Margins of textile mills buoyed by cotton price fall, but hurdles lie ahead

Cotton prices in major producing centres such as Punjab and Madhya Pradesh have declined to nearly 10% below the government's MSP

The profit margins of textile mills improved during the second quarter (July-September) of the current financial year. Input costs were low, driven largely by a fall in cotton prices. 

Leading players Welspun India, Trident and Vardhman Acrylic reported emphatic growth in turnover and net profit, as did Raymond and Surat Textiles.

Welspun India, for example, posted a 21.4 per cent growth in net profit to around Rs 1.217 billion over the same period last year. Sales grew 11 per cent to Rs 17.8 billion.  

"Raymond's overall performance was above our expectations, driven by broad-based growth across divisions. Sales increased 16 per cent,