According to denim giant Arvind, 2012-13 is likely to bring a slowdown in demand for apparel in the domestic market. This due to high inflation rates, a slowing economy, high interest rate costs, a depreciating rupee among other reasons. The company feels that the domestic demand for apparel until June has not seen a rise and may slowdown as the year progresses. “In 2011-12, the industry increased prices of garments by 20 per cent including passing the 10 per cent excise duty levied by the government. As a result, there was a slowdown, so no one may dare increasing prices for a while,” said Sanjay Lalbhai, CMD of Arvind. Announcing Arvind’s fourth quarter results, wherein the profit after tax (PAT) remained flat due to volatility in cotton prices and fluctuating currency, Lalbhai said that the margins were heavily squeezed during the period.
In the quarter ended March 31, 2012, the net profit of the company marginally increased to Rs 66.68 crores from Rs 63.02 crores in the year-ago period. But in the fiscal 2011-12, net profit was Rs 245 crores, up 48 per cent over Rs 165 crores in the previous financial year. Despite sluggish demand, the brands segment of Arvind saw a 50 per cent rise in the fourth quarter and 44 per cent rise during the fiscal. But the company expects demand to remain sluggish throughout this year.
On a positive note, Lalbhai feels that now, with prices of cotton almost stabilised, our margins have increased slightly. “The consumer has lost the ‘feel good’ factor due to which there is a slight fall in demand. But if we have a good monsoon, we may see some rise in the demand,” he said.