Apparel makers stare at huge losses

Vijay C Roy

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Tribune News Service

Chandigarh, April 8

Amid global lockdown in the wake of Covid-19 pandemic, apparel manufacturers in Ludhiana are staring at huge losses. After global companies resorted to cancellation of export orders, now the brands retailing in the domestic market are following the suit. According to the manufacturers, in the past few days the domestic apparel brands have either cancelled their orders or pressurising them to offer huge discounts.

Perturbed over the situation, the exporters have already appealed to their buyers across the globe not to cancel orders due to lockdowns. The cancellation of orders meant for the domestic market has come as a huge setback for the garment makers. Almost 90% of the garment units in Ludhiana manufacture apparels for big brands.

“It’s a double whammy for the garment makers. The manufacturers are not only facing cancellation of export orders to the tune of 60% from overseas buyers but also in many cases the consignments are stuck which will lead to delay in payments. My own consignment meant for France is stuck,” said Harish Dua, managing director of Ludhiana-based KG Exports.

Many importers have also asked the exporters to hold back shipments till stores reopened and have sought the extension of payment terms.

“If that was not enough, now, leading apparel brands retailing in the domestic market and those who outsource garments from Ludhiana-based manufacturers are cancelling their orders. A few of them have also sought discounts to the tune of 30%,” he said.

He said the manufacturers were operating at very thin margin of about 10% and offering 30% discount was practically not feasible. “We are in huge trouble and planning to negotiate with our buyers soon,” he added.

Ludhiana contributes around 10% to the total exports from the country and caters to around 30% to the total domestic apparel demand. India exported $16.2 billion worth of garments in 2018-19 and as far as domestic market is concerned, it is bigger than the export market.

“My consignment is lying at ports as shipping lines are not operating. Moreover, my overseas buyers are not in a position to accept the consignments. On the one hand, our consignments are stuck, on the other hand, we are facing cancellations of export orders,” said Neeraj Arya, managing director, Different Garments (P) Ltd.

According to the industry, the cancellation of orders would lead to serious financial implications and their accounts would become non-performing assets for the banks.

“Our buyers are suspending orders and we don’t know what the future holds for us,” said one of the garment makers.

According to insiders, the countrywide lockdown has resulted in temporary shutdown of factories as well as layoffs of low-income employees in the apparel and textile sector.

The industry apprehends that even if lockdown is lifted in mid-April, markets are not expected to return to normalcy anytime sooner.