The Indian dyestuff industry is fragmented in nature and is likely to consolidate to a limited extent due to stringent environmental norms and high technology up-gradation costs. The intensiveness of capital for R&D in a rapidly changing industry has resulted in the closure of many small players. Moreover, many small players are likely to face margin pressure on account of decline in crude oil and feedstock prices which affects realization adversely. However, the players with economies of scale and backward integration are likely to benefit from decline in prices which may lead to improvement in margins.

The technology employed by the dyes and pigment players have been well received in the international market resulting into an export growth of ~21% in rupee value over a five year period. The factors restraining the growth of players are raw material price volatility, its global over capacity, and environmental concerns among others.

Source: Acuité Research; Ace Equity

Key Risks & Attributes

• Global demand for textiles
• Exchange Rate
• Competition intensity
• Changes in duty structures and Government Policy
• Domestic outlook on Textiles Sector