MUMBAI (Commoditiescontrol) – It has been a little more than five weeks into demonetization and respite not on the horizon, textile makers in major hubs of Ludhiana and Coimbatore are fast losing interest of doing business anymore this year. The most important winter and marriage seasons will almost pass away by the time things get back to normal.
Many traders, with whom CommoditiesControl spoke to, echoed disappointment in varying depth. They commonly said, without adequate cash it is difficult to conduct business as labourers are quitting, raw material and other inputs buying is difficult and moreover, many who can deliver goods fear default or delays in receivable.
Said Sharma, “My stock was dispatched on November 2 (a week before the currency ban announcement) and payment was promised within one week. However, till date I haven’t received my payment,” understanding the plight of his regular buyers. Majority of traders, like Sharma, are scared to transact anticipating delay in receiving payments, which can derail business cycle.
Even mills and powerlooms working on cashless transactions, fear payment delays since the last point of sale, the retail business, is 95 per cent cash based. And retailers feeling the heat of demand compression, are ending up holding huge stock of goods for sale. This is the situation at all every stage where goods change hands.
With this in view, mills and powerlooms in Coimbatore are shutting down and trading has come to standstill. Prices are being quoted and only need based looms are purchasing to continue their operations.
Pranay of Ludhiana said volumes have declined 50 per cent and most knitters have shut down operations. The situation is unlikely to improve soon he believes. Old stocks are brought out for sale since no one is interested in purchasing new stock. Buyers now, who were strict on delivery deadlines, no longer care for deadline and do not mind delivery at later dates than the deadline. Prices are just quoted, but no deal is concluded even at lower than quoted price as retail demand is almost void.
Thus, it appears that textiles makers could not reap the benefits of ongoing seasonal demand and will see their balance sheet in red, hoping for recovering current losses in the next season.
(By Commoditiescontrol Bureau; +91-22-40015522)