June 2022
Sample Size: 12 Companies
Median Rating Value of sample size: BBB-
Individual Parameters Contributing to the Score
Moderate Over Supply
The volumes of overall textile sector were impacted especially in the first half due to subdued domestic and export volumes, on account of supply side and demand side challenges. While a revival has been noticed subsequently, the sustainability depends on the growth in domestic and more importantly export volumes.
Fragmented Industry
The industry is characterised by the presence of smaller players. The competitive pressures are reflected in the operating margins.
Stable Regulatory environment
Given that the overall sector is labour intensive, support from the government in terms of incentives and subsidies may continue. Central government has unveiled National Textile Policy. The focus will be on technology upgradation in order to improve competitiveness of the domestic players. Flexible labour law can be a critical factor for this industry.
Largely predictable supply of inputs from diversified sources or Raw Materials with rare, occasional disruptions / fairly predictable price band
The industry is vulnerable to the volatility in prices of dyes and pigments some of which will be linked to crude prices. The relatively higher cost of power is one of the challenges that constrain the competitiveness of Indian players.