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Published on 14/03/2018 5:02:36 PM | Source: Motilal Oswal Securities Ltd

Agri And Textile Day: Post-conference takeaways - Motilal Oswal

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Agri & Textile Day: Post-conference takeaways

We recently organized the ‘Agri & Textile Day’ Conference, which was attended by 12 corporates (8 textile companies and 4 chemical companies) and 8 experts in various fields (2 farmers, 2 agrochemical dealers, 1 chemical expert, 1 seeds & agri expert, 1 cotton expert and 1 retail dealer). Key takeaways:

Agrochemical: An opportunity in adversity

Agrochemical companies need to focus on marketing, as farmers tend to choose products depending on their experience and word of mouth. Although branded products are more popular among farmers than a particular chemical composition, educating the farmer is crucial, as smaller firms try to replicate the brand logo of established brands for new product launches. Thus, opportunities are immense for established companies, provided they are able to create awareness about their products by employing the right strategies.

Chemicals: Specialty chemicals is the way forward

India has an edge over China when it comes to specialty chemicals. The shutdown of a number of Chinese chemical companies due to environmental concerns has provided huge opportunities to the Indian chemicals industry. Factories in China are considering relocating to other areas, but not the entire shutdown capacity will come into stream in the near term. This might lead to unmet demand now shifting to India. An expert from the chemicals space highlighted the importance of good manufacturing practices and opined that adherence to environmental norms is critical for sustainability of any chemical company. Looking at the environmental clearance track record of a chemical company is extremely crucial.

Textile: Business likely to return to normalcy

The exports business of textile companies is likely to bounce back in FY19, led by restocking by retailers in the US. Cotton prices and intensifying competition still pose a challenge, but currency depreciation is proving good for exports. Textiles expert believes that companies will focus more on increasing presence in new markets to drive growth. Structural shift from unorganized to organized trade in the domestic market has been slow and not panning out as expected. However, stabilization of GST-related hurdles, along with e-way bill implementation, will make it difficult for unorganized players to operate, going forward, creating opportunities for the organized players. Overall outlook for the domestic textiles market is sanguine.

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