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Indian textile & clothing firms make loss in FY12

10
May '12

The volatile fluctuations in cotton and yarn prices in both Indian and global markets resulted in changes in inventory levels of textile and clothing companies, and several of them posted a dip in bottom line in fiscal year 2011-12, according to the Confederation of Indian Textile Industry (CITI).

During the six-month period from October 2010 to March 2011, prices of cotton increased from Rs. 34,000 a candy of 356 kg to Rs. 63,000 a candy. The prices then came down sharply to October 2010 levels in the first quarter of 2011-12.

“The roller coaster effect of price fluctuations in the domestic and global markets for cotton and other fibres on one hand, and for yarn and other textile products on the other, led to huge erosion of working capital in the industry and demand destruction in the markets,” Mr. DK Nair, Secretary-General of CITI, told fibre2fashion.

“The industry found it impossible to pass on to the consumers the burden of high cost of raw materials, once the demand for finished products from yarn onward fell drastically. Increasing unsold stocks and steep decline in prices led to huge losses in the spinning and other segments of the textiles industry,” he adds.

The Centre for Monitoring Indian Economy (CMIE) has compiled data for 234 BSE-listed textile and clothing companies for the first three of quarters of fiscal 2011-12 and compared the same with their performance during the corresponding period of the previous fiscal.

According to the CMIE data, 175 of the 234 textile and clothing firms registered poorer financial performance during April-December 2011 period.

The number of net loss making textile and clothing firms grew to 130 during the period under review compared to 53 loss-making companies during the same period in 2010-11.

All the 234 BSE-listed firms together posted a net profit of Rs. 18.5 billion during the first three quarters of 2010-11. However, these firms made a net loss of Rs. 7.342 billion in the first nine months of last fiscal, as per the CMIE data.

Fibre2fashion News Desk - India

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