02 October 2023, Mumbai

Key takeaways:

• Revenue growth to be driven by domestic demand and export revival
• Lower cotton prices and easing supply chain issues to support growth
• Volume growth estimated to be 6-8%, higher than last year

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However:

• Revenue growth rate to be lower than last year due to stabilized raw material prices and lower realizations

Overall:

The Crisil Ratings report paints a positive outlook for the RMG sector in FY24, with revenue growth expected to be higher than the previous fiscal year, driven by strong domestic demand and export revival. However, the revenue growth rate is expected to be lower than last year due to stabilized raw material prices and lower realizations.

Additional notes:

• The RMG sector is a major contributor to the Indian economy, accounting for over 10% of the country's exports.
• The sector employs over 50 million people, making it one of the largest employers in the country.
• The Indian government is targeting to increase RMG exports to $100 billion by 2030.

Conclusion:

The RMG sector is poised for growth in FY24, driven by strong domestic demand and export revival. However, manufacturers and retailers should be mindful of the lower revenue growth rate due to stabilized raw material prices and lower realizations.

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29 September 2023, Mumbai

Revenue Growth Expected to Reach 7-8% in FY23-24

A recent report by CRISIL Ratings has revealed that brick-and-mortar apparel retail is returning to normal, with revenue growth expected to reach 7-8% in the financial year 2023-24 (FY23-24).

This is being driven by the upcoming festive and wedding seasons, as well as the return to office and buoyant corporate activity.

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Data points; The report, which analyzed 39 apparel retailers who accounted for 25% of Rs 1.9 lakh crore revenues in FY22-23, also found that demand from the premium segment is rising gradually, with consumers increasingly preferring branded garments. This is helping to offset muted-to-low demand from the economy and value segments, which generate 60% of total revenues.

Observation

However, the report also cautioned that there are some challenges that retailers need to be aware of, such as commodity inflation, the impact of erratic monsoons, and inflationary pressures on purchasing power.

Additionally, the report found that capital expenditure on store expansion in FY23-24 is expected to be around Rs 2,000 crore, lower than the Rs 2,500 crore spent in FY22-23.

Overall, the report is optimistic about the future of brick-and-mortar apparel retail in India, with revenue growth expected to reach 7-8% in FY23-24. However, retailers need to be aware of the challenges that lie ahead and take steps to mitigate them.

Indications of the road ahead

Despite the optimism of the CRISIL report, the indications so far have been mixed for retailers. For example, leading retailer Aditya Birla Fashion and Retail Limited (ABFRL) reported a consolidated loss of Rs 161.6 crore in Q1 2023-24, while Page Industries reported a 23% drop in consolidated net profit to Rs 158.3 crore in the same period.

However, Raymond got lucky with a consolidated net profit of Rs 1,066.7 crore after having gained from the sale of the consumer division to Godrej Consumer Products.

It remains to be seen whether the brick-and-mortar apparel retail sector will be able to sustain the positive momentum predicted by the CRISIL report.

However, the upcoming festive and wedding seasons are expected to provide a boost to sales.

5 key insights:

• Revenue growth: 7-8% in FY23-24
• Drivers: Festive and wedding seasons, return to office, buoyant corporate activity
• Premium segment: Rising demand
• Challenges: Commodity inflation, erratic monsoon, inflationary pressures
• Store expansion: Capital expenditure to be Rs 2,000 crore

27 September 2023, Mumbai

Textile Minister's Bold Vision

In a call to action, the Hon'ble Textile Minister urges the textile sector to quintuple Technical Textiles exports, targeting a jump from $2 billion to $10 billion.

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Indian Technical Textiles Set for Explosive Growth

Rachna Shah, the textiles secretary, highlights the Indian technical textiles sector's remarkable potential.

The sector, currently valued at $22 billion, is poised to reach an astonishing $50 billion within five years.

Government's Strategic Initiatives

To achieve this ambitious goal, the government adopts a multifaceted strategy, emphasizing research and development in technical textiles, workforce skilling, and collaboration among certification agencies, industries, and ministries.

India Aims to Dominate MMF Exports

Chairman of the Synthetic and Rayon Textiles Export Promotion Council (SRTEPC), Badresh Dodhia, sees significant growth potential in India's man-made fiber (MMF) exports. 

