Apparel Sourcing Intelligence - Worldwide

Indian apparel and textile companies in profit collapse

Another survey shows serious moves from profit to loss at most Indian quoted apparel and textile companies. We reported similar findings in another story a month earlier, when the top 33 companies lost $35mn in the April-June quarter, compared to a profit of $33.6 mn in 2007

The interesting thing about the later survey was that it showed sales were generally healthy. The profit problems weren’t all that often to do with lower prices either. They were management issues: foreign exchange contracts going wrong, rising interest liabilities, losses on new ventures – and some pretty miserable performances from textile manufacturers setting themselves up as retailers. We’ve already reminded readers that auditors qualified the accounts of Alok Industries’ UK retailing subsidiary, and that GHCL managed to turn a profitable UK retailer into a stonking loss-maker in its first year of ownership

Signs, in other words, that management at fundamentally healthy companies simply isn’t expanding its control skills as fast as their business. And often signs hidden away in the small print of quarterly reports.

It’s easy, of course, to disguise this by moaning about how tough business is in the US – just as British retailers typically blame the weather whenever they misread the market. But there are some pretty rotten business decisions being taken in India’s clothing and textile industry – and it won’t be long before someone gets a lot of egg on their face