RSWM Ltd. is one of the largest manufacturers and exporters of value-added synthetic, mélange, blended spun yarns, denim fabric, knitted fabric, and green polyester fibres from India, recently announced its financial results for the Q2 & H1 FY23 ended 30th September 2022.
Yarn
▪ The global economic volatility and high inflationary pressure resulted in subdued demand from export markets
▪ While our total turnover (Yarn+Knits+Denim) remained stable, our export turnover dropped ~31% on a YoY basis
▪ However, the domestic market performed well with growth of ~18% on a YoY basis
▪ We sold our products in domestic markets, but at reduced margins on the back of increased supply
Denim
▪ Volatile cotton prices wiped out our margins during the quarter
▪ We have been able to pass on the increased cotton prices to some extent only
▪ All-time higher prices of cotton during the period under analysis, resulted in an unbearable increase in finished product prices and customers moved away from retail stores or remained with low-cost denim
▪ With the arrival of the new cotton crop, prices will settle down to some extent and we expect prices to normalize by end of December’22
Knits
▪ Commercial production started on 1st July 2022
▪ Low-capacity utilisation during Q2FY23, due to teething challenges
▪ Since it is our new product in our basket of offerings it may take a few more months to reach an optimum level
Commenting on the results, Riju Jhunjhunwala, Chairman & Managing Director, and CEO of RSWM Ltd. said, “The last quarter was one of the most challenging quarters we have witnessed recently due to the macroeconomic business environment. We at RSWM continue to focus on operational excellence and optimize costs at different levels to manage our working capital well and generate cash to support our growth engine. Currently, we are closely watching the cotton prices which peaked in Q2FY23 and now it’s stabilizing on the onset of new crop arrival we expect a further correction in cotton prices. Secondly, Marco’s economic environment such as the issues of high inflation, interest rates increase, and gas prices increase due to the Russia-Ukraine is a cause of concern for demand globally in the short term.
But we are utilizing this period to build our customer relationships and ensure smooth functioning. Our view for the long term in textiles remains favorable. We have been taking all necessary measures to de-risk ourselves from supply chain disruptions and expect to see these efforts bear fruits next fiscal onwards. Due to the current volatile and uncertain environment, we believe that we will not be able to meet our guidance, and it will not be prudent on our part to give any future guidance until the situation becomes stable. All our projects and plans are on track, and I am confident that the current fiscal will be a one-off and not affect our long-term growth strategy and aspirations.”
