Fluctuating costs, demand cycle impact textile firms' Q2 net

Even those who posted better results, such as Arvind Ltd and Kewal Kiran Clothing, did so at marginal growth rates

Fluctuating costs and demand cycle impacting their books, several textile companies have either seen a decline in their net profits or seen a marginal rise for the second quarter ended September 30, 2014.

Be it textiles, polyester yarn, fabrics or apparel players, several factors including stiff competition in certain products, low capacity utilisation, high inflation, high interest rates and weakened rupee impacted the textile industry.  For instance, Raymond Ltd posted a 26 per cent decline in its net profit at Rs 68 crore for Q2 of fiscal 2014-15 as compared to Rs 92 crore for the corresponding period last year. While the textiles segment of Century Textiles Industries Ltd saw its net profit decline by 24.71 per cent at Rs 32.90 crore, that of Vardhman Textiles Ltd dipped by 48.42 per cent at Rs 91.70 crore.

Commenting on the results, Gautam Hari Singhania, chairman and managing director, Raymond Ltd said, “During the quarter ended September 2014, while revenue growth was in line with our expectations, profitability did not meet our desired targets, particularly in branded textile segment and engineering businesses.”

Though due to change in accounting period the year to date for previous accounting year with the current year was not comparable for Alok Industries, the company posted a net profit of Rs 45.36 crore for the quarter ended September 30, 2014 where as the same was at Rs 96.98 crore for the quarter ended September 30, 2013.

Even those who improved their performance such as Arvind and Kewal Kiran Clothing Ltd. (KKCL), did so at marginal growth rates of 4.13 per cent and 3.10 per cent, respectively.

While it improved its performance by registering a net loss of just Rs 16.02 crore for Q2 of fiscal 2014-15 as against net loss of Rs 61.36 crore for the corresponding period last year, Indo Rama Synthetics (India) Ltd. continued to be impacted by raw material price volatility as well as anti-dumping duty imposition on PTA.

According to Indo Rama Synthetics (India) Ltd., the polyester industry is undergoing a very challenging phase due to the economic environment created after the imposition of anti-dumping duty on PTA by the government which has resulted in an increase in the cost of raw material.

“As one of the leading player in market, our performance reflects the industry situation. While the sentiment around business environment is showing signs of improvement, the duty structure on PTA is hampering the growth of the domestic polyester industry. We look forward to positive policy framework under the Make-In-India campaign and expect policy support in order to help the domestic polyester industry in showcasing its capability and prowess to deliver better returns to all the stakeholders,” said OP Lohia, chairman and managing director of Indo Rama Synthetics (India) Ltd.

Meanwhile, Ashima Ltd. too saw its net loss of Rs 3.02 crore for quarter ended September 30, 2013 in previous fiscal worsening to Rs 11.86 crore for the second quarter ended September 30, 2014 of current financial year 2014-15.