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Sharp rupee appreciation challenge for domestic home textile sector: Report

Major players like Bombay Dyeing, Trident, have seen a sharp turnaround in profitability

Dilip Kumar Jha  |  Mumbai 

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An appreciating rupee has been posing a major challenge to sustaining growth of domestic textiles industry, which has seen a low turnaround in the past few quarters, mainly due to high raw materials prices.

Major players in this segment, including Bombay Dyeing, Trident and Welspun, have seen a sharp turnaround in their profitability over the past six quarters, despite challenges in domestic demand. This is on account of demonetisation first, and then the recent implementation of the goods and services tax (GST) regime.

Bombay Dyeing, for example, has seen its profitability increasing to Rs 211.36 crore on a turnover of Rs 447.50 crore for the March 2017 quarter. In the January-March 2017 quarter, however, the profitability had seen over 90 per cent growth over the year-ago period. The company had reported a loss of Rs 52.97 crore in the October-December quarter of 2016. Similarly, Trident and Welspun had also reported a fall in their profitability in the January-March quarter of 2017.

“The Indian textiles industry is currently facing challenges in the form of currency risk, increasing competition from on unfavourable currency and higher raw material costs. We believe that cotton prices are likely to soften from September quarter of 2017-18 as we expect higher supply due to liquidation of inventory and enhanced cotton sowing in India,” said Sumant Kumar, an analyst with Financial Services.

Interestingly, China’s yuan has fallen by around 4 per cent in the past three months, even as the Indian rupee has appreciated by around 4 per cent in the same period. The recent currency movement has given an advantage over India, as observers see a weakness in the rupee against the major global currency.

Experts believe the currency risk for the Indian home textile players is likely to be moderate in the coming year. Moreover, will continue to enjoy cost advantages in home textiles on lower labour cost, better availability of cotton and favourable government policy. “We, therefore, believe that Indian home textiles industry will recover and mitigate short-term risks like higher raw material costs and currency volatility,” said Kumar.

The profitability increase in the Indian home textiles sector has reflected in their respective stock price movement also. Share price of Bombay Dyeing, Trident Ltd and Welspun Enterprises are shy of their respective 52-week highs. Bombay Dyeing stock closed on Friday at Rs 83.30 apiece against its 52-week high level of Rs 92.95 apiece. Similarly, share prices of Trident and Welspun Enterprises closed at Rs 83.95 apiece and Rs 135.95 apiece against their 52-week highs of Rs 92.30 apiece and Rs 149.30 apiece respectively.

India, and together account for 80 per cent of all bed and bath linen imported by the United States; has an edge with a 54 per cent market share in bed sheets and 42 per cent in in 2017 (as of March). 

In bed sheets by US, India’s share has increased 12 percentage points since calendar year 2009, while Pakistan's share has fallen by 3 percentage points during this period. China’s, meanwhile, has remained flat at 24 per cent. 

In the US’ bed sheet imports, India’s share doubled from 27 per cent in calendar year 2009; China’s fell from 29 per cent to 20 per cent, and Pakistan’s from 26 per cent to 16 per cent.

is well poised to gain from long-term growth in the global home textiles market, as it leverages the twin benefits of lower cost of production and significant share of global installed capacity,” said a report from

Even India’s Ministry of Textiles is pushing the Commerce Ministry to pursue the proposed free trade agreement (FTA) with the European Union to boost India’s textile trade. Meanwhile, India’s home textiles industry is estimated to grow at a CAGR of 8.3 per cent during 2014-21 from $4.7 billion in 2014 to $8.2 billion in 2021.

First Published: Sat, July 29 2017. 16:48 IST