Sources say, the Indian cloth industry reported a modest increase in revenues in the December 2015 quarter. Net sales of the industry grew by 2.4 per cent y-o-y during the period. The sluggish growth was attributed to a poor sales performance of a few large companies in the industry.

Out of the 54 company’s sample, 29 reported an increase in revenues. Net sales of 23 companies declined, while two companies failed to generate any sales. Aggregate net sales of the top 10 companies (accounting for three-fourth of the industry’s total sales) grew by 10.8 per cent. Raw material expenses of the industry dropped by 15.8 per cent in the December 2015 quarter.

Moreover, the industry liquidated inventory worth Rs.393.8 million during the quarter under review as compared to a pile-up of Rs.5.1 billion in the year-ago quarter. After adjusting for change-in-stock, operating expenses of the industry increased by 1.2 per cent. Nevertheless, this was still slower than the growth in sales. Consequently, operating profit of the industry increased by 12.3 per cent in the December 2015 quarter. Operating margin expanded by 110 basis points to 11.8 per cent.

On the post-operating front, interest expenses of the industry grew by 1.8 per cent and depreciation charges by 3.3 per cent, slower than the growth in operating profit. Resultantly, the industry reported a net profit worth to 0.2 per cent of the total income in the December 2015 quarter. The industry had reported losses equivalent to 0.1 per cent in the year-ago quarter.