New Delhi, July 24 -- Polyester yarn manufacturers are expected to see volumes decline by 2-3 per cent this fiscal as higher crude-linked input costs arising from the West Asia conflict increase production costs, while cautious price hikes to protect demand are likely to weigh on profitability, according to Crisil.

The agency said crude prices are expected to average around 15 per cent higher this fiscal at USD 80-85 per barrel, directly increasing the cost of key raw materials. However, manufacturers are expected to adopt a measured approach to passing on these costs, resulting in average realisations rising by only 6-7 per cent as companies prioritise preserving volumes.

Crisil Ratings said the strategy is expected to reduce operating...