Guj textile units defer expansion plans

While the raw material prices are heading downwards seemingly, textile weaving and processing units in Gujarat have not been able to capitalize on them due to lack of liquidity. Moreover several of them have deferred their expansion plans amid economic slowdown.

“Several of us had been planning of making good the Technology Upgradation Fund Scheme (TUFS) announced by the government. While we have received the capital subsidy, we have not been able to fully implement the expansion plans. The economic slowdown has taken a heavy toll on our working capital lately,” said a textile mill owner. The units are in a fix after having order machinery as part of expansion plans without sufficient liquidity to pay for the same.

Some time back, several weaving units were also on the verge of closure following a glut in the grey fabric market after processing houses cut production by 30 per cent. The weaving industry had been reeling under pressure of dwindling sales of grey cloth ever since processing houses in Surat had literally stopped buying the fabric.

“Processing houses in Surat mostly import raw materials like chemicals and dyestuff for processing from China. They had cut down their production by at least 30 per cent ever since the raw materials supply had been affecting due to stringent measures by the Chinese government. But after Beijing Olympics, it is the overall financial meltdown which has led to the glut since weaving units are not able to sell their fabric to the processing houses,” said Devkishan Manghani, general secretary of Federation of Surat Textile Traders Association (FOSTTA).

There are roughly seven lakh weaving looms in and around Surat. Collectively, units process around 250 crore metres per day of grey fabric, while the city witnesses additional 50 crore metres per day being sourced from Bhiwandi. Through sales of grey fabric to processing houses, weaving units earn a revenue of Rs 15-20 per metres. With sales dipping by 30 per cent, the units are losing revenues worth Rs 15-20 crore.