Demonetisation shrinks orders of Ludhiana hosiery, knitting units

Vijay C Roy

Tribune News Service

Chandigarh, January 20

After facing the brunt of demonetisation on the sale of winter wear, the hosiery industry and knitters in Ludhiana said it will also affect the sales during summer season. The industrialists said they had received 40% less orders this year from retailers.

The manufacturers said the retailers were conservative in placing orders and it was affecting their production. They said lower consumer spending had hit the domestic demand for apparels and other end-products of textile industry and as a result they were cautious and operating at 60-70% of the installed capacity for summer apparels. The manufacturers begin production of summer wear in November.

“We start production for summer apparels in November. Out of total output, around 70% is produced on retailers’ order while the remaining 30% is inventory build on our calculations. Having suffered loss in retailing winter wears, the retailers are cautious in placing fresh orders. As compared to last year, the industry is witnessing around 40% decline in orders by the retailers. Considering the present scenario, even the manufacturers are producing around 40-50% less products so that inventories don’t pile up,” said, Bhushan Jain, managing director, Vallabh Fabriks Ltd.

Perturbed over cash crunch, the retailers had started the sale season early this year, which hit their bottom lines. Since there margins have already been affected, the retailers are apprehensive in procuring summer wears.

Ajit Lakra, president, Ludhiana Knitters Association, said, “The knitters start manufacturing summer wear in November and their production is at peak in December. However, this year, due to cash crunch, many manufacturers in Ludhiana are operating at 60-70% of their capacity.”

The manufacturers added that the winter-wear inventory pile-up with the retailers had deferred their purchases and had also resulted in stretched payments.

This, in turn, affected the cash flow of the textile industry and impacted the demand for the entire value-chain. Since the textile retailers faced the immediate impact, the apparel manufacturers and other intermediaries in the value chain are also facing the heat now with the reduction in orders due to slower offtake of the channel inventory.