Apparel industry underperforms GDP, growth slows in Dec quarter

Poor performance by smaller players resulted in huge inventories, which was double than sales in many cases

The apparel industry has grown by five per cent in the quarter ended December 2014, said the Clothing Manufacturers Association of India (CMAI).

It had launched an index to measure growth in the industry from various angles early last year.

Growth underperformed the country’s gross domestic production due to poor performance of smaller entities, as weak consumer sentiment resulted in huge inventories, double the sales in many cases, said CMAI.

However, “Players have realised the need to invest to grow their businesses, which also shows their confidence in the market. On the whole, 78 per cent of the brands surveyed said they increased their investments. Part of these is also used to build inventories before the season to scale-up sales. Nearly 85 per cent of big brands and 67.5 per cent of small brands increased their investments by one to 20 per cent.”

“Increasing investment in the sector shows there is confidence in the sector,” said Rahul Mehta, managing director of Creative Lifestyles.

Giant brands (with a turnover of over Rs 300 crore) performed during the quarter and topped the growth chart with 10.29 points. Brands with a turnover between Rs 100 crore to Rs 300 crore saw its points rise by 9.28 and brands with a turnover of Rs 25 crore saw a rise of 8.02 points.

Inventory holdings had an impact on most brands. Smaller brands have been the worst hit and have seen an impact on their profitability.

According to a survey done by CMAI, the quarter also witnessed a 70 per cent sales turnover rise, with an increase in investments to create improved facilities and infrastructure. Giant brands have registered growth, with over 70 per cent of these growing 21-40 per cent.