India’s apparel exports have been under pressure for some years now. And 2020 could mark a new low for Indian garment exporters as even the big brand buyers have resorted to hefty order cancellations, deferments, and partial or non-payments. In an exclusive interview with Reena Mital from Textile Excellence, Ashok Rajani, Director, Midas Touch, said best purchase practices and global rankings for buyers and suppliers based on their ethical business practices will be the order of the day, in the future.
By when do you think you would be able to restart operations?
Apparel production has been on standstill since the lockdown in March 2020 and the uncertainties of order position, logistic challenges and worker availability among other things, has put a question mark on the future plans of restart of production.
Have you planned the process – in terms of maintaining hygiene and sanitisation, social distancing, protective wear, etc among workers and employees?
We have provided training to the workforce on guidelines to be followed as we restart the operations to maintain hygiene and sanitation along with coping with mental stress due to the changed ways of working during the pandemic. They now know the significance of social distancing, use of PPE, washing hands, seating etiquettes, symptoms reporting and precautions.
What challenges do you anticipate in terms of labour, raw materials, machine operation and maintenance, etc?
The industry is heavily dependent on migrant workers. Industry is apprehensive of labour availability once normalcy resumes, as workers who have gone back to their villages may take time to come back.
It will impact our capacity utilisation. There has been severe impact on order position of exporters, apparel consumption, working capital, raw material, pending refunds. Indigenous and imported supplies of fabrics, trims, accessories, etc have been disrupted due to lockdown. Many are facing constraints like access to manpower, access to raw material and movement of products.
Revenue will be impacted by orders cancellations, non-availability of raw materials, non-availability of workers, transport/logistic issue and inventory obsolescence. We have requested states to allow our apparel exporting units to start operations on the lines of an EOU, as they are on a similar footing.
Some in the industry are genuinely unable to incur expenditures and meet financial obligations. How are you placed?
The cancellations, deferments and postponement of shipments have resulted in packing credits being eroded, and impacted the fund-liquidity position of the exporters, which is in a precarious condition, as the cash flows have completely stopped.
In terms of business, how do you see the export markets evolving?
Overseas buyers and buying houses were postponing confirmed export orders indefinitely and holding back or indefinitely deferring the payment for goods already shipped or ready-to-ship and asking for hefty discounts.
Buyers were not making payments for goods where delivery has already taken place and existing shipments are on hold either on ships or are lying in the warehouses/factories/ports. With intervention of government, things are easing out and discussions are on for better business that is – Commerce with Compassion. There will be a steep decline in the revenue in the coming times. Few new orders are being placed by the buyers.
What strategies are you following to stay on course in these times?
We are engaging with the authorities on a daily basis to resume work even partially with minimum workers to salvage some of the orders and prepare for getting some orders for the autumn and winter seasons.
We are following all the guidelines to restart the operations and ensuring that the workers feel safe and have all the safety gears and procedures in place at work to maintain health and hygiene, so that we can take advantage of whatever orders that come by. Some of us have even started or plan to start producing PPEs for the sudden upsurge in its demand.
What changes do you anticipate in your relations and/or way of doing business with your international buyers?
The current crisis has surely impacted the trust between the buyers and the apparel exporters as many have not only cancelled future orders but many big brand buyers have also not paid for goods shipped or in production.
Some have demanded hefty discounts and many have either cancelled the entire order or have partially cancelled and partially postponed. Post Covid-19, all these practices will come under review and we may need an agreed set of guidelines for best purchase practices. We may also have global rankings for buyers and suppliers based on their ethical business practices and trustworthy business partner.