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Payment defaults puts textile suppliers in lurch
13
Oct '09
Mr Devkishan Manghani
Mr Devkishan Manghani
The concurrent festive season along with bringing cheers to the textile sector, is also adding to the woes of a few. According to reports emanating from the synthetic textile cluster of Surat, a few traders have declared bankruptcy, to the bewilderment of their creditors.

The last few months have been tough for the 50,000 odd textile traders of the city, whose order position had slipped abysmally in the last few months, due to a demand fall from the Northern and Southern India markets.

According to Mr Devkishan Manghani, General Secretary Federation of Surat Textile Traders Association (FOSTTA), there are two types of defaulters. One who do it intentionally, with a planned modus operandi. Such kind of defaulters starts doing business in the market with a small rented shop and trade for a period of two to six months.

“They try to purchase maximum stock from the suppliers and also give higher prices for the textile materials when compared to normal prices prevailing in the markets, due to which textile material suppliers get attracted to such traders, who later run away, leaving the suppliers in the lurch”, he said.

He added by saying, “The other kind of defaulters is more genuine & real. They get trapped in the usual ups and downs and price fluctuation in different products seen in the market as they would have purchased goods at a higher price, the price of which later falls down, due to which they may suffer heavy losses”.

Mr Manghani confirmed that the payment defaults are as high as Rs 40 crores. Mr Manghani has a word of advice for textile suppliers. Check the credentials of a new trader, before conducting transactions with him, because this is the only solution to avoid defaults in payments.

He also urges the suppliers to transact in cash payment as far as possible or give maximum credit period of 45 days and at the same time exercise caution on the volumes of transactions they conduct with these new traders.

Fibre2fashion News Desk - India

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