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Liquidity crunch coupled with low market sentiments is robbing the Surat-based synthetic textile industry of festive season cheer. Dull business since past 4-5 months has created liquidity crunch among the man-made textile players, especially in the processing, dyeing and weaving value chain.
This has led to reduced ability among the textile players to process orders for the festive season this month.
"Even after elections, market sentiments have hardly improved. Hence, business is not moving at an expected pace. Neither demand nor sales are picking up leading to liquidity crunch among textile players, many of whom are yet to receive payments for sales of past 4-5 months. This has robbed their ability to process orders for the festive season," said Jitu Vakharia, president of South Gujarat Textile Processors Association (SGPA), adding that the reduction in business for this festive season could be around 10-15 per cent.
As against a festive season's sales of over Rs 3000 crore during last year's festive season, this year the industry expects to do 10-15 per cent less due to reduced capacity. However, according to Rakesh Chaudhary, executive director of South Gujarat Textile Exporters' Association (SGTEA), the slackening has not taken place in terms of festive orders.
"Orders seem to be more or less similar to last year. It is the ability to fulfill the orders that has seen an impact due to liquidity crunch. Add to that, due to the market scenario, even banks are taking more time to process working capital requirements of the industry," said Chaudhary.
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.
Meanwhile, the industry is anticipating further impact on its raw material prices due to the anti-dumping duty imposition on polyester imports from China, Korea and other countries. The industry fears the duty imposition will result in monopolistic pricing due to limited domestic manufacturers of such raw materials which include purified terephtalic acid (PTA) and monoethylene glycol (MEG).
