresight of Padini's management would help the company to override the problems that may pop up due to India's ban on cotton exports, the report adds.

The research says Padini is cash-rich and it should have no problems in procuring materials, even if, there occurs a serious supply shortage due to prolonged ban, as it has the capacity to pay upfront.

The report further said the company is doing well and it plans to open three exclusive brand outlets (EBOs) and three multi-brand outlets (MBOs) in the second half of the current year. The new stores would increase Padini's retail floor space by 66,000 sq. ft.

The report concludes that Padini would do well in an increasingly competitive world, through its 235 outlets spread across the country.

Fibre2fashion News Desk - India

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