Second Wave Of COVID-19 In India Unlikely To Severely Impact Textile Sector: Ratings Agency

Second Wave Of COVID-19 Unlikely To Severely Impact Textile Sector: Report

The second wave could barely affect the textile sector in India

The continued second wave of the COVID-19 pandemic within the nation could barely affect the textile sector’s demand and provide within the first quarter of the present monetary yr, based on score company Indian scores and Analysis (Ind-Ra). The availability chain is impacted by native lockdown restrictions throughout many components of the nation, particularly at main textile hubs together with Ludhiana, Tirupur, Bhilwara, and Surat. The lockdown has resulted in restricted motion of products, which implies non-availability of inputs resembling cloth, yarns and so on. This will likely trigger a short-term affect on the completed output within the sector.

In accordance with the scores company, a sustained export demand coupled with learnings from the primary COVID-19 wave, a stronger stability sheet in addition to liquidity in comparison with the fourth quarter of fiscal 2020-21, will permit the sector credit score profile to stay steady within the present monetary yr.

Within the present circumstances of the second wave, the labour availability within the textile sector can be affected however reasonably, and at a lot lesser severity than that in the course of the first COVID-19 wave. The store flooring are prone to stay operational at a couple of plant websites however at a restricted occupancy stage. Ind-Ra states that as a result of robust export markets, the primary quarter of the present monetary yr is probably not a ‘misplaced quarter’ for the textile sector.

Moreover, many of the cotton textile gamers may have an enough stock given the second wave hit in April and Might this yr, and in addition as a result of the recent stock is out there between November-March. The provide chain disruption can result in 20 – 30 per cent year-on-year decline in toplines in the course of the first quarter of this fiscal (April-June). The restoration expectation varies relying upon the sub-sector.

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