Apparel exporters gained over others in the segment during the September quarter (Q2) of this fiscal. Fabric and garment maker Raymond recorded profit of Rs 62 crore when compared to a net loss of Rs 7 crore in the pre GST quarter of April-June. KPR Mill, Kitex Garments and Gokaldas Exports, for which exports are the mainstay of business, saw revenue or profit either improving or steady over both the June quarter (Q1), pre GST rollout and Q2 a year before.
On the other hand Arvind, whose garmenting business is equally focused on the domestic market, saw the impact of GST rollout of 28 per cent on branded apparel with their Q2 bottom line fallng over Q1 this year. Analysts report was a marginal reduction in domestic demand in the month post GST rollout, despite a slight growth in exports. For instance, KPR Mill saw its garment production increase year-on-year from 30.48 million units in Q2 last year to 39.41 mn this year.
Prashant Agarwal, Joint Managing Director, Wazir Advisors points out overall apparel export from India to the US grew six per cent in Q2 as against the previous year's Q2, however, for overall top textile players, consolidated sales declined by five per cent and Ebitda margins declined by an average of four per cent. Further, Ebitda margin remained the same or declined for most companies. A rise in net profit of some, according to Wazir Advisors, such as Raymond, Kitex and Gokaldas Exports, was primarily due to higher other income.
Arvind’s Jayesh Shah, Chief Financial Officer, feels second quarter turned out to be another challenging one for the industry, with GST implementation impacting our domestic textile business. Even consumer-facing brands business was impacted in July as both wholesale and retail channels were under pressure. However, the brands business saw strong performance in August and September leading to good growth overall. Going forward, they expect the transition impact of GST to settle and revenue growth to return to normalcy.
