Profitability Analysis of Cotton Processing Industries ‑ A Study in Telangana State, India

The purpose of the study is to evaluate the financial performance of cotton processing plants. Adilabad and Nalgonda districts in Telangana state were selected as study locations and data were gathered from a sample of 10 ginning mills, 10 spinning mills, 10 weaving mills, one dyeing and printing mill and one garment manufacturing unit by using the personal interview technique. To analyze the collected data breakeven analysis and profitability ratios namely gross profit margin, operating profit margin, pre-tax margin and net profit margin were worked out. The study revealed that all cotton processing plants are processing enough additional cotton than is required to achieve breakeven point and profitable ratios are also shown positive financial position and shock absorbing capacity of the processing units. The highest gross profit margin was observed in garment manufacturing unit (23.11%) followed by spinning mills (21.92%). Whereas, highest net profit margin was seen in weaving mills (8.13%) followed by garment manufacturing unit (7.02%).