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In FY07, India's textile and apparel exports grew at a modest pace of 7.7% YoY to reach US$ 19 bn (nearly one-fifth of total exports). However, growth in the two key markets of the US and the EU at 9% and 15% YoY, respectively during 2006, was relatively stronger.
At a time when companies across sectors and sectors across industrial and service categories have generated much investor interest, causing their stock prices to multiply several times, the textile sector seems to be unduly derelict.
In Views on News, Equitymaster has tried to highlight here some factors one should keep in mind before investing in an Textiles company. Know more
Indian textile companies, across product categories (apparels, denim, home textiles) are today seeking to build scale, extend their footprint and access global markets. While their attempts are not without several hiccups, there is certainly a sort of rejuvenation in the sector, which was once written off as an old economy debt-ridden sector. This was primarily so when most companies in the sector sought refuge in the BIFR in the late 90s. With the textile majors today once again talking of expa
Besides population, GDP growth and infrastructure amenities, India today is competing head-on with China on other grounds as well. One of them being - targeting a larger share of the American and European consumers' wallets. With the uncertainty prevailing over the Chinese textile industry on account of the restriction on exports to the US and Europe, retailers and merchandisers in these countries are seeking to diversify their sourcing in order to avoid any sudden supply shocks. India has been
The bear carnage witnessed on the bourses over the last couple of months took a toll on all sectors alike - be it old or new economy stocks. Textile stocks have been witness to such market wrath more than once. In the previous interest rate hike-economic slowdown cycle (from late 1990s to early 2000s), it was this sector that was the worst affected, with most players being subject to the BIFR (Board of Industrial and Financial Reconstruction).
The domestic textile industry is yet at the inflection point from where it needs to take off and capitalise on the export opportunities in the post quota regime. What however, has caught the 'apparel' players off guard is the fact that while they awaited for the quotas to get lifted, to embark on their capex plans, the cycles (like the denim cycle) have turned and new competitors have emerged. In such a scenario, their counterparts in the 'home textiles' segment seem to be better geared.
One of the worst hit sectors during the skyrocketing interest rate scenario in the late 90s and early 2000s.
Post the dismantling of the quota regime, the global apparel (readymade garment) industry has seen a gradual but steady shift of 'sourcing hubs' to the developing nations like India and China. The same was facilitated by circumstances that typically characterise developing nations. Firstly, the apparel industry is labour intensive - labour costs are cheap in developing nations and secondly, the industry requires very little capital investment - developing nations lag behind developed countries w
AV Birla Group Company, Indian Rayon, declared lackluster results for 2QFY05. While the topline of the company grew by only 9% YoY, the bottomline of the company declined by 56% on account of contraction of operating margins as well as extraordinary expenses. The operating margin declined by 370 basis points, while net profit margin declined by 8 percentage points.