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Inventory up by 30% for Surat textile industry on low demand

Economic slowdown coupled with liquidity crisis in the market has led to subdued demand for textile products from the city

Vinay Umarji  |  Ahmedabad 

The Surat-based textile is witnessing an aggravated over supply situation with demand for textile products has been more or less stagnant since last six months. Inventories at textile units have risen by 20-30 per cent, say players.

According to sources, economic slowdown coupled with liquidity crisis in the market has led to subdued demand for textile products from the city. Moreover, reduced demand has resulted in buyers keeping less stock with themselves leading to higher inventory for textile makers in Surat.

"It is a buyer's market with Surat based textile makers having produced more than the demand from buyers. Orders are declining and becoming more sporadic. Also, the subdued demand has led to buyers keeping less stock with themselves, resulting in increased inventory for us," said Devkishan Manghani of Federation of Surat Textile Traders Association (FOSTTA).

Add to that, fluctuating fuel costs have added to their woes too.

"Earlier, almost all the units were running in natural gas. However, with continual price rise, the fuel was becoming unviable, thereby forcing textile units in Surat to turn to imported coal and lignite. However, there have been supply as well as cost issues with the current fuel arrangement which have aggravated under the over supply situation," said Jitu Vakharia of South Gujarat Textile Processors Association (SGPA).

On an average day, around 50-60 trucks would ply to AP from Surat carrying ready made sarees, dress materials and other textile products worth roughly around Rs 10-12 crore. However, with subdued demand, much of the produce is lying with textile units and traders in Surat, leading to a rise in inventory by 20-30 per cent, Manghani added. It needs to be mentioned here that annually, the Surat based textile industry's turnover is pegged at roughly Rs 90,000 crore, of which Rs 40,000 crore alone comes from finished goods such as apparel and sarees, while rest is distributed into other verticals such as spinning, weaving, processing and fabric sales, among others.

First Published: Tue, April 07 2015. 20:59 IST