Kolkata-based knitwear manufacturer Dollar Industries is expecting a 15 per cent sales growth in fiscal year 2021-22 on the back of increased demand for athleisure and casual wear as well as an anticipated surge in hosiery sales during summers.
The company, which had posted a turnover of ₹969 crore in FY20, is expecting to close the current fiscal (FY21) with an 8-10 per cent growth.
Dollar Industries, which forayed into the athleisure segment in February 2020, is looking to ramp up its production capacity by nearly three times and launch new products under the category.
According to Vinod Kumar Gupta, Managing Director, Dollar Industries, the demand for hosiery products typically start picking up ahead of the summer season and continues to remain strong till June-July. The work-from-home culture in the wake of the pandemic has prompted people to look for comfort wear at home, thereby leading to a good demand for athleisure wear. Both these would augur well for the company.
“The demand for hosiery and knitwear products has remained strong and that is the reason we are expecting an 8-10 per cent growth in business this year despite the lockdown during the first two months of this fiscal. We are planning to ramp up our production by 12-15 per cent in the coming fiscal as we expect our sales to grow by around 15 per cent in FY22,” Gupta told BusinessLine .
Rise in input costs
While the demand for hosiery, knitwear and athleisure products have been on the rise, the production has been hit badly because of supply-side issues, primarily due to the unavailability of raw materials including cotton and yarn. There has also been a short supply of elastic and packaging material.
“There is a huge gap between demand and supply. Though the demand from domestic market has been very high, the supply of raw material has been poor and this is because most spinners have been catering to the export market. Since these are time-bound contracts, the spinners have been fulfilling them first and once that is done, they would be catering to the domestic market,” he said.
Prices of raw materials including cotton and cotton yarn have also witnessed a steep increase since November 2020. While cotton prices have increased by more than 30 per cent, yarn price has gone up by nearly 50 per cent during the period.
The firm, which has increased the price of its finished products by nearly 12-15 per cent since November 2020, is looking to take another price hike of about four-to-six per cent in April across categories to offset the rise in input costs.
“Since the demand has been good, there has not been much of a problem on the price front and we have been able to pass the price hike to consumers. We do not see any impact on margins,” he said.
For the quarter-ended December 31, 2020, the company had posted an operating profit margin of 13.48 per cent and a net profit margin of 9.10 per cent.