JOIN USApparel Industry may take a hit of Rs 1 lakh crore: CMAI
The domestic apparel industry could take a hit of almost Rs 1 lakh crore due to the lockdown and the slow down in economic growth that may follow, according to a survey by CMAI.
Over 1,500 members of The Clothing Manufacturers Association Of India (CMAI) with sales of about Rs 60,000 crore and employing about 400,000 people have reported the estimated drop of 40% drop in demand after the lockdown would mean that almost 50 lakh jobs in the apparel Industry are at risk.
While 81% of the members have received cancellation of orders, 20% indicated that they may consider closing down their business.
Meanwhile, 80% of participants have indicated that they will need to down-size their organisation immediately. A minimum 30% reduction in employee count and about 20% reduction in salaries for all continuing employees is the action that CMAI members are likely to take to ensure survival after the lockdown is lifted.
The survey further stated, “90% members of the association expect 30-40% increase in inventory due to zero sales during the lockdown. 100% of members are worried of collection from trade post the lockdown. 25% of the collections may become bad-debts and members expected a minimum 90 days additional delay in collections.”
“The choking of working capital, will lead to a delay in reviving factories and thus 75% of the members expect normalcy in the market only in FY22,” it added.
Rahul Mehta, President, CMAI said, “Even after the lockdown is lifted, Retailers are unlikely to place immediate orders as they too would be carrying their inventory. Cash flow will be very hard to obtain. Bank support will be hard to come by. All in all, only the very tough are likely to survive. It is going to be a bloodbath.”
CMAI has close to 4,000 members primarily in the domestic branded apparel manufacturing.