Global uncertainties and slowdown in the domestic market have not impacted the order books of denim manufacturers, due to festive demand.
Analysts say the order books have seen a growth of seven-eight per cent in volume terms compared to last year and are booked till March. However, due to fall in cotton prices, realisations are low and growth on the price front remains muted.
The global economic scenario is weak, but demand is still emerging from Japan and the US. Also, Asia is emerging as a growing consumer of denim. Also, Indian cotton prices, the main raw material for denim fabric, are lower compared to global prices, which helps control production costs. During the 2008-09 economic crisis, apparel manufacturers realised that India and China were cheaper destinations for importing denim fabric. Currently, India and China are major producers. CARE Ratings says due to higher cotton prices on the international and Chinese markets, major denim buyers like Walmart and VF Corporation are now looking at India.
Arvind Mills, which has 24 per cent of the Indian denim market, plans to raise the price of fabric by Rs 8-10 a kg in the next month. “We have a healthy order book so far but, going ahead, concerns do exist,” said Aamir Akhtar, chief executive officer, den-im fabrics.
“Domestic demand rema-ins intact. Export demand has not seen a hit so far. We do not have plans to raise prices but if those of raw material (cotton) falls, then we will have to bring our prices down. So far, we do not plan to do so,” said Utsav Pandvar, chief financial officer, Aarvee Denims.
