The 3rd survey conducted by CMAI amongst its members reflects the crisis the domestic garment is going through, with 74 percent of its respondents seeing a 90 percent drop in sales for the quarter ending June 2020. An additional 13 percent indicated a drop of more than 75 percent. This indicates that 87 percent of the industry saw a more than 75 percent drop in their revenues in the 1st quarter of 2020-21.
The projection for the coming quarter (July to September) is equally grim. 95 percent of respondents expect to operate at less than 50 percent of their production capacity. Of these, as many as 68 percent of the respondents anticipate using less than 25 percent of their production capacities in the next 3 months.
The respondents do not see much improvement in the next 12 months either. 21 percent of the respondents expect to operate at less than 25 percent of their capacity in the coming 12 months, and 46 percent expect to operate at between 25 percent and 50 percent. Which means almost half of the industry expects to operate at less than 50 percent of capacity in the coming 12 months.
What is obviously adding to the worries of this largely MSME dominated sector, is the drying up of working capital funds, with manufacturers not receiving payments from the equally stressed retail sector.
91 percent of the respondents have received less than 25 percent of their dues in the last quarter – and close to 85 percent are not expecting their dues to be cleared in the next 3 months. In fact, 44 percent of the respondents fear that 20-50 percent of their dues will turn in to bad debts, and another 10 percent expect even a higher percentage of bad debts.
“All these findings reflect an extremely grim future for the Garment Industry, and survival of many of the smaller players looks extremely doubtful,” said Rakesh Biyani, President of CMAI.
“It will take at least another year for our Members to reach back to the normal business conditions,” added Rajesh Masand, Vice President.
Rahul Mehta, Chief Mentor CMAI cautioned about the severe job losses in the industry. “Looking at the survey results, I would not be surprised if close to 25-30 percent units shut down. I am also expecting job cuts of 25-30 percent even in the companies that somehow survive this year,” opined Mehta.
The industry currently has around 85,000 factories, largely in the MSME sector, and employed around 12 million workers in the pre-COVID era.