Coronavirus impact: Textile companies fear FY21 will be a washout

Getting adequate manpower to ramp up production is one of the major challenges the industry is facing, said Sivaramakrishnan Ganapathi, MD of India’s largest apparel exporter, Gokaldas Exports.
Textiles and apparel units are reopening slowly in areas where they have received permissions, but the situation is not very encouraging. Companies like Century Textiles, Gokaldas Exports, Filatex and several medium and small units in Karnataka, Ludhiana and Tiruppur regions have started operations at 25 per cent capacity.

R K Dalmia, president of Century Textiles and Industries, said, “While we have started operations at our plant, production of fabric or garments wouldn’t make any sense unless 90 per cent of both domestic and overseas markets open and consumer demand comes back.”

“We are eyeing Diwali as the possible opportunity for restoration of textile consumer demand. Financial year 2020-21 could be a washout for textile players,” Dalmia said.

Filatex India, a manmade fibers maker, has resumed partial operations at its Dadra plant to meet the urgent requirement of yarns. “Considering the current scenario, we are looking to restore normalcy in two to three months. We are even expecting orders to move from China to India,” said Madhu Sudan Bhageria, chairman and managing director of Filatex India.

Getting adequate manpower to ramp up production is one of the major challenges the industry is facing, said Sivaramakrishnan Ganapathi, managing director of India’s largest apparel exporter, Gokaldas Exports.

“We are now struggling to serve the orders we have. We are struggling to get workers, as there is no public transportation. If we don’t serve orders, people may shift back to Indonesia or Vietnam, wherever there is capacity. We want to get back to normal production,” Ganapathi said.

As of now, demand from export markets is higher than the capacities at which firms are operating. Gokaldas Exports expects to operate at 100 per cent capacity in June, if all goes well.

To address the labour issue, A Sakthivel, chairman of Apparel Export Promotion Council (AEPC), said the government should consider allowing 12 hour shifts instead of 8 hours with normal wages. Normal wage rate should be considered for the additional four hours rather than at twice the wage rate.

The Clothing Manufacturers Association of India (CMAI) has said garment retailers and traders are currently not allowed to register micro, small and medium enterprises (MSMEs), but they need to be allowed to register and get the benefits offered to the sector. The survival of retailers is important to create demand.

Further, many MSMEs are dependent on sub-contract orders from large manufactures, exporters, and retailers. The measures announced for the MSME sector in the Centre’s economic package, don’t cover retail trade.

“Since the entire value chain is impacted, support package has to be made available to the entire textile and apparel value chain — from textile to retail — both MSMEs and large companies,” said the Association.

Rahul Mehta, chief mentor at CMAI, said few factories had opened for regular production, and most catered to the domestic market.

Essentially the challenge is for whom and what do they produce, said Mehta. “Since retail has not yet opened up, there are no orders. Retail sales are expected to be at half for the next three months, hence with 40-50 per cent business, many factories will find it difficult to remain viable. There are about 75,000-80,000 units across the country,” he said.

Challenges ahead

  • Units in Ludhiana, Tiruppur, Karnataka begin operations at lower capacity
  • Production of fabric or garments makes sense only when domestic and exports market open
  • Retail trade, backbone for reaching consumers, needs support
  • Availability of workers when needed is a big challenge
  • Industry suggests longer working hours till labour is available

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