Home / Knowledge / News / Textiles / Does over-capacity trouble Indian denim sector?
Does over-capacity trouble Indian denim sector?
20
May '14
Denim fabric capacity in India is increasing with passage of years. And although domestic consumption is rising alongside, exports of denim fabric have not risen in the same fashion. At the same time, many companies are setting up new denim plants, while a few existing players are adding new capacities. So, is there a situation of over capacity in the denim industry?
 
According to an industry expert – Mr Rajesh Dudeja of Denim Club of India, India currently has a capacity of one billion meters per annum and a domestic consumption of 600-700 million meters and with exports accounting for around 200 million meters. This leaves a balance of around 100-200 million meters or 10-20 percent of capacity.
 
Many forward looking denim players, such as Aarvee, Jindal, LNJ, Nandan, Sangam, Sri Lakshmi, have expanded capacity in the last 2-3 years and are continuing to expand capacity. Nandan Denim is expanding from 80 million meters to 100 million meters and Mafatlal Industries Ltd. is in the process of increasing capacity from 25 million meters to 30 million meters per annum. 
 
Newer players have also emerged on the scene like R & B Denims - Surat and Mahak Synthetics - Ahmedabad, while some projects are in the setting up stage, such as those of SEL group and Anubha Industries. 
 
Speaking to fibre2fashion, Mr Dudeja says, “The demand and consumption of denim in domestic market has been growing and is anticipated to rise in coming years. However, due to continuous adding and expansion of denim production capacities, the industry has been facing an oversupply situation.”
 
Mr Utsav Pandwar – CFO of Ahmedabad based Aarvee Denims discloses that there is an oversupply of denim fabric in the market due to recent expansion and entrance of some new players in the denim industry. “But the demand is growing at almost same pace”, he adds.  
 
Mr Siddhant Sharma, VP-Operations at Rainbow Denim Ltd avers, “There is a supply-demand mismatch in the around Rs 100 per meter denim fabric category particularly made for domestic market, as robust demand mainly in this segment, led to increase of capacity in the last 2-3 years.”
 
When there is a supply-demand mismatch in favour of supply, the first casualty is margins as there is extreme pressure to reduce prices from denim fabric buyers. For instance, net profits at Aarvee in the quarter ending December 2013 have slipped to Rs 93 lakhs from Rs 2.63 crores in December 2012 and Rs 11.85 crores in quarter ending March 2013. 
 
Mr Pandwar admits that the over-supply situation has affected them too which has also led to a stiff competition in prices, etc. 


Must ReadView All

Textiles | On 20th Sep 2017

India needs to double cotton farmers’ income: top official

India needs to double the income of cotton farmers and non-farmers...

Textiles | On 20th Sep 2017

Pakistan seeks more JVs with China: textile minister

The Pakistani Government wants to forge more joint ventures (JVs)...

Apparel/Garments | On 20th Sep 2017

Egypt’s garment exports touch $941 million in 8 months

Egypt's garment exports touched $941 million in the first eight...

Interviews View All

Stefan Warnaar
Peak to Plateau

People are willing to pay for quality and performance

Victor Chao
Esmetex

‘In future, clothing boundary lines will become increasingly blurred.’

Anshul Sood
Oceedee

‘Indian footwear market is nascent and largely a trend follower’

Ashok Desai
Bombay Textile Research Association

Bombay Textile Research Association (BTRA) is a leading name in textile...

Larry L Kinn
Suominen Corporation

Larry L Kinn, Senior Vice President - Operations Americas of Suominen...

Kai Poehler
Voith Paper GmbH & Co. KG

The glass mat industry is growing by five to eight per cent annually. Kai...

Robert Brunner
Devereux

Golfwear and menswear brand Devereux is set for greener pastures. Robert...

Mike Hoffman
Gildan Activewear SRL

Gildan Activewear, a manufacturer and marketer of branded clothing and...

Ritu Kumar
Label Ritu Kumar

‘Classics will return’ "There are a lot of people wearing western clothes ...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

September 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Planning to Take the Leap towards
Sustainability?

Do you see sustainability as a route to business growth?

Yes No

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes No

Active Poll

Do you see sustainability as a route to business growth?

Yes
74.5%
No
12.8%
Skip
12.8%

Total Votes: 47

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes No

Active Poll

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes
61.7%
No
25.5%
Skip
12.8%

Total Votes: 47

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes No

Active Poll

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes
87.2%
No
6.4%
Skip
6.4%

Total Votes: 47

Thanks for your valuable feedback. Claim your free latest sustainability e-book.

Active Poll

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes
70.2%
No
10.6%
Skip
19.1%

Total Votes: 47


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search