Covid 19 | News & Insights

LOCKDOWN – What Next?

Published: April 8, 2020
Author: TEXTILE VALUE CHAIN

 

Rajesh Balkrishna Padalkar – Owner of BLKRSNA MEDIA EVENTS HOSPITALITY

Straight to the point. We in India have roughly 50 million spindles working right now. Taking an average of Ne 30’s count the per spindle production would be approximately 200 gms/shift. In a day that would be 600 grams and with 90% efficiency we can take it as 550 grams per day. It would mean 0.550 x 5 crore = 2.75 crore kilograms of yarn per day. So 2.75 x 21 days = 57.75 crore kgs of yarn in 21 day Lockdown period will not be produced. Assuming its at Rs 180 per kg, 57.75 x 180 = Rs 10,395 crores of loss to the Indian spinning industry.

The obvious question is What Next? So, the first scenario is that we had many persons entering the country via Mumbai in Maharashtra. Quite a few people returned to Punjab, Kerala and other states before the Lockdown21. Now we have many people in their houses who might show positive signs and will come out in the next few days. First week of April is very crucial. With a population of 1.3 billion at the time of writing this article the known cases in Maharashtra alone were 1000+. If somehow the all India figure till April 14 2020 remains below 5000 or max 8000, then it will be a huge success to all the government agencies and women and men who were working selflessly to take care of the patients. God forbid if the tally goes above 10,000 then we have to be mentally prepared perhaps for another Lockdown15. If that happens then the losses would jump to approx. Rs.17,820 crores. This we are talking only of the spinning industry.

Let’s accept the fact that none of the consultants, gurus, advisers and pundits would have imagined this disruptive scenario in their visions circulated earlier. None of the corporates would have had a Plan D ready for such a scenario. All the CAGR numbers predicted earlier are now null and void. All of us suddenly are in this unique boat which is sinking faster than the Titanic, and nobody knows when we will reach the bottom. The gravity of the situation can be judged by the fact that 5 star hotels are now giving home deliveries of food items. Hmm…its that bad.

The traditional growth drivers like, heavy demand of exports, organized retail sector along with e-commerce shopping, competitive advantage in manufacturing costs, rising income levels and favorable demographics may not immediately apply. Entire world would be first trying to take care of their individual industries. While the whole world is fighting the virus, China has already re-started its industry.

Factors which will come in affect while we re-start are:

Independent states – Depending on the status of positive cases, all the states may not revoke the lockdown at the same time. As all our businesses are interlinked, this factor will be a deterrent even before we re-start.

Labour – persons who had migrated to their home towns will think twice before leaving their houses so soon again.

Stocks – most of the mills must have huge stocks of yarn with them. First priority will be to disperse it off first which may be difficult.

Spare parts – After a long gap there might be problems with re-starting all machines. Many may need urgent spare parts. Availability of such critical parts will be an issue.

Transportation – Trucks which now have stranded at various places before the lockdown may not be available for next assignments so soon.

Cotton – The cotton available now with mills is from the third pick. So, it will have its affect on the quality of the yarn produced. Ring frame speeds also may have to be compromised to get desired quality.

Exports – There surely will be no demand from China. Indian spinners will have to brave up to the situation and try to grab the opportunities left open by China.

Govt policies – They will come but they will be more of long-term sops. So the industry will have to try to find ways to help itself. Individual states will come up with lower power rates. Some more reliefs in various taxes may be given.

Austerity measures – Already most CFO’s are busy “working from home” making plans for various measures to keep the financial liabilities at the lowest in the near future. The imminent salary cuts will reflect poor balance sheets and keep the staff’s morale at the lowest.

Spinning manufacturing units – They exist at the extreme other end of the textile value chain. Its only when the spinners make profits, will they expect new orders and deliveries. Apart from this they will have another problem – most of them import critical parts from China, Vietnam or European countries with a lead time of 3 months. These parts will not be quickly available.

Domestic demand – This is the industry’s best bet and every body will have to work in the same direction. Luckily India has presence in the entire textile value chain. The bigger textile houses can come up with new ideas and support the smaller companies with temporary tie-ups.

Overall, the sentiments of most industry experts are that Q1 and Q2 of 2020-21 would be utilized to bring the industry back on its tracks at the earlier status.

In the meanwhile, we as the Common man, lets travel to Indian tourist spots for our next vacation. Let’s travel by Indian railways and airlines more. Let’s stay at Indian chain of hotels. Let’s buy gifts from Indian artisans, items from local vendors and kirana stores. Let’s celebrate our birthdays and throw parties at local restaurants and still be cool about it.

Be Indian Buy Indian and India First would be the best mantra to follow and help each other.

Further views, comments, suggestions are welcome in the comments section below.

 

Rajesh Balkrishna Padalkar

BLKRSNA MEDIA EVENTS HOSPITALITY

 

 

 

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