New Delhi, Nov 24 (UNI) Profit of textile sector, among the worst hit by recession in the developed world, declined by 40 per cent; with 70 per cent of companies having suffered losses in the second quarter of this fiscal, an analysis said.
Aggregate net profit of 28 textile companies declined by 39.82 per cent to Rs 524.93 crore in second quarter of 2008-09 from Rs 872.31 crore in the year ago quarter, according to an Assocham Eco Pulse (AEP) study.
Of these 28 textile companies, as many as 20 suffered net losses, the analysis, based on results posted by these companies on Bombay Stock Exchange, added.
Worried over recessionary trends in the developed countries, which have been the biggest market for Indian textile, the industry has warned of five lakh layoff in the remaining five months of financial year 2008-09.
The study said 12 per cent rise in sales in the second quarter was almost negated by double digit inflation till September-end. Net sales grew by 12.29 per cent to Rs 7,016.33 crore in Q2 FY 09 from Rs 6,248.67 crore in Q2 FY 08.
It said the surging raw material cost, long power cuts, high credit cost and slump in demand contributed to the woes of textile companies.
It said borrowing cost of 28 textile units went up by 27.07 per cent.
Similarly, the industry had also to face 22.30 per cent rise in material cost, largely on account of surge in price of raw cotton to Rs 74.41 per kg in September 2008 from Rs 49.62 per kg in the year ago month. Cotton accounts for almost 74 per cent of total yarn output.
Nineteen companies said their power and fuel cost went up by 35.18 per cent to Rs 1,240.29 crore in the second quarter from Rs 917.50 crore in Q2 FY 08.
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