Category: General
Country: India
The steep rise in costs of raw materials and the shortage of chemical agents, has forced processing houses to run fewer shifts. Vipul Desai, for instance, is using his goodwill with fellow processors to source discharging agents and soda ash to be able to complete some orders. But he must return the raw materials in a week.
April 18, 2022 5:45:00 am | By Nayan Dave
Weaving and processing units in Surat, the country’s biggest man-made fabric hub, are grappling with both input inflation and a shortage of key raw materials. Prices of coal and lignite are up over 100%, electricity bills are bigger by about 10-15% and the workers too are now demanding 10-12% more.
Aakash Patel runs a small weaving unit in Surat but of late he has not been able to deliver the finished products to his customers. The grey fabric has been made but there is a long queue at the processor’s end where it needs to be dyed and printed.
The steep rise in costs of raw materials and the shortage of chemical agents, has forced processing houses to run fewer shifts. Vipul Desai, for instance, is using his goodwill with fellow processors to source discharging agents and soda ash to be able to complete some orders. But he must return the raw materials in a week.
Weaving and processing units in Surat, the country’s biggest man-made fabric hub, are grappling with both input inflation and a shortage of key raw materials. Prices of coal and lignite are up over 100%, electricity bills are bigger by about 10-15% and the workers too are now demanding 10-12% more.
The textile cluster, in and around the commercial capital of south Gujarat, was just beginning to recover from the impact of the pandemic but that momentum has reversed. Polyester yarn prices have jumped 30% in the last six months, says Ashok Badani, who runs a processing unit making it difficult to buy in big quantities. Weaver Lalit Pipaliya says the steep rise in inventory costs is hurting to a point where the operations are being pared; very few units can afford to run two shifts and most are running just one 12-hour shift a day.
Before the pandemic, nearly 40 million meters of fabric was being processed every day but unable to fund the inventories, the output has been restricted to about 30 million metres a day. Unless the situation reverses, the Surat cluster, which by one estimate generated some `80,000 crore of sales annually pre-pandemic, will see the turnover fall to 60-65% of this amount in the current year.
Also, operating margins are being squeezed as not all the additional costs are being passed on to the consumers; processors say their margins have almost halved compared with the levels they made two years ago.
Of the 50,000 plus weaving units and more than 400 textile processing houses, over 75% are relatively small units or MSMEs. Their small capacities, according to Jitendra Vakharia, president of South Gujarat Textile Processors Association (SGTPA), make it harder for them to absorb the sudden hike in raw-materials and other costs.
“Processing houses are the biggest sufferers of higher raw-material prices in the entire value chain. The prices of discharging agents, including those for rongalite, sepiolite, sodium hydro-sulphite, have doubled in the span of seven to eight months,” says Vakharia. He says processors have been able to hike the end prices only by about 25%.
Surat’s textile cluster provides direct employment to over two million; for hundreds more, the commerce in the region is a source of livelihood. Raghu Yadav, a 40 year-old migrant who transports grey fabric from weaving units to processing houses, is worried about the slowdown. But he carries on regardless, trying to do at least three 10-15 km trips everyday even if it’s hot and humid. Else, his family of four cannot afford even a simple life.
Courtesy: https://www.financialexpress.com/industry/rising-costs-input-shortages-weigh-on-surat-textile-clusters-recovery/2494300/
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