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Home Textile Industry Likely To Witness 7-9% Growth This Fiscal: Crisil

Updated: Sep 01, 2023 01:55:34pm

Home Textile Industry Likely To Witness 7-9% Growth This Fiscal: Crisil

New Delhi, Sept 1 (KNN) The Indian home textile industry’s revenue is likely to increase by 7-9 per cent in the current financial year, Crisil Ratings said in a report.

The resurgence of the home textile industry relies on several critical factors, one of which is the adjustment in domestic cotton prices. These prices had previously surged to unprecedented heights, reaching Rs 1 lakh per candy in May 2022.


Nonetheless, they have now receded to around Rs 55,000, bringing them into closer alignment with international prices. This adjustment has greatly enhanced India's competitiveness in the global market.

Furthermore, major retailers in international markets are increasing their orders from Indian home textile manufacturers. This uptick in demand is driven by the need to replenish inventory following supply chain disruptions and a gradual recovery in sales over recent months.

Mohit Makhija, senior director at Crisil Ratings, said, "With domestic raw material prices now more competitive relative to international levels, coupled with the restocking efforts by major U.S. retailers and the sustained China+1 policy of global buyers, we anticipate a rebound in revenue for Indian home textile makers this fiscal year, albeit from a lower base."

Despite these positive developments, the industry is expected to experience a gradual improvement in capacity utilization due to recent significant capacity additions amid moderate demand growth. As a result, operating margins are projected to remain below pre-pandemic levels.

The home textile industry has been in the midst of significant capital expenditure (capex), totalling approximately Rs 4,000 crore, with completion planned between the fiscal years 2022 and 2024, reported Mint.

Gautam Shahi, director at CRISIL Ratings, emphasized that this capex is not expected to substantially increase debt levels. "With only about 25 percent of the capex remaining to be completed this fiscal year, debt metrics are expected to remain stable. Consequently, gearing is forecast to improve to 0.70-0.75 times as of March 31, 2024, compared to 0.8 times in the previous year. Interest coverage is also expected to improve to 4.8–5.0 times this fiscal year, as opposed to around four times in fiscal year 2023."

Nonetheless, the industry maintains a watchful stance regarding possible obstacles, such as a substantial deceleration in the crucial United States export market and an abrupt increase in domestic cotton prices compared to global rates. These elements will be closely observed as the industry charts its course for recovery.  (KNN Bureau)


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