Small companies worst hit by fall in textile exports

The ongoing global economic crisis has hit Indian textile exporters hard, but the brunt of it is being felt by the small and medium export firms, as large export houses have managed to retain healthy order books.

Big textile companies say order books have remained stable in terms of volumes but the price per order has come down. However, small and medium exporters are finding it difficult to retain existing clients or generate new orders.

“There is some stress on the financial front, as customers are demanding extensions in credit payment schemes, but majority of high-end exporters like us are not severely affected,” said Sudhir Dhingra, managing director of Gurgaon-based Orient Craft Ltd, a textile exporter with a turnover of around Rs 700 crore. He said the bookings had not decreased despite the current economic slowdown.

The Union textile ministry estimates Indian exports to contract 30 per cent in the fiscal ended March 2009. In addition, exporters are also complaining of rise in payment defaults. According to the Export Credit Guarantee Corporation of India (ECGC), which provides insurance cover to exporters, insurance claims rose 60 per cent in 2008-09, with nearly half of these from the textile industry.

Rajan Hinduja, managing director of Bangalore-based Gokaldas Exports Ltd, said there was a “small dip” in their exports but the customer base was intact. “We were averaging a turnaround of Rs 270 crore every quarter, but now it might go down to Rs 255 crore this quarter,” he added.

Medium, small exporters adjust to drop in orders:
The medium and small export companies have been compelled to devise ways to combat the slowdown. Apart from cutting workforce, they are reducing work hours and the number of working days. “I know firms in Noida and Okhla that have reduced working days from 6 to 4 and cut working shifts from 6 to 3,” said Sudipt Arora, a member of the Apparel Export Promotion Council (AEPC).

H K Maggu, MD of Jyoti apparels, a Delhi-based exporter with a turnover of Rs 90 crore, said the firm had suspended operations in two of its factories as there were not sufficient orders.

Though most exporters believe that things would improve by October this year, they are also trying to reduce their dependency on the US and European markets.