Apr 7, 2020
Textile industry could see EBITDA drop by 15% in FY21: Ind-Ra
Apr 7, 2020
The Indian textile industry could see its earnings before interest, tax, depreciation, and amortisation drop by at least 15% in the 2021 financial year as the coronavirus pandemic is expected to have a significant global impact.
Most of the textile sector has seen business and production grind to a halt during the ongoing lockdown and sales are expected to remain muted even after the lockdown is lifted. The 2021 financial year, which began on April 1, could see a drop in EBITDA of 15% or more, according to a recent report by India Ratings and Research, accessed by the Press Trust of India.
Buying by both businesses and consumers will not reach pre-lockdown levels any time soon after the lockdown is lifted, according to Ind-Ra. A widespread fall in consumer income will mean shoppers have less spending power and a lack of demand for fashion could lead to clothing manufacturers ordering less textiles as inventory piles up.
Textile product prices will also be affected by the ongoing Covid-19 crisis as an effect of the disruption that the virus has caused in the global textile production and supply chains, said Ind-Ra. Prices have been muted but could increase if there is a shortage of raw materials.
India has traditionally exported a large amount of its yarn to China and the current pandemic has seen these exports drop dramatically. Other key markets for Indian textile exports including the US, UK, and UAE have also halted orders and the Indian industry is relying on demand picking up again to begin the road to recovery.
Copyright © 2024 FashionNetwork.com All rights reserved.