Jayshree Textiles expects profits to plummet due to Chinese imports
India’s leading textiles firm Jayashree Textiles, a unit of Grasim Industries of Aditya Birla group is expecting a steep fall in its revenue and profits for the current fiscal as a result of growing imports of goods from China.
Jayshree is looking to expand the presence of its in house brand Linen Club by opening 30 to 35 stores annually across the country in order to cut down the losses cost due to Chinese imports.
Jayshree Textiles had posted strong results in the last financial year with revenue of Rs 1700 crore (approx $262.3 million), however that number is expected to fall sharply by end of this fiscal which ends March 31.
Jayshree Textiles currently has around a 70 percent share of the pure linen textile market in India and supplies domestic brands as well as international brands including Marks & Spencer and H&M. The firm had been ramping up its production at its apparel manufacturing unit in Karnataka, however the sudden influx of Chinese goods is eating into the share of Jayshree.
"We are expecting a steep fall in EBIDTA margins between 2015-16 and 2017-18, particularly after the implementation of GST (Goods and Services Tax)," the company official was quoted as saying by news agency PTI.
He said that pre-GST; Chinese players had affected a 23 per cent price drop which was making the company's products uncompetitive in the domestic market.
"This situation has made things very difficult for us and the company and other domestic manufacturers had written to both the commerce and industry ministries to take remedial measures against cheap Chinese imports," he said.
To deal with the situation, the company is planning to increase productivity at its manufacturing units and increase the store count for Linen Club. There are around 180 Linen Club EBOs across India and strong online presence.
As the brand is positioned in the premium segment, the margins are higher too which is why the company is focusing on the brand to revive its fortunes going forward in the coming fiscals.
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