Rated garment makers to buck weak industry trends: Crisil

The US and Europe together accounted for over 60 per cent of the country's garments exports worth USD 11 billion in 2010-11.

By PTI | Updated: Mar 01, 2012, 10.54 PM IST

NEW DELHI: Ratings agency Crisil on Thursday said that over 180 rated garments manufacturers are ready to tide over the challenges posed by uncertain global economic environment thanks to their sustained growth in the previous years.

These entities have maintained a compound annual growth rate of 16 per cent in the last five years till March 2011, CRISIL said.

However, it did not mention names of the rated companies. Though dependence on overseas (especially EU and US-based) customers increases the industry's vulnerability to global economic conditions, steady margins and cost efficiencies will help the firms withstand demand decline, it said.

The US and Europe together accounted for over 60 per cent of the country's garments exports worth USD 11 billion in 2010-11. The company has rated 181 apparel players accounting for a fifth of India's garments exports in value terms, CRISIL said.

Further, it said the industry is highly fragmented and exposed to risks relating to small-scale operations and customer concentration.

"We expect the rated players to buck the industry trends, and maintain growth of 4 to 5 per cent over the medium-term, supported by their ability to closely align internal processes and quality standards," CRISIL Ratings Director Gurpreet Chhatwal said.

Besides, the rating firm said Technology Upgradation Fund Scheme (TUFS), if extended beyond March 2012 will serve as a fillip to the apparel sector and result in fresh capex over the medium term.

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