Indian companies in the commodity business from sectors including cotton and yarn, metals and mining, and capital goods are experiencing adverse impact of structural changes in the Chinese economy. China has recently been moving towards a consumption-driven economy after focusing on manufacturing for decades, leading to decline in China's imports of commodity products, while its exports of finished products continue to increase owing to excess manufacturing.
\Data shows that China imported 7 per cent less cotton yarn from India in the three months to October 2015 compared to the preceding three months; with the imports declining sharply in October impacting Indian companies like Vardhman, Nitin Spinners, RSWM, Sutlej Textiles, Nahar spinning.
Revenue of cotton yarn manufacturing companies may fall in the 5 per cent-10 per cent range in the second half, according to Sanjay Jain, VP, Hosiery Manufacturer Association of India, which he says could be a positive for domestic garment manufacturers as it will create reservoir of raw material leading to rise in profitability of several companies such as Indocount, Welspun India, Nandan Denim, Page Industries, Gokaldas and Arvind.
