Indian rating agency ICRA has evaluated that the performance of Indian cotton spinners across the board suffered from inflationary pressures and uncompetitive prices in 2nd quarter of the financial year 2023 (Q2 FY2023). Their revenues declined by 4 percent YoY. The margins declined by about 1 percent.
The smaller players suffered more while large-scale spinners were shielded to some extent by cost savings on bulk purchases of raw materials. The spinners exhausted most of their inventory in H1 FY2023 as stocks from the previous crop were consumed. The erratic and volatile cotton prices reduced the buying power of most spinners.
The ICRA pointed out that apparel spinners in comparison were more resilient. Their revenues surged by 4.5 percent year on year basis. But the recession in key export markets resulted in lower exports and a decline in revenues.
An official of ICRA said that despite some setbacks the agency expects textile companies to show robust revenue growth in FY2023. However, the margins would be lower because of cost pressures that companies suffered while the margins are expected to moderate amidst cost pressures. The official said in Q2 FY2023, revenue and margins dipped for the Indian spinners, while revenue and margins remained flat for the apparel sector because of recessionary conditions in key markets.
