Mountain of unsolds hits garment cos

With the retail industry struggling to recover from the slowdown, sub-contractors, who supply to large garment manufacturers and retail chains, are bearing the brunt.

An official from Clothing Manufacturers Association of India said, “Retailers like Shoppers Stop have cut down on purchases. This has resulted in huge volumes of unsold inventory with garment manufacturers. This has impacted sub-contractors as orders from manufacturers have dried up.”

Domestic demand for textile items is down 14% year-on-year while exports have taken a 40% hit this year compared to the previous year.

Bangalore-based Maxim Marketing Media proprietor Sunil Heda said he managed to stay afloat in 2008, but this year the going has been tough.

From making and supplying 17,000 shirts for domestic clients last year, he is down to just around 10,000 shirts. Most of the earnings go into meeting salaries and there is little left for his family, he complained.

“While the salaries of workers have gone up very fast, sales volumes have dipped, hitting profitability,” Heda added. Though there are a larger number of clients now, they are buying fewer shirts, he added.

The textile and garment industry, accounts for nearly 20% of India’s exports and 16% of its industrial production.

With the global economy taking a big hit, large export houses like Gokaldas and Arvind brands have increased focus on domestic markets, hurting smaller players that were catering to the domestic market till now.  

“Whatever few orders are coming in, are being gobbled up by bigger companies and smaller players are getting wiped off. Many factories have closed down as there is no business,” said a sub contractor.
Arun Sirdeshmukh, chief executive, Reliance Trends, said, “Domestic manufacturers who are dependent on export customers are now taking up private labels for domestic markets more seriously now.”