Industrial units across Gujarat are battling working capital woes, amid growing costs of production and payment cycles getting longer. To make matters worse, higher freight, coal and gas costs are also making manufacturers shell out more.
Manufacturers in sectors such as textiles, chemicals and dyes, metal castings, plastic packaging, engineering goods — particularly micro, small and medium enterprises (MSMEs) — are reeling from a shortage of working capital.
Most are thus either downsizing production, cutting operational hours or simply keeping units shut. MSMEs which do not have large cash reserves are the worst off, say industry players.
“Exporters are already battling delays in shipments due to the container shortage. In most cases, manufacturers receive payment after shipments reach their destination. With shipments delayed due to the lack of shipping containers, payments are delayed by an additional 45-60 days. This adds to the manufacturers’ working capital constraints,” said Jaimin Shah, co-chairman, Assocham Gujarat State Council.
With higher input costs on raw materials and the industry operating on water-thin margins, MSMEs find it difficult to absorb the cost, state industry players. “Overheads such as Covid-19 related safety protocol, followed by higher fixed costs and lower utilization of capacity have added to the burden on working capital,” said Milan Thakkar, CEO, Walplast.
