India’s cotton yarn spinning industry should see an improvement in its performance in the 2025 financial year compared to last year, which saw some of the poorest operating margins of the past decade, according to ratings agency Crisil.
“Better availability of domestic cotton and continued downstream demand growth will drive recovery in cotton yarn spreads to Rs 90 to Rs 92 per kilogram this fiscal from Rs 87 per kilogram last fiscal [FY24],” said Crisil Ratings’ director Gautam Shahi, ET Bureau reported. “The improvement was already visible in the second half of fiscal 2024 as higher cotton arrivals resulted in the normalisation of cotton prices, thereby improving spinners’ margins. With cotton prices expected to stay benign and likely to remain below international prices, the operating margin is expected to recover 150 to 200 basis points to 10.5% to 11% this fiscal [FY25].”
The 2024 financial year saw profit margins drop to between 8.5% and 9% which were some of the lowest India has seen in 10 years. Yarn spinning business’ credit profiles felt the effects of lower rates of cash accrual in the 2024 financial year and should improve this fiscal year with a better predicted operating performance.
Although yarn prices are not expected to increase significantly this financial year, sales volume within India could grow by 4% to 6%, according to Crisil Ratings. Segments which look set to perform well include readymade apparel and home textiles, ET Retail reported.
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