A variety of challenges were already giving tough times to apparel manufacturing business in India, but from March 2020 onwards, all challenges are evolving around the coronavirus crisis and its different aspects. Recently, many factories cleared their work in progress (WIP) on their shop-floor at various stages. Though global brands and retailers were quick to update these factories about the overall conditions after which many factories have planned and controlled production accordingly. In particular, factories are now taking quick decisions on fabric and some of them are avoiding the cutting of fresh fabric. So, such factories are able to avoid extra trouble in terms of WIP. They can use this fabric later with different options (especially in the case of grey fabrics).
It is pertinent to mention here that even in the first week of March, many factories across India were careful regarding coronavirus and kept a close eye on the temperature of workers. They were equally active on WIP front also. On 16 May, DGFT allowed export of non-medical/non-surgical masks of all types (cotton, silk, wool, and knitted). It also helped exporters, as their cut fabric was easily used for the same.
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To best serve the buyers and to ensure safety, few export houses are even in the process of sanitising the final garments also. On the other side, as many overseas buyers ‘cheated’ their suppliers and cancelled orders or asked to put the complete work on hold, many factories were concerned about cut fabric and cut pieces at the stitching stage or garment at finishing stage. Due to working capital crunch, exporters also wished to get rid of this WIP, and hence, they accepted the discount offers of overseas buyers.
Right after the negotiation finalised about discount and payment, factories resumed operations, and exporters completed their work on reduced rates and shipped on a priority basis. “There was no other way, so many exporters supplying on the discount basis to buyers was a natural option,” told Rajeev Bansal, MD, Celestial Knits & Fabs, Noida who is also Secretary, Indian Industries Association (IIA).
Many exporters followed the same path and out of them, some believe that by doing so, they have supported their buyers in this difficult time. Rajiv Kapoor, MD, Affordable Exports, Delhi, shared, “Industry has earned money for decades. Yes, there were always challenges and profit margins were thin. But as now buyers are also suffering, so if we can supply RMG on discount, it is like support to buyers and can strengthen long-term relations at least with old and good buyers.”
Irrespective of all the above-mentioned factors, there are few exporters who have a lot of cut pieces lying idle as buyers have completely denied taking orders. In such cases, exporters have decided to complete these garments and negotiate with other overseas buyers. The final option for them is to dispose of these garments in the domestic market which is indeed no gain, as they receive very less price for the same.
Having said that, it must be underlined here that there are several domestic manufacturers who are not much worried about ready goods with them. Some are of the view that they don’t see this as a problem at all, as they have the advantage of different product categories and client support. Manufacturers of products like basic tunics, nightwear, lingerie, undergarments and socks come under that category, as despite all challenges, these products are pretty much in demand, and seasons and fashion trends are not major aspects of these product categories. Some manufacturers of such products, who have their own retail operations also, are not worried and are assured of getting full price for their products.
On the other side, manufacturers offering fashion products to various brands and wholesalers have to face more difficulties, but they are also not much perturbed, as they are hopeful that their inventories will be cleared through discounted prices. Few of them are even planning for direct sales once the lockdown is over completely.
“The coming months will be definitely challenging, so we do have the option to use these inventories for the next season rather than disposing of the products at comparatively less prices. It is better to block capital for few months and get a good price the next season. Even our corporate buyers (India’s leading retailers) have also suggested keeping stock with us. There are enough chances that these buyers will buy stock next season,” shared a well-known manufacturer who works for many Indian brands, on the request of anonymity.
Some manufacturers are also in the process of changing the existing products to get more value (to make it different for the next season), be it little value edition or different finishes, etc. As per demand, price and allied factors, they will make these changes in the available products.
In India, majority of garment manufacturers are now working for export as well as domestic market and most of them have the right balance of both the market segments. This balancing act has helped them little in this tough phase of the pandemic, as their goods, ready to be shipped for export but denied by buyers, are now being sold in the domestic markets. Though the price is comparatively low in the domestic market, it is far better than the heavy discounts asked by the overseas buyers.
Many garment manufacturers have been sharing with Apparel Resources for the last few years that rather than focusing on their core business, their major role is now of troubleshooting, as every day there is a new problem. So, one should hope that whatever challenges are there in this unprecedented time or maybe in future, garment manufacturers will be able to come forward and give solutions.