Punjab textile units in the red

Businesses of most of the textile firms in Punjab that cater to domestic and international markets have been affected in the past two months in the wake of the global financial crisis.

Kamal Oswal, managing director of Nahar Industrial Enterprises Ltd, is worried as his company has lost about 25 per cent of its business. Out of the total turnover of Rs 2,000 crore, his company exports yarn, fabric and garments worth Rs 500 crore annually.

“The downturn in the US market has hit the bottomline which has squeezed our production. We have frozen recruitment due to attrition in the textile industry. If the situation does not stabilise, we might have to resort to layoffs,” Oswal told Business Standard.

Supreme Yarns Ltd of Ludhiana, a vertically integrated unit, has slashed its production by over 30 per cent, said Rajiv Bhambari, vice-president of the company.

The recent depreciation of the rupee had acted as a cushion for the exporters but that was offset by the revision in the cotton prices by 40 per cent, says Sunil Jain, president, Northen India Textile Mills Association.

Textile firm owners in the state expect their exports to come down to around Rs 800 crore this year, as against Rs 1,000-Rs 1,200 crore in the previous years.

President of the Ludhiana Knitters’ Association, Ajit Lakra, maintains that in view of the hike in the prices of raw material and fluctuations in the market, some of the export orders have been put on hold. As a result, expansion plans of various companies have also been restricted.

The cotton yarn mills in Ludhiana are operating at 40 per cent less capacity in view of yarn prices not going up in proportion to cotton prices, which have moved up by 25-30 per cent in past.

Also, garment manufacturers in Ludhiana are reworking their production that has been trimmed down according to the market demand.

Lakra, who is also the managing director of Superficial Knitwear, maintains the company had earlier planned to increase its garment production from 5,000 garments every day to 7,500 per day, but that has been put on hold.

Aarti International, which was planning to expand its weaving, processing and spinning units, has also stalled its expansion plans.