BackInventory glut may last 6 months more: Welspun’s Goenka
Exports of cotton yarn and jute products plunged over 40% in October as demand slowed in India’s major markets amid high inflation and fears of a recession
PremiumRising interest rates and the ongoing energy crisis could extend demand slowdown in the west for another six months, Welspun India chief executive officer and managing director Dipali Goenka said, and added that the domestic market continues to offer healthy growth opportunities for the textile industry.
Exports of cotton yarn and jute products plunged over 40% in October as demand slowed in India’s major markets amid high inflation and fears of a recession. Overall exports also registered fell by over 16% in October, registering the first such decline in 19 months.
“A couple of things took us by storm. Cotton prices went up by ₹44,000 per bale to ₹100,000 per bale. Freight costs went up by over 50%. Energy prices also took a toll on us. After any kind of pandemic, there is a recession that follows. This recession was long overdue and if you look at the US, its going to be in a recession for a couple of quarters. So it is going to take a couple of quarters," Goenka said in an interview.
“We had a challenge with the supply chain disruptions. A lot of retailers faced a tough time. The Christmas goods that they ordered came in the summer. As a result, there has been a glut of inventory. As the inventory starts clearing up, the orders will be coming in but quarter three and quarter four are going to be slow," she said. Domestic retail business has been healthy, with the flooring business seeing triple-digit growth, Goenka said.
“Diwali season starts from September to October and our sales have been up by 30%. In both months combined, we have done sales of about ₹100 crore. For Welspun India, our portfolio is very strong. We have towels, sheets, rugs and bedding and our emerging businesses like flooring and domestic retail are growing at the rate of 30%. That is an opportunity for us to focus on," she further said. On FTA, Goenka said the textile infrastructure has been a challenge in the country but schemes such as PM MITRA and PLI has the potential to give the industry a boost.
“The government has been gunning for FTAs with UK, EU and Canada and that is going to be a huge opportunity. Because we are set back by 9.3% compared to our neighbouring countries such as Pakistan and Bangladesh," she added.
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