Home / Knowledge / News / Textiles / Capex activity of textile companies will be stronger in 2011
Capex activity of textile companies will be stronger in 2011
04
Feb '11
Fitch Ratings has said, in a just published report, that the outlook for Indian textile companies is stable for 2011, on the back of robust domestic demand, sluggish-yet-steadily-growing export demand and an overall improvement in their credit profiles (i.e. lower gearing and leverage).

However, Fitch's outlook for Indian garment exporters is negative to stable, as they continue to face challenges of rupee appreciation against the USD. The agency expects volume gains to be partly offset due to lower rupee revenues, leading to low-to-moderate single-digit export revenue growth for garment exporters in 2011.

The agency expects the domestic apparel market to remain strong, boosted by a higher purchasing power and a greater penetration of the organised retail and favourable demographics. The growing front-end demand will filter through to downstream players, e.g. garmenters, fabric makers, spinners and traders. In contrast, despite improving demand in key export markets, rupee appreciation and rising input costs have impaired the competitive advantage of Indian garment exporters on the global front.

Fitch expects cotton and cotton yarn prices to remain firm in the current cotton season (October 2010 to September 2011).

Also, there is an uptrend in synthetic fibre and yarn prices, which is bolstered by the supply-demand gap (rising substitution for highly prices cotton) and in sync with higher input prices (which are crude derivatives).

Profitability pressures will likely filter down the value chain to cotton textile companies, depending on their positioning in the value chain, level of integration, timing of cotton buying and diversification into synthetic and other natural fibres. Spinners' margins are expected to remain protected to a greater extent as robust demand for yarn has enabled them to pass on price hikes; fabric makers and garmenters are less able to do so.

Capex activity will be stronger in 2011 than the last two years', driven by continued government support under the technology upgradation fund scheme and growing demand, which will motivate capacity expansion. Debt-funded capex will pressurise the credit metrics of the textile companies in the medium-term.

Downside risks to the outlook could stem from a double-dip recession in key export markets, competition aggravated by a sharper rupee appreciation and adverse changes in regulation (impacting raw materials or end-product prices). A positive outlook is unforeseeable against a backdrop of volatile input prices, uncertainty on yarn prices and competition restraining pricing power.

Fitch Ratings


Must ReadView All

UNIDO, eWTP discuss strengthening ties to back e-commmerce

Textiles | On 25th Apr 2018

UNIDO, eWTP discuss strengthening ties to back e-commmerce

United Nations Industrial Development Organisation director general...

Courtesy: HueTrap

Apparel/Garments | On 25th Apr 2018

Making sustainability affordable is a big challenge

In a lot of instances, being sustainable comes with an additional...

Courtesy: Formosa Petrochemical Corporation

Textiles | On 25th Apr 2018

Formosa to set up petrochemical plant in Louisiana

Formosa Petrochemical Corporation has selected St. James Parish in...

Interviews View All

Akash Khetan
Narayan Tex Fab

I find it hard to find professionals in Surat

Top executives
Textile industry, India

The event should be organised every year

Cindy McNaull
Cordura

We have broad range of options in durable fabrics

Sugandha Bhardwaj

<div>New Delhi-based Brinjal Designs Pvt Ltd manufactures home furnishing...

Suresh P Bagrecha

Komal Texfab, founded in 1981, is into manufacturing of knitted fabrics,...

Urmil Arya

Sushila International, a well established textile organisation established ...

Eamonn Tighe
Nature Works LLC

Eamonn Tighe, Fibres and Nonwovens - Business Development Manager of...

Lynda Kelly
Suominen Corporation

Suominen Corporation is a manufacturer of nonwovens as roll goods for...

Iago Castro Asensio
RCfil Distribuciones S.L.

Iago Castro Asensio, International Business Manager of RCfil...

Robert Brunner
Devereux

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

Judy Frater
Somaiya Kala Vidya

Among the many honours showered on Frater, including Fulbright and Ford...

Nisha Chanda
Whistling Woods International School of Fashion

<div>A lack of upgraded courses in costume designing and fashion as per...

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

Leave your Comments


April 2018

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
69.9%
No
12.6%
Skip
17.5%

Total Votes: 103

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
63.1%
No
29.1%
Skip
7.8%

Total Votes: 103

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
87.4%
No
8.7%
Skip
3.9%

Total Votes: 103

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
82.5%
No
7.8%
Skip
9.7%

Total Votes: 103


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