Currently, at 30% of total exports, MMF could drive India's global presence in the textile market.

MMF Sector's Resurgence

MMF demand has consistently grown at a 10% Compound Annual Growth Rate (CAGR) in the past five years, following a period of stagnation. 

Dodhia attributes this growth to increasing awareness among Indian consumers.

Sustainability and Government Support Boost MMF

Stability in MMF prices and its sustainability factor make it an attractive option. Government initiatives, like the Productivity-Linked Incentive (PLI) scheme and endorsements by Prime Minister Narendra Modi, further boost the sector.

Bright Prospects for Technical Textile Exports

With comprehensive strategies and government backing, India's technical textiles sector is primed for exponential growth, positioning itself as a major player in the global market.

5 key insights :

• Technical textiles exports to quintuple
• $50 billion sector in five years
• Focus on R&D, skilling, collaboration
• MMF exports poised for growth
• Sustainability and government support

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30 September 2023, Mumbai

FY2022-23

• Readymade garment export contributed 84.5 per cent of Bangladesh's total exports valued at nearly $47 billion.
• The US is its largest market where unfortunately, growth was negative at -5.5 per cent.
• Garment exports to the UK and the EU fared much better, registering a positive growth of 11.8 and 9.9 per cent respectively.
• Non-conventional markets like Brazil, Turkey, and Japan fared exceptionally well with over 71 per cent, nearly 50 per cent, and nearly 46 per cent growth respectively.

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FY2023-24 (First two months)

• Bangladesh sees moderate demand growth in both traditional and non-traditional markets.
• Apparel export worth $7.99 billion, a growth of 12.46 per cent from $7.11 billion in July-August of this fiscal.
• The US is the largest single export destination with exports worth $1.46 billion, a year-on-year growth of 2.95 per cent.
• The UK is the third highest destination with exports worth $976.8 million, a growth of 19.1 per cent year-on-year.
• Apparel export to other major destinations such as Spain, France, Netherlands, Italy, and Poland also registered positive growth.
• The US's Generalized System of Preference program has included Bangladeshi apparel, making it duty free as opposed to the 11 per cent it is being taxed as customs.

Conclusion

BGMEA is satisfied with Bangladesh's export performance in FY2022-23 and FY2023-24. 

Bangladesh has fared well as per course, especially in non-traditional markets despite depressed orders from traditional markets. 

The US's decision to make Bangladeshi apparel duty free is a positive development for the garment sector.

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29 September 2023, Mumbai

An overview

Intex India is a significant B2B international sourcing trade show that provides a unique opportunity for direct access to the vast Indian, South Asian, and global markets.

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Leveraging India's robust manufacturing capabilities and the immense domestic demand it commands, Intex India offers unparalleled opportunities for international suppliers seeking entry into this expansive market.

Sweet spot

India is currently the world's fastest-growing major economy and is expected to witness its GDP surge to $7 trillion by 2030. 

This remarkable growth trajectory is also expected to translate into a 9.5% increase in disposable income from 2022 to 2026, with consumption projected to soar to $1.8 trillion by 2030.

India's Gen-Y population, with over 808 million individuals under the age of 35, has a growing appetite for fashionable attire. 

Tailwinds; This trend is propelling the domestic fashion and apparel brands market towards an impressive $220 billion target by 2025. 

The active wear sector is set to reach $6 billion by 2024, while the sports apparel market is anticipated to hit $2.2 billion by 2029. These flourishing sectors are well-supported by the fashion retail market, which aspires to reach $118 billion by 2028, and the rapidly expanding online sales segment, potentially reaching $130 billion by 2026.

Multiple data points

India's textile and apparel exports surged to an impressive $44.4 billion in FY22. The readymade garment exports are projected to sustain a compound annual growth rate (CAGR) of 12-13%, ultimately surpassing $100 billion by 2030.

Leveraging

In alignment with this growth, India's textile and apparel imports also witnessed a robust uptick, surging by 26.7% to $8 billion in 2022-23.

In this thriving ecosystem, Intex plays a pivotal role in assisting businesses in expanding their operations and harnessing the abundant opportunities that lie ahead.

26 September 2023, Mumbai

Introduction

Textile printing ink is a liquid or paste that contains dyes or pigments and is used to print designs and patterns on textiles. 

