The ready-made garment export industry is well-equipped to tide over the uncertain business environment, according to a study by Crisil.

The study rated 181 players which account for a fifth of India's ready-made garment exports by value. The players rated by Crisil include Laguna Clothing, AI Enterprises, K Mohan and Co and Kaitex, across major textile clusters of Tirupur, Bangalore, National Capital Region, Ludhiana and Mumbai.

“The ongoing economic crisis, and resultant dip in demand, especially in the Euro Zone, a major export destination for RMG, may constrain revenue growth for most RMG exporters. However, Crisil believes that its rated players will continue to outpace the industry on growth as in the past, despite the fact that they derive 80 per cent of their revenues from exports. Their established customer relationships, cost efficiencies, and stable financial risk profiles will continue to drive their resilience to slowdown in business,” said a press release.

“Dependence on overseas (especially EU and US-based) customers increases the industry's vulnerability to the global economic conditions, and to fluctuations in currency rates. Crisil-rated entities have, nevertheless, maintained a compound annual growth rate of 16 per cent – twice that of the industry – in the five years through March 2011,” the note added.

Says Mr Gurpreet Chhatwal, Director, Crisil Ratings, “We expect the rated players to buck the industry trends, and maintain growth of 4-5 per cent over the medium term, supported by their ability to closely align internal processes, quality standards, and delivery timelines to the stringent norms of clients.”

Related Topics