Coimbatore: A study conducted by textile industrial association Indian Texpreneurs Federation (ITF) on the current state of the sector has shown that about 45% of the firms across the state are facing a ‘severe or very severe’ crunch in their working capital requirements, which is affecting their performance.

Convener of ITF Prabhu Dhamodharan said they had conducted a survey among textile entrepreneurs in spinning and readymade garment sectors in September and November, in which more than 300 entrepreneurs participated. “We conducted the study in three levels. First was a survey among the participant units, where participants mentioned that a lack of sufficient working capital was the single largest reason for their poor performance. 

Following this, we compared the result with credit rating agencies’ profiles of the units, where the results were in agreement. In the third level, we collected three years’ balance sheets of the participants and analysed financial results. All the three results showed that 45% units face working capital issues. Small and medium industries face this more. Working capital issues affect performance. The difference between a strong player and these units is lack of money. This leads to increase in manufacturing cost,” he said.

Volatility in cotton prices, Eurozone crisis and extended credit due to liquidity crisis in the system were some of the reasons for the shortage of working capital, Dhamodharan said. “ITF submitted the results to the Centre. We met the textile minister and the textile secretary 10 days ago and explained the findings with data. They said our study was Tamil Nadu specific and asked for a pan-Indian study to ascertain whether this was an area-specific issue or an overall issue.”

Following this, ITF appointed research firm Crisil Limited to conduct a pan-India study. “They will submit a report covering 1,800 units across India in 30-40 days.”

Of these, 1,146 would be spinning units and 690 would be readymade garment units in Tamil Nadu, Karnataka, Gujarat, Maharashtra, Punjab and NCR region. “The firm will analyse financial performance of spinning and readymade garment units from 2016 to 2019. It will arrive at pan-India rating distribution of rating profiles of various textile clusters to understand cluster-wise performance of units. It will also compare the performance trends of listed companies with smaller, unlisted entities to draw inferences on the financial health of the sector. ITF will submit the result to the ministry of textiles and ministry of finance,” Dhamodharan added.

Published On : 10-12-2019

Source : Times of India

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