...Fitch Ratings believes that the Indian textile and clothing sector (T&C) is undergoing a challenging phase, leading to weaker credit profiles. Profitability has been hit by a number of factors: high cotton prices, inflation\01led hikes in wages and other input costs, the higher c ost of credit and forex losses. Although revenue growth during the first half of FY09 (H109) was satisfactory for most of the companies rated b y Fitch, t he agency feels that this was mainly because of new c apacity coming on stream and sales in anticipation of the peak season (October December) in the domestic market. However, margins have come under pr essure pr imarily due to high input costs and higher o verheads on the back of increased capacities. Fitch has also seen increased pressure on the short\01term liquidity of the industry led by increased w orking capital requirements and lengthening cash cycles. Fitch s demand outlook for...
