High and volatile cotton prices have led the Mumbai-based vertically integrated textile major; Alok Industries Ltd to reduce the length of its global sales contracts from one year to three months.
“Given the volatility of the cotton markets, the contract validity has been changed to three months, which is a mutual decision, since in either case of prices going up or down, the business relationship should be transparent”, says Mr Arun Agarwal, CEO of Alok's international division.
Alok International Inc is the USA-based subsidiary of Alok Industries and was set up with an objective to provide forward integration to USA retailers by strengthening the distribution channel.
Alok is a major textiles supplier to retail biggies like Wal-Mart and Target Corp.
Since it is difficult to forecast the prices of cotton on a long term-basis, considering that prices have more than doubled from a year ago, this decision coming from Alok seems prudent.
“The market is buzzing with activities. Sales have picked up and it seems cotton price increase and subsequent cost increase in product prices has been accepted as a reality to live with” Mr Agarwal informed fibre2fashion.
“Many retailers were holding their buys, hoping price to come down, so they are hurting for merchandise. This is good news for us as a manufacturer” he concluded by saying.
Fibre2fashion News Desk - India
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