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Indian denim makers foresee better outlook in 2012
06
Dec '11
After witnessing a rise in their bottom lines during the second quarter of current fiscal, denim manufacturers in India are expecting a better year ahead.

The better performance of denim companies this year is attributed to decline in cotton prices, better inventory management, and decrease in China's competitiveness.

Speaking to fibre2fashion, Mr. Muthuswamy, Director & CS, KG Denim, a premier denim and apparel fabric manufacturer, catering to leading fashion brands and retailers worldwide, said, “The short-term outlook is that the export market will continue to be sluggish and there will be increased competition in the domestic market. We expect 2012 to be better for textile, though we are adopting a 'wait and watch' policy. The cotton/yarn prices are expected to be lower and help denim manufacturers.”

Talking about denim market's performance in Q2 of 2011-12, he says, “We find that export market had slowed down and there has been over supply condition in the domestic market. The trend of fabric price increases of the previous two quarters had started reversing.”

Informing about his company's good performance in Q2 of 2011-12, he says, “KG Denim did well in spite of sluggish market conditions and registered a 32 percent growth in sales compared to that of Q2 last fiscal. The company posted a turnover of Rs. 1.033 billion in Q2 this fiscal, as against the turnover of Rs. 0.784 billion recorded in corresponding quarter of 2010-11.”

"Accordingly, the net profit after tax also went up from Rs. 15.3 million in Q2 2010-11 to Rs. 39.8 million in Q2 2011-12. The key factor that helped our company was the falling yarn prices,” he adds.

According to Director KG Denim, inflation will be the chief factor influencing consumer spending next year and resistance to higher prices can be expected in retail market.

Fibre2fashion News Desk - India

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