India's pure textile companies may face resistance in the second half of 2011

In the second half of the fiscal year, Indian textile companies may have to go through a difficult period because of weak demand, both domestically and globally. In addition, Indian textile companies will face more intense due to the cancellation of import tariffs on Bangladeshi textile products. With the competition, the export earnings of these companies will be affected.

In the domestic market, the business prospects of pure textile companies seem very bleak. The price of raw materials is expected to continue to decline, and most clothing and brand companies are not able to get rid of their existing inventory, which will drag down the performance of pure textile companies.

Therefore, analysts believe that most textile companies (production of fabrics, yarns, and cotton) may encounter resistance in the second half of the year. For example, one of the highly efficient pure textile companies, Vardhman Textiles. In the quarter ending in September 2011, the company’s profit decreased by 69% year-on-year to Rs 350 million.

In contrast, companies that produce brands and clothing may have a better business situation. Unlike their counterparts in the raw material value chain, these companies performed better financially during the quarter ended September 2011.

Take the Arvind company as an example. In the quarter that ended in September, the company's profits rose by more than 85% year-on-year to 520 million rupees. Similarly, SKumars is a pure brand company whose product portfolio includes Reid & Taylor, Belmonte and other international brands. The company reported that in the quarter ended in September, the company's profits rose by 55% year-on-year to Rs 400 crore. The strategies of these companies include extending sales during peak seasons and discounting the entire market.

In the coming months, apparel and brand textile companies will continue to have advantages over pure textile companies. This year's cotton production has increased and production is estimated at 35.6 million bales, compared with 32.5 million bales last year. The company expects cotton prices to decline further.

In the first half of this fiscal year, the price of cotton (Shankar-6) dropped by 38% to Rs 105/kg. Industry veterans estimate that cotton prices will stabilize by the end of March this fiscal year. Apparel and brand companies will start buying raw materials from a pure textile company from a price point.

Others Set

Opal Jewelry Set,Silver Opal Jewelry,Color Stone Jewelry

Yiwu MengHan Jewelry CO,.LTD. ,