Readymade garment exports to tide over uncertainty

The readymade garment export industry is well-equipped

to tide over the uncertain business environment, according to a study by Crisil. The study rated 181 players which account for a fifth of India’s readymade garment exports by value. The players rated by Crisil include Laguna Clothing, AI Enterprises, K Mohan and Co and Kaitex, across major textile clusters of Tirupur, Bangalore, National Capital Region, Ludhiana and Mumbai.

“The ongoing economic crisis, and resultant dip in demand, especially in the Euro zone, a major export destination for RMG, may constrain revenue growth for most RMG exporters. However, Crisil believes that its rated players will continue to outpace the industry on growth as in the past, despite the fact that they derive 80 per cent of their revenues from exports. Their established customer relationships, cost efficiencies, and stable financial risk profiles will continue to drive resilience to slowdown in business,” said a press release.

“Dependence on overseas (especially EU and US-based) customers increases the industry’s vulnerability to global economic conditions, and fluctuations in currency rates. Crisil-rated entities have, nevertheless, maintained a compound annual growth rate of 16 per cent, twice that of the industry in the five years through March 2011,” the note added.