Thanks to riding on a revival in rural demand, the Indian hosiery industry will stitch up revenue of Rs. 36,000 crore this fiscal, 18-20 per cent higher on-year.
Hosiery products include stocking, socks, undergarments, and knitted T-shirts. Tirupur, Ludhiana and Kolkata are the leading hubs of such products.
Indicating this, a CRISIL Ratings analysis of 28 hosiery makers (accounting for a third of the industry by revenue) also says that operating margin will expand 300-400 basis points (bps) on softer input prices and improved capacity utilisations.
Rural demand contributes to almost half the domestic revenue and it was impacted last fiscal amid rising inflation and lower farmer income. So the overall volume plunged 30 per cent on-year. The price of cotton yarn, the key raw material, almost doubled in the last two fiscals.
The urban demand is expected to remain stable, while a well-distributed monsoon and probable inflation moderation should boost rural demand, leading to a recovery of 35-40 per cent in volume.
It is being also said that the capacity utilisation, which had fallen to 60 per cent last fiscal, will rebound to 90 per cent this fiscal.
Though the companies are not taking up significant capacity expansion this fiscal.
