Surat textile industry witnesses rise in inventory by 30pc over low demand

The Surat-based textile industry has been witnessing rise in inventories by 20-30 percent at textile units as the demand for textile products is more or less stagnant since last six months.

Due to economic slowdown coupled with liquidity crisis in the market has led to subdued demand for textile products from the city. Moreover, reduced demand has resulted in buyers keeping less stock with themselves leading to higher inventory for textile makers in Surat, according to industry sources.

Devkishan Manghani of Federation of Surat Textile Traders Association (FOSTTA) said that Surat based textile industry’s turnover is pegged at roughly Rs 90,000 crore, of which Rs 40,000 crore alone comes from finished goods such as apparel and sarees, while rest is distributed into other verticals such as spinning, weaving, processing and fabric sales, among others.

Surat is a buyer’s market, the textile makers having produced more than the demand from buyers. While the orders are declining and becoming more sporadic, the subdued demand has led to buyers keeping less stock with them, resulting in increased inventory.

On an average day, around 50-60 trucks would ply to AP from Surat carrying readymade sarees, dress materials and other textile products worth roughly around Rs 10-12 crore. However, with subdued demand, much of the produce is lying with textile units and traders in Surat, leading to a rise in inventory by 20-30 per cent. Moreover, fluctuating fuel costs have added to their woes too.

Earlier, almost all the units were running in natural gas. However, with continual price rise, the fuel was becoming unviable, thereby forcing textile units in Surat to turn to imported coal and lignite. However, there have been supply as well as cost issues with the current fuel arrangement which have aggravated under the oversupply situation, said Jitu Vakharia of South Gujarat Textile Processors Association (SGPA).