Home textile exports from India are facing a sharp decline of 16-18 percent in the current fiscal year (FY23) compared to the previous year (FY22), as the demand for these products slows, particularly from the US and Europe.

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Sivaramkrishnan Ganapathi, of Gokaldas Exports, appeared on CNBC-TV18 to discuss the company's recent performance. He reported that although the company has become more efficient, the demand in the western market has seen a slowdown.

Despite this, Ganapathi expects growth to pick up in the second half of the fiscal year 2024. He also believes that the recessionary effect in the US will be out of the way by the second half of the fiscal year 2024.

Following a surge in textile exports during FY21 and FY22, the Indian textile industry experienced a 13.4 percent year-over-year decline to reach USD 23.1 billion from April to November 2022.

This contraction is in sharp contrast to the impressive growth seen in FY22, where exports reached USD 44.4 billion, driven by increased demand resulting from the pandemic and the "China+1" importing strategy.

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Home textiles are a significant contributor to the textile sector and have seen substantial growth, with exports increasing by 34 percent in FY21 and further by 12.6 percent in FY22, second only to ready-made garments.

However, despite the initial growth, exports began to level off in Q2 FY22 due to a combination of rising commodity inflation and the onset of a global recession, which had a significant impact on growth.

The operating margins for the leading four listed home textile companies, which hold a market share of 30-35 percent in India's home textile exports, have seen a decline on a quarterly basis and are predicted to decline further by 400-500 basis points in FY23.

The reduction in demand and increased operating costs due to decreased capacity utilisation have impacted the margins, despite a decrease in cotton prices.

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However, Ganapathi expects growth to pick up in the second half of the fiscal year 2024. He expressed confidence in the future growth of the company, particularly in the latter half of fiscal year 2024.

To ensure stability, the company is prioritising margin maintenance. Ganapathi also provided a revenue prediction for fiscal year 23, with a range of 2,200-2,300 crores and a potential for sequential growth starting from the next quarter.

He believes that the recessionary impact in the US market will dissipate by the second half of the fiscal year 2024. Despite the current softness in the market, the company is determined to maintain a margin of 11 percent, he added.

Watch video for full interview