In the current fiscal year (FY23) compared to the previous year (FY22), India’s exports of home textiles are experiencing a sharp decline of 16–18 percent as the demand for these products, particularly from the US and Europe, slows.
Sivaramkrishnan Ganapathi, of Gokaldas Exports, appeared on CNBC-TV18 to discuss the company’s recent performance. The demand in the western market has slowed down, he said, despite the company becoming more efficient.
Despite this, Ganapathi anticipates that in the second half of the fiscal year 2024, growth will pick up. He also thinks that by the middle of the fiscal year 2024, the effects of the US recession will have passed.
The Indian textile industry saw a 13.4% year-over-year decline from April to November 2022, dropping from a peak in textile exports during FY21 and FY22 to USD 23.1 billion.
This contraction is in sharp contrast to the impressive growth seen in FY22, where exports reached USD 44.4 billion, driven by increased demand resulting from the pandemic and the “China+1” importing strategy.
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The second-largest contributor to the textile industry after ready-made clothing, home textiles have experienced significant growth in recent years, with exports rising by 34 percent in FY21 and another 12.6 percent in FY22.
A combination of rising commodity inflation and the start of a global recession, which had a significant impact on growth, caused exports to level off in Q2 FY22, despite the initial growth.
The operating margins for the top four publicly traded home textile companies, which account for 30–35 percent of India’s home textile exports, have decreased on a quarterly basis and are expected to do so by 400–500 basis points in FY23, according to analysts.
Despite a drop in cotton prices, the margins have been impacted by the decline in demand and increased operating costs as a result of lower capacity utilization.
However, Ganapathi anticipates that growth will pick up in the second half of the fiscal year 2024. In the latter half of the fiscal year 2024, in particular, he expressed confidence in the company’s potential for growth.
The business is giving margin maintenance top priority in order to ensure stability. In addition, Ganapathi forecast revenue for fiscal year 23, with a range of 2,200–2,300 crores and the possibility of sequential growth beginning in the following quarter.
By the second half of the fiscal year 2024, he predicts that the US market’s effects of the recession will be gone. The business is committed to preserving a margin of 11% despite the market’s current softness, he added.