3rd CMAI Survey conducted amongst its Members reflects the crisis in the Domestic Garment. Which is going through, with 74% of its respondents seeing a 90% drop in sales for the quarter ending June 2020. An additional 13% indicated a drop of more than 75%. This indicates that 87% of the Industry saw a more than 75% drop in their revenues in the 1st quarter of 2020-21.
The projection for the coming quarter (July to September) is equally grim. 95% of respondents expect to operate at less than 50% of their Production capacity. Of these, as many as 68% of the respondents anticipate using less than 25% of their Production capacities in the next 3 months.
The respondents do not see much improvement in the next 12 months either. 21% of the respondents expect to operate at less than 25% of their capacity in the coming 12 months. And 46% expect to operate at between 25% and 50%. Which means almost half of the Industry expects to operate at less than 50% of capacity in the coming 12 months.
What is obviously adding to the worries of this largely MSME dominated sector. It is the drying up of working capital funds, with Manufacturers not receiving payments from the equally stressed Retail sector.
91% of the respondents have received less than 25% of their dues in the last quarter – and close to 85% are not expecting their dues to be cleared in the next 3 months. In fact, 44% of the respondents fear that 20%-50% of their dues will turn in to Bad Debts. And another 10% 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. Chief Mentor CMAI, Rahul Mehta, cautioned about the severe job losses in the Industry. “Looking at the survey results, I would not be surprised if close to 25% to 30% units shut down. I am also expecting job cuts of 25% to 30% 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.
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