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High Interest Rate And Low Finished Product Rate Squeeze India Textile Enterprises' Profits

2011/8/17 16:10:00 39

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High Interest Rate And Low Finished Products Extrusion India Textile

Even in India, even big enterprises can hardly escape the difficulties they face.

Most textile production enterprises, including Alok industry, Mumbai printing and dyeing and Raymond, ended in the first quarter of June 30th, quarter to quarter.

Net profit

All fell sharply because of the sharp fall in the finished product rate and the substantial increase in loan interest required by working capital.

The net sales of these companies also dropped sharply in the first quarter of this fiscal year.

Alok industry is a comprehensive textile manufacturer. Its net profit in the last fiscal year (201-11) was 1 billion 600 million rupees in the last fiscal year. By the end of June, profits fell to 677 million 700 thousand rupees.

Similarly, Mumbai's printing and dyeing ended last March with a quarterly net profit of 819 million 500 thousand rupees and a loss of 397 thousand and 900 rupees to the end of June.

Raymond ended last March with a quarterly net profit of 13 million rupees, a loss of 100 million rupees to the end of June.

ICRA points out that

Do spinning

The factory may find it difficult to recover costs in the 2011-12 and two quarters.

Rohit Inamdar, a spokeswoman for the rating agency, said it was imported from October 2010 to March 2011 to produce high priced cotton yarn.

He pointed out that in order to maintain a healthy balance sheet, the price difference between yarn and cotton has gradually improved, and the optimum capacity utilization rate will become a key factor in the short and medium term of cotton mills.

Regulatory risk has been greatly improved because of frequent policy changes, such as restricting export of cotton, cotton yarn and export tax rebates.

At the same time, the price of cotton yarn has increased, coupled with the low cost stock utilization from October to March 09, which has increased the average operating profit from 14.5% in 2009-10 to 17.5% in 2010-11 years.

However, earnings dynamism weakened in the fourth quarter of 2010-11, because the ban on export of cotton yarn was prohibited from January 15, 2011 to March 31, 2011.

Export-oriented industries face a series of problems, especially in the textile industry. The India exporter forum urges the Ministry of Commerce to extend the DEPB, which gives enterprises a breathing space before launching the goods and services tax.

DEPB is the preferred plan for exporters to expire in September 30th.

Another problem facing industry is interest rate rises, and bank interest rates have exceeded 3.5%.

According to the report of the India Textile Industry Federation, the spinning mill has invested more than 400 billion rupees in capacity expansion and modernization in the past 10 years.

That means about 50 billion rupees a year for bank loans.

He added that these

loan

The interest payment is 20 billion rupees.

Therefore, the interest paid by the textile mill in this fiscal year will reach 70 billion rupees.

Other sectors of the textile chain also have huge repayment commitments.

The increase in interest means the increase in the amount of money they pay, so the financial situation of the textile mill is weakened.

The highly leveraged capital structure, coupled with rising interest rates, has led to a higher default risk in the textile industry.

After a brief and rapid rise, India's cotton yarn industry is facing a challenging environment because cotton prices have plummeted since April.

In the first quarter of this fiscal year, the benchmark Carle 6 cotton price plummeted by 38%, therefore, it was a blow to textile production enterprises.

Similarly, the price of 40 cotton combed yarns has risen to 280 rupees / kg.

At present, cotton

Price

In 170 rupees / kilos.

The price of cotton yarn dropped to 160 rupees / kg two weeks ago.