It is available in a wide range of colors and finishes and can be used on a variety of fabrics, including cotton, polyester, nylon, and silk.

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Market Dynamics

The global textile printing ink market is expected to grow significantly in the coming years. This growth is being driven by a number of factors, including:

• Increasing demand for printed textiles in the apparel, home furnishings, and automotive industries.
• The growing popularity of digital printing requires specialized inks.
• Rising consumer awareness of sustainability and increasing demand for eco-friendly inks.

Innovations

The textile printing ink market is constantly evolving, with new innovations being introduced on a regular basis. Some of the latest trends include:

• Development of water-based and UV-curable inks, which are more environmentally friendly than conventional.
• Development of inks with new functionalities, such as inks that can glow in the dark or change color with temperature.
• Development of inks for new applications, such as printing on 3D textiles and wearable devices.

Opportunities

The textile printing ink market offers a number of opportunities for growth, including:

• Expanding into emerging markets, such as Asia and Africa, where the demand for printed textiles is growing rapidly.
• Developing new ink formulations for specific applications, such as printing on technical textiles and medical textiles.
• Investing in new technologies, such as digital printing and 3D printing, which are expected to drive the growth of the textile printing ink market in the coming years.

In summary

The textile printing ink market is a dynamic and growing market. Manufacturers that can keep up with the latest innovations and offer a wide range of high-quality inks will be well-positioned to succeed in this market.

5 key insights about textile printing ink market :

• Market Dynamics: Growing demand, digital printing, sustainable inks
• Innovations: Water-based, UV-curable, new functionalities, new applications
• Opportunities: Emerging markets, new ink formulations, new technologies
• Overall: Dynamic and growing market, rewards innovation and quality

CREDITS: Future Market Insights report

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30 September 2023, Mumbai

Discounts and Advertising Costs Challenge Fashion Retailers

Fashion retailers are bracing for profit margin pressure in FY2024 due to two key factors: increased discounts to combat a demand slowdown and elevated spending on advertising and promotions to drive revenue growth, according to ICRA's analysis.

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Operating Margin Conundrum

Margin Projection Despite Revenue Growth

Despite anticipating a robust 13% year-on-year (YoY) revenue growth, fashion retailers are expected to see their operating profit margins decline by approximately 120 basis points (bps) to 5.2% in FY2024. This projection concerns 11 listed retail entities that collectively account for 23% of the industry's revenue.

Sector's Resilience

Stable Outlook Amid Challenges

ICRA currently maintains a stable outlook for the retail sector, indicating confidence in its resilience despite the impending challenges.

Potential for Industry Changes

Impact on Individual Retailers and Industry Consolidation

While the sector as a whole may remain robust, the profit margin pressure could impact individual retailers, potentially leading to industry consolidation.

Strategies for Survival

Adaptation and Innovation Are Key

To counter profit margin challenges, fashion retailers should focus on cost optimization, refine their product mix, and enhance the overall customer experience. Exploring new avenues, such as expanding into online retail and offering value-added services, can also be beneficial.

Mixed Outlook

Balancing Growth and Margins

In summary, the fashion retail industry's outlook for FY2024 is a mixed bag. While revenue growth is expected to persist, profit margins face increasing pressure. Successful retailers will need to proactively manage costs and prioritize customer satisfaction to thrive in this demanding landscape.

5 key insights:

• Discounts and ads challenge margins
• Revenue growth expected, despite margin pressure
• Industry resilience despite challenges
• Profit margin pressure could impact individual retailers
• Retailers must adapt and innovate to thrive

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28 September 2023, Mumbai

The Wazir Advisors September 2023 report shows that Western apparel imports and India's exports remained stagnant in June and July, compared to August 2022, with domestic retail sales faring better.

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Key findings:

• Western apparel imports remained low in June and July, with the US and UK showing the sharpest declines.
• India's apparel exports continued to lose ground in June and July, with shipments to the US down 22% in August 2023 compared to August 2022.
• Domestic retail sales fared better than imports in the UK and US, with online sales of clothing growing 10% in the UK in Q2 2023 and monthly apparel store sales up 3% in the UK in July 2023.

