There is a economic upheaval in Europe, Latin America and the US which is followed by the Russia- Ukraine war. This time India’s Gujarat is considered as the Denim capital.
There is also a slow demand in major export market and relatively which has muted the domestic demand . This has coupled with the volability in the cotton prices which seems to be eroding the profits and revenues of the denim majors as well the MSMEs.
Arvind Nandan Denim and Vishal fabrics are considered as denim giants in India. There has been a decline in the demand and revenue due to various reasons.
Arvind Denim’s exports have fallen to 18 million meters to 6 million meters. This is approximately 66% decline in the demand and revenue. Whereas on the other hand, the domestic volumes have dropped by 50%. With this, the revenue of the denim industry in FY22 has decreased to Rs.1549 crore and also correspondants to the current quarter. The current quarter is seeing a decline of 25%. In every quarter, there is a decline of 12%.
In the third quarter, Nandan Denim’s revenue decreased by 55%. Vishal fabrics too saw a decline of 10% . With this, approximately on an average, 30% of the denim market has seen a decline. There is an attribute to the decline in both export and the import market.
The prices in the cotton has been fluctuating due to:
- Demand in denim fiber has been going higher
- Price hike
- Garment manufacturing
- No manufacturing of denim in denim mills due to the costs.
The high price of cotton has affected the manufacturers competitiveness. When the prices are low, the companies are able to gain cotton in an easier way. In the 4th quarter, the prices of the cotton are stabilized. The denim majors are optimized and there is a scope of revival of the domestic demand.
It was observed that each of the major manufactures have been reporting a decline in the stock prices because of the on-going Russia-Ukraine war.
