Demonetisation: Shaken, but not out!

Cash crunch is very much the talk of the town today! Though demonetisation is a bold decision taken by the Government, it has left a sudden jerk in the entire textile chain. Textile retailers faced the immediate impact and other intermediaries in the value chain are facing it now with a lag of a few weeks with reduced orders due to slower offtake.

Speaking on the impact of demonetisation, Sanjay K Jain, Managing Director of T T Limited and Chairman of NITRA, says, “Demonetisation impact on textile industry is going to be deep and impactful. The domestic fabric and garment industry is 70 per cent unorganised and fragmented. They have almost come to a standstill due to shortage of working capital, lack of currency to pay workers and also slow down in receipts form customers. This has in turn impacted the organised yarn and fabric industry as they were suppliers to the unorganised segment. Further the winter sales have been impacted by 30 to 40 per cent leading to stock accumulation at all levels in the chain – this means capital blockage for one year and this will impact summer production as the funding capacity of manufacturers will be badly hit.”

He added, “However the organised sector will gain eventually, once things settle down and demand comes back to normal level in three to four months – as they being better banked will be able to produce using their infrastructure. Unorganised segment has to realise the writing on the wall and quickly start working towards reorganising themselves.”