“Club of Knowledge Hunters”

Rising cotton prices give apparel retailers a tough time

Posted by retailigence on August 30, 2008

At a time when the Rs 1-lakh crore apparel retailing has begun to boom in the country, rising cotton prices seem to pose a hurdle in its growth.

Despite projections of a bumper cotton crop of 325 lakh bales (one bale is 170 kg) during the current season to September, price issues in the backyard have begun to affect the sector’s prospects. The prices of J-34 cotton touched Rs 28,000 a candy last month, up from Rs 21,000 a candy a month-and-a-half ago and Rs 18,000 a candy last year.

Mr M.S. Vasant, Head (Retail) of the Rs 225-crore Royal Classic group, said: “The prices have shot up over 60 per cent from the previous year. In the first six months of the current year, prices have surged nearly 40 per cent, giving a hard time to the industry.” On increasing the prices of the end-product (apparels), he said: “We are not in a position to pass it (price rise) on to our buyers or customers as we fear we might lose our business. Instead, we are working on cost-trimming measures and realign our business plans.”

‘Eye on India’

Mr P. Sundar Rajan, Managing Director of SP Apparels, seconds the view, but gives a flip side to the story. “With the South-East Asian countries such as China, Indonesia, the Philippines and Vietnam quoting exorbitant prices, labour unrest plaguing Bangladesh and high cost of production in Sri Lanka, Western buyers are now seriously looking at India. At this juncture, we cannot afford to raise the prices and lose the race.”

The company has been getting enquiries from hitherto unexplored markets such as Hong Kong, Singapore and African nations, Mr Rajan added.



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