Over 65 per cent of top officials blame insufficient demand and raw material price mismatch for the lower capacity utilisation in Indian textile mills in October, as per a recent survey. Only 26.92 per cent units operated at a capacity of over 95 per cent. About 61 per cent of the respondents do not expect export demand to revive in the next 3 months.
Raw material shortage and labour unavailability were also cited as the reasons for reduced capacity utilisation, according to the survey of chief executives and top officials of textile companies conducted by the Confederation of Indian Textile Industries (CITI) to take stock of the performance of the industry in October.
Close to 23.08 per cent survey respondents operated their mills at less than 50 per cent capacity, The survey found that 19.23 per cent units ran at a capacity of 50-69 per cent, 23.08 per cent at 70-84 per cent and 7.69 per cent at 85-95 per cent.
Additionally, more than 30 per cent CEOs had stocks of finished goods of 1-2 months’ production. While 11.54 per cent responded on stock piling of more than 2 months. More than half of the CEOs had affirmative reply on increase in stocks during the last month. Over 65 per cent respondents had stocks of raw material in October. However, 58 per cent CEOs said that the prices of raw materials came down by 10 per cent in the last two weeks.
Close to 23 per cent CEOs confirmed the trend of order cancellations. Over 34 per cent people said they were not getting clear answers from the buyers, or the orders were postponed. Only 42 per cent respondents said that no orders were cancelled by their buyers. Eighty per cent people felt that demand remained weak, while only 10 per cent of the exporters are satisfied with the current demand.
The survey indicated that uncertainty was the key reason for order cancellations and postponements.