The textile industry is consolidating as the smaller spinning companies are facing shutdowns. This will help stronger textile players to improve margins amid increasing yarn prices, experts said.
In the last one year, yarn prices have risen and cotton prices have also surged. Dinesh Nolkha, MD of Nitin Spinners and Anuj Sethi, Senior Director of CRISIL Ratings spoke to CNBC-TV18 about the impact of the rise in price on the industry.
Sethi said, “With increased administration and normalisation of people mobility and opening up of markets, we expect normalcy to return and the overall readymade garments, as well as the home textile demand, will recover strongly in the next fiscal.”
He expects a slight pressure on margins for the readymade garment players in the coming year. However, rupee depreciation as well as export incentives could provide some buffer to the margins, he said.
“For the home textile players they already operate with slightly higher margins and most of the Indian home textile manufacturers are backward integrated into cotton yarn so they enjoy higher margins. They should be able to absorb the impact of higher yarn prices and therefore we don’t see much of an impact on the home textile manufacturers,” Sethi added.
On cotton prices, Nolkha said, “During the pandemic, the industry was nearly at a standstill and cotton prices went down substantially. They went to a low of about Rs 95 per kg which normally used to be in 2019-2020 was around Rs 110-115 per kg. Now the cotton prices have reached a level of Rs 130 per kg. This has how it has been a roller-coaster ride in cotton price during the last year.”
For the full interview, watch the accompanying video...