Home / Knowledge / News / Textiles / ITF picks CRISIL to study capital issues of textile sector

ITF picks CRISIL to study capital issues of textile sector

Dec '19
Pic: Shutterstock
Pic: Shutterstock
The Indian Texpreneurs Federation (ITF) has appointed CRISIL for a pan-India study on working capital issues and financial performance of spinning and readymade garment (RMG) sector. CRISIL will complete the study in next 30 to 40 days by covering 1146 spinning units and 690 RMG units covering Tamil Nadu, Karnataka, Gujarat, Maharashtra, Punjab, NCR region.

As part of its study, CRISIL will analyse the financial performance of entities in the spinning and RMG sector for four years from 2016-2019. It will understand the revenue growth in these entities to identify the demand conditions in the industry; analyse various financial ratios to identify the profitability and working capital issues that the industry is currently facing; and arrive at pan India rating distribution of rating profiles of various textile clusters to understand cluster-wise performance of units. Thereafter, CRISIL will juxtapose the trends emerging from performance of listed companies in the sector and compare the same with smaller, unlisted entities and draw inferences based on the financial health of the sector.

Once the study is completed, ITF will submit the report to the ministries of textiles and finance.

Earlier this year, ITF conducted an independent survey among textile entrepreneurs mainly in two segments—spinning and RMG. More than 300 textile entrepreneurs participated in the survey and mentioned that lack of sufficient working capital is the single largest reason for the poor performance of majority of the companies. The surveyed entrepreneurs also mentioned that with some additional working capital they can come out of the negative cycle and improve their competitiveness.

Volatility in cotton prices, eurozone crisis, extended credit due to liquidity crisis in the system, etc were some of the reasons highlighted for the shortage of working capital. ITF Research Desk then analysed the financial performance of the 300 plus textile companies with the help of the three-year balance sheets, and that analysis also revealed the same fact of stress in working capital and its direct impact on financial performance.

Further, ITF Research Desk collected the data on credit rating profile of the companies in the spinning and RMG sector which mapped each company to its rating profile.

Based on the three different analyses and study, ITF concluded that in Tamil Nadu around 45 per cent of the spinning and RMG companies are facing either severe or very severe shortage in their working capital requirements, which is keeping them in negative cycle of performance. For example, in the total of 753 companies rated by various agencies, 21 per cent got very good ratings, 36 per cent got moderate rating, while 43 per cent got average or poor ratings.

By some specific intervention from banks, such as converting working capital loan into long-term loan and offering on-time additional working capital loans, at least 25 per cent of the surveyed units can bounce back to a healthy performance, according to the ITF.

The study along with four case studies and suggestions were presented by the ITF to the ministry of textiles. The ministry asked ITF to conduct and submit a pan-India study report with a larger sample size in the two sectors to identify and reaffirm the real issues across the country in various other textile clusters also.

Fibre2Fashion News Desk (RKS)

Must ReadView All

Pic: Shutterstock

Apparel/Garments | On 17th Jan 2020

Industry unhappy with retrospective withdrawal of MEIS

Apparel manufacturers and exporters are not happy with the...

Pic: Saint Laurent

Apparel/Garments | On 18th Jan 2020

Saint Laurent to open leather goods factory in Italy

French fashion label Saint Laurent, part of the Kering Group, will...

Pic: Levi Strauss & Co

Apparel/Garments | On 18th Jan 2020

Levi Strauss announces management changes in company

Levi Strauss has announced leadership changes in the company. Roy...

Interviews View All

C. Dhandayuthapani, Mag Solvics Pvt. Ltd

C. Dhandayuthapani
Mag Solvics Pvt. Ltd

ITME 2016 exploited our full strength like never before

Nuno Venda, ROQ

Nuno Venda

‘There has been an increase in demand for water based inks, rather than...

Top executives, Textile industry

Top executives
Textile industry

Sri Lanka has a good sustainable track record and strong stories to back it

Marcello Galvanin,

Marcello Galvanin

Galvanin has more than 50 years of experience in the production of textile ...

Christiane Thies,

Christiane Thies

Founded in 1892, Thies has concentrated on the fabrication of high-quality ...

Sandip Bhojani, Manthan Patel,

Sandip Bhojani, Manthan Patel

Krypthm Tradelink LLP is a Surat-based manufacturer of westernwear....

Kai Poehler, Voith Paper GmbH & Co. KG

Kai Poehler
Voith Paper GmbH & Co. KG

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

Razvan Popescu, Directa Plus SpA

Razvan Popescu
Directa Plus SpA

Directa Plus is one of the largest producers and suppliers worldwide of...

Davide Vigano, Sensoria

Davide Vigano

Sensoria is a leading developer of smart garments and IoMe (Internet of...

Karan Arora, Karan Arora

Karan Arora
Karan Arora

Bridal couture created with rich Indian heritage, exquisite craftsmanship...

Sweta Tantia, Tahweave & Garo

Sweta Tantia
Tahweave & Garo

Designer Sweta Tantia owns Garo, a couture indutva or ethnicwear brand,...

Seema Agrawal, Artisan Saga

Seema Agrawal
Artisan Saga

Artisan Saga, founded by Kaushik Rajani and Seema Agrawal, is an online...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


Letter To Editor

(Max. 8000 char.)

Search Companies


Leave your Comments

January 2020

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

Advanced Search