Lower Q3 results disappoints textiles industry

Leading textile players saw disappointing third quarter results. While 24 percent decline in crude prices during October to December 2014 negatively affected polyester industry, cotton prices too saw downward spiral by 15-18 per cent leading to a wait and watch approach by buyers, says a Textile Excellence report. The industry as a whole saw a decline in sales by 3-4 per cent, while net profits were down 20 percent, compared to second quarter of this fiscal and inventories piled up across the industry.

Q3 results disappoint many

Among top performers, Alok Industries' net sales of Rs 35,717.40 million during October-December 2014, registered a decline of 4.62 percent compared to Q2. During Q3 2013-14, the company had clocked in sales worth Rs 36,867 million. It also reported a significant decline in net profits at Rs 258.60 million, down 43 percent than the previous quarter.

Bombay Rayon Fashions however, managed to improve sales by over 6 percent to Rs 8,800.70 million during the quarter, compared to Q2. But net profit declined 9.39 percent and inventory levels went up significantly to Rs 4,461.20 million. Inventories were at Rs 710.50 million in the previous quarter. Century Textiles' textile business saw net profit decline of 58 percent to Rs 136.6 million with net sales at Rs 4,326.5 million up 2.76 percent, compared to the previous quarter.

In the suiting and men’s wear segment, Raymond reported a drop of 4.92 percent in net sales to Rs 13,823.20 million compared to the previous quarter. However, sales were 14.54 percent higher than in same period last year. Net profits, at Rs 560.70 million declined 17.69 percent compared to the previous quarter. Rajasthan Spinning & Weaving Mills too reported a fall of 4.81 percent in its net sales to Rs 6,732.90 million, compared to the previous quarter. Net profit for the company at Rs 245.70 million was 10.75 percent lower than in Q2, but 19.16 percent higher compared to Q3 2013-14. Siyaram Silk Mills saw a significant fall in net profits during Q3 2014-15 at Rs 130.70 million, 40.67 percent lower than in the previous quarter. Net sales during Q3 2014-15 at Rs 3281.90 million were 16.81 percent lower compared to Q2 2014-15.

Polyester vs denim players

In the polyester segment, Indo Rama Synthetics registered a drop of 9.49 percent in net sales to Rs 6,487.99 million, compared to the previous quarter. However, net sales in this quarter were 11.46 percent higher than in Q3 2013-14. The company's net profits during Q3 2014-14 at Rs 584 million, was substantially higher than in the previous quarter. The company was however able to manage its inventories well despite poor market conditions.

Polyester major JBF Industries, on the other hand, witnessed a fall of 12.75 percent in its net sales to Rs 10,004.30 million compared to the previous quarter. Net profits at Rs 285.30 million, also decreased 26.24 percent.

The denim segment, however, was able to witness growth with players exploring new export markets and catering to increasing domestic consumption. Arvind, one among the world's largest denim manufacturers, for instance registered a 5 percent increase in net sales during to Rs 13,273.69 million, compared to the previous quarter. Net sales were 9.48 percent higher compared to Q3 2013-14. Arvind's net profits at Rs 992.10 million during October-December 2014 were also 2.13 percent higher than in the previous quarter.

Nandan Denim too recorded a growth of 0.24 percent in net sales to Rs 2,775.95 million. Sales were 25 percent higher compared to Q3 2013-14. The company also reported a 5.67 percent increase in net profit to Rs 126.36 million, compared to the previous quarter, and almost 38.05 percent compared to Q3 2013-14.

As per industry research, production of various textile fibres remained flat or witnessed a marginal growth of 1-2 per cent. Manmade fibres production during April-December 2014 was 1,003 million kgs, 1.5 percent higher than in previous year. MMF production at 980 million kg was 4.2 percent lower and cotton yarn production at 3,006 million kg during April-December 2014.