According to a report by India Ratings and Research, the domestic textile demand could revive in the third quarter of the current financial year with the onset of the festive season and reopening of retail spaces. However, export demand would depend on global economies such as the US and UK.
The agency expects a huge revenue downfall for textile companies in the first half of the current fiscal and a moderate recovery only over the second half of fiscal year 2022. With the stoppage of production and shortage of labour due to the lockdown, revenue is likely to bottom out over first half of the current fiscal. The report said the consumption demand is unlikely to revive in the current fiscal.
This is likely to result in a fall in EBITDA in the range of 20-50 per cent YOY, depending on the segments, leading to deterioration in credit metrics. Furthermore, players in spinning, readymade garments carry high debts on account of stretched working capital cycles with low cushion to borrow. The agency expects the working capital cycle to stretch for textile players over the next 9 months due to delays in collections and a longer inventory. WWF has welcomed the launch of the proposals for an EU Green Recovery Plan in the textile, apparel and footwear industry.
The proposals were developed by the Policy Hub a joint effort of the Sustainable Apparel Coalition (SAC), the Federation of the European Sporting Goods Industry (FESI) and Global Fashion Agenda (GFA) – and will help countries and this critical industry to ‘build back better’.
WWF agrees with the Policy Hub that the pandemic has occurred in a period when sustainability programs and commitments are increasingly becoming the norm in the industry, and how relevant these are to efforts to prevent and mitigate future crises. Given this fact, and the opportunity that the EU Green Recovery Plan presents, there is a need to ensure this progress is maintained and strengthened in the recovery phase.
WWF expects that the COVID-19 recovery plans will strengthen the progress of recent decades in water stewardship and in addressing climate change, air and water pollution, ecosystem degradation and other environmental challenges.
