MEMBER'S LOGINX
| Invalid Username / Password | ||||||||
| Invalid Captcha | ||||||||
|
||||||||
| Sign Up | Forgot Password? | ||||||||
- Home
- Todays Market
- Indian Stock Market News June 23, 2010
A boon in disguise for Indian textile Wed, 23 Jun Pre-Open
There was hardly anything that was going right for this sector ever since global economy took a U-turn. Being heavily export dependant sales nearly nosedived. Margins became a fraction of what they were pre-crisis. The volatility in foreign exchange only added to their woes. Even more to those that had forex denominated borrowings. Being heavily leveraged a steep rise in interest rates was nearly the last nail in the coffin. Companies that went overtly ambitious by entering into foreign JVs only repented later. But now it seems that China's decision to revalue the Yuan will be a boon in disguise.
Consider this. China is the largest exporter of textiles and allied products in the world, while India ranks seventh. Export of apparels totaled 28 bn Yuan in 2009. In fact China's stance of not letting the yuan appreciate assisted growth of its exports. High productivity and supportive labour laws also went to a great extent to make China one of the lowest cost producer. But now things are set to change.
Labour unrest in China has already grabbed headlines. With the Yuan revlauation raw material (cotton) cost is also expected to move up. This drives home the point that the oriental economy will no longer remain as cost competitive as before.
For Indian textile companies, China losing competitiveness has come in as a boon in disguise. The former are ideally positioned to capture all the markets that China is looking to exit. Also they are unlikely to face as much pricing pressure as earlier.
Infact the situation currently is similar to what it was before the abolioshment of quota system. At that time, China took over massive orders as it had been building capacities three years in advance. Indian capacities have only been built since then. However, Indian capacities are currently not high enough to compensate the surge in orders. Nonetheless the scope of growth is immense.
Whether or not the global economy benefits with the re-pricing of Chinese goods, India will. It only remains to be seen to what extent China acts on its promises.
For information on how to pick stocks that have the potential to deliver big returns, download our special report now!
Read the latest Market Commentary
Indian Share Market Update: Top Gainers and Losers
Equitymaster requests your view! Post a comment on "A boon in disguise for Indian textile". Click here!
3 Responses to "A boon in disguise for Indian textile"
Imran
Jun 23, 2010Hope this will result in an increase in share value of textile co.s like Nakoda .......... am i right?
Pradeep Kumar
Jun 23, 2010The Indian Textile industry (any part of the value chain) is a moribund entity with dinosaurs or plain crooks running the show, whose strategic intent and capabilities are juvenile. Of course, the laws & policies of the land also have not helped their growth cause. Our apparel industry (minus some branded houses) run sweat shops without any intent to modernize people, systems, processes or business models. In my opinion, it is near childish to say that a revaluation of the yuan is a "boon-in-disguise" , infact its a curse which will give our leaders fresh excuses not to change. You just have to check some of the new apparel companies in China who are able to "Customize-to-order" in 30-40 days. Before anybody shows Tirupur as a shining example, i would recommend a visit to the "ghost town". I have been visiting Tirupur over the last 15 years and time stands still there, just another symptomatic indication of our textile industry
ABOUT EQUITYMASTER
Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.
PREMIUM PRODUCTS
QUICK LINKS
POPULAR TOPICS
- Multibagger Penny Stocks
- Basics of Value Investing
- Benjamin Graham
- How to Invest in Gold
- How to Invest in Silver
- Best Stocks to Buy Today
- Best Small-cap Stocks to Buy
- Best Bluechip Stocks to Buy
- Guide to Penny Stocks
- How to Invest in the Share Market
- Warren Buffett - The Value Investor
- Pick the Best Multibagger Stocks
TRENDING TOPICS
Copyright © Equitymaster Agora Research Private Limited.
Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap
Equitymaster Agora Research Private Limited (Research Analyst)
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Email: info@equitymaster.com. Website: www.equitymaster.com.
CIN:U74999MH2007PTC175407
Name of the Compliance & Grievance Officer: Ms Sonal Ramachandran
Telephone: +91-22-61434003 | Email: compliance@equitymaster.com
LEGAL DISCLAIMER:
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.
Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
sunil arora
Jun 23, 2010good textile stocks Bombay rayon, hopfl , gokuldas exports, skumars