A Force Majeure situation, whole supply chain adversely affected
Vardhman is one of the
largest integrated textile manufacturers of India producing yarn, fabric,
acrylic fibre, garments and special steel. In a chat with Fibre2fashion, Mukesh
Bansal, General Manager, Vardhman, gives an overview of the current COVID-19
situation on how it has impacted the garment industry and the steps the
government should be taking.
In view of COVID-19, factories have reported cancellation of orders from brands / retailers. How do you view the current situation?
In the light of this pandemic, government had to issue orders to close the retail stores. With brands having to shut down the sales, manufacturing companies including Vardhman started receiving messages for holding the production. Immediate action was taken to hold the production as is where is.
When the situation worsened, customers started cancelling the orders as it was being speculated that the stores could remain shut for a whole season. The current situation still remains uncertain. A lot of orders are cancelled or are on hold and no new orders are coming.
This is a Force Majeure situation and the whole supply chain has faced adverse effects economically. When stock in retail is not moving, naturally production will be impacted. However, this is a temporary phenomenon and we support the government for the actions and decisions that have been taken to safeguard the lives of the citizens. Gradual improvement is anticipated by the industry post the pandemic is contained.
What are your suggestions / inputs to fashion brands / retailers on tackling this issue?
Our submission to all our customers is that orders for goods which are already manufactured shouldn’t be cancelled. They can lift the goods 2-3 months later, but cancellation of manufactured goods will be a huge loss.
How are you dealing with order cancellations?
Nothing much can be done for the orders that are cancelled. The whole industry will have to rebuild itself. We need to be future ready and look for new opportunities when lockdown opens.
What steps should be taken by the government keeping in mind the current COVID-19 situation?
Vardhman’s request to the government for steps to be taken to support the garment industry in view of the COVID-19 crisis (during and post COVID-19 crisis) is as follows:
The industry is under tremendous pressure owing to two major issues.
a) Constraint of working capital.
The payments are not being released by the brands. They are also facing working capital crunch. To combat this, government can finance the industry for next 12-18 months via lower rate of interest and extra funds.
b) Burden of fixed cost during the lockdown period.
The major fixed cost for industry during this lockdown is wages of the labour. Government can support the industry in this by enabling the employers to pay wages to the labour via financial assistance.
Published on: 28/04/2020
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.
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