Third-quarter results from textiles and garments maker Arvind Ltd indicated that the economic recovery from the COVID-19 pandemic has been far from uniform across all sectors of industry.
While certain segments, such as two-wheelers and electrical equipment, have bounced back or even exceeded their pre-COVID levels, there are still others like textiles, retail and hospitality that continue to remain depressed.
In case of Arvind, one of India’s biggest textiles and garments makers, revenue for the final three months of 2020 was only 81% of the corresponding number for 2019.
Even within this, there was a definite skew towards casual and daily-use items, with woven demand for woven textiles remaining the most depressed.
While sales of denim were at 81% of last year’s numbers, those of garments were 89% of last year’s numbers.
However, revenue from the woven segment remained down 34% (see chart). Woven textiles are used for making traditional clothes, including formal wear and celebration wear.
However, people continue to avoid large gatherings for fear of contracting COVID-19, which has in turn depressed demand for formal wear.
Even within the woven segment, said Arvind, the mix has shifted towards lower price point products, such as those used for making daily-use items. The average price of a meter of woven fabric sold during Oct-Dec 2020 by Arvind was Rs 146, compared to Rs 167 in the same period in the previous year.
Even in case of denim, whose demand was supported by strong exports, average price realization fell to Rs 184 from Rs 188.
There was a higher recovery seen in ready-made garments prepared by Arvind, as they achieved 90% of the sales seen in the corresponding period of 2019.
However, given the steady improvement, sales are likely to normalize in the current quarter, according to the management’s projection for a 12% increase in revenue for the ongoing quarter vs Oct-Dec.
Arvind said it also expects domestic demand to continue its recovery momentum, especially given that the government is likely to allow relaxation on gatherings and functions.
Most of North and West India have already seen COVID-19 infection rates of 30%-60%. Given that the infected people are also those who move around the most, economic activity in these regions are fast approaching normal levels.