Analysis:

The weak Western apparel market is likely due to a number of factors, including high inflation, rising interest rates, and consumer caution about spending. This is challenging for Indian apparel exporters, who rely heavily on the Western market.

However, the domestic retail market in India is expected to remain relatively resilient, supported by a growing middle class and rising disposable incomes. This could provide some relief for Indian apparel exporters in the near-term.

Outlook:

Domestic Retail Sales Fare Better; The Report suggests that the Western apparel market is likely to remain weak in the near-term. 

Indian apparel exporters should focus on diversifying their markets and developing new products and services to meet the changing needs of consumers.

The domestic retail market in India is expected to remain relatively resilient, but apparel exporters should still be mindful of the potential for a slowdown in consumer spending if the global economy weakens further.

Recommendations:

• Indian apparel exporters should focus on diversifying their markets and developing new products and services to meet the changing needs of consumers.
• The Indian government should continue to support the apparel sector through initiatives such as trade promotion and export subsidies.
• Domestic apparel retailers should focus on improving the customer experience and offering a wider range of products to meet the needs of different consumer segments.

  5 key insights:

  • Western apparel imports stagnant
  • India's apparel exports lose ground
  • Domestic retail sales fare better
  • Indian exporters should diversify
  • Domestic retailers should improve CX

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26 September 2023, Mumbai

Outlines

Cotton picking in Brazil is 94% completed in terms of the total planted area as of September 18, 2023.

In August, Brazil shipped 104.3 thousand tonnes of cotton – up by 66% compared with the amount shipped in August/2022.

Brazil is estimated to export a total of 2.4 million tonnes in the current market year (2023/24). If confirmed, this will represent a 66% increase over the previous season.

HVI results show an upward trend for the quality of Brazilian cotton.

Brazil is also estimated to export 2.4 million tonnes of cotton in 2023/24, a 66% increase over the previous year. This is due to a combination of factors, including the larger crop, improved quality, and strong global demand.

Brazilian cotton quality is improving, with 96% of samples within the desired micronaire range in 2023/24. Fibre strength and length have also improved.

Overall, the Brazilian cotton sector is poised for a strong year in 2023/24. With a larger crop and improved quality, Brazil is well-positioned to meet the growing global demand for cotton.

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Additional details:

• Brazil exported 104.3 thousand tonnes of cotton in August 2023, up 66% from the same month in 2022.
• The average cotton yield in Brazil is expected to be 1,840 kg/ha in 2023, an increase of 18.9% over the previous year.
• The main destinations for Brazilian cotton exports are China, Bangladesh, Vietnam, and Pakistan.

The Brazilian cotton sector is a major player in the global market. With its large production and export volumes, Brazil is well-positioned to meet the growing global demand for cotton.

2023 Crop

The forecast for total cotton production is 3.07 million tonnes (+1%) from a planted area of 1.67 million hectares (+20%). Abrapa predicts an average cotton yield of 1,840 kg of cotton per hectare in 2023, an increase of 18.9% over the previous year.

Export Shipments

Brazil exported 104.3 thousand tonnes of cotton in August/2023. This amount is 66% above the amount shipped in August/2022. The monthly shipments of Brazilian cotton resulted in revenues of U$ 187.7 million.

Brazilian cotton exports in the 2023/24 market year are estimated to be 2.4 million tonnes (August 2023 to July 2024). This will represent a 66% increase over the previous year, 2022/23.

Made in Brazil

Brazilian cotton quality is on the up. The Brazilian cotton that will be going out to the global market in the 2023/24 market year will present better quality indicators than in the previous season. 

One example is micronaire (MIC), which is a measurement of fibre diameter and maturity. Tests show that 96% of the samples were within the desired range of 3.50 to 4.90. 

In addition, the percentage of fibre lower than 3.6 has drastically reduced. Fibre strength and length have also improved, especially in relation to length and uniformity. 

The short fiber index is better but there is still room to improve, although this parameter is also affected by weather conditions. Another highlight in the report is the fiber colour indicators. 

The reflectance grade (which measures the ‘whiteness’ of the cotton) was within the ideal range for 94% of the samples tested and yellowing with 95% in the ideal range.

Bottom line

The Brazilian cotton sector is poised for a strong year in 2023/24. With a larger crop and improved quality, Brazil is well-positioned to meet the growing global demand for cotton.

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