Following a weak festive season in Ahmedabad, the Maskati Cloth Market Association (MCMA) finds itself in doldrums. With demand for grey cloth and fabric declining by 20 per cent, several of the association members are incurring losses worth crores.
According to Upendra Dalal, secretary of Maskati Cloth Market Association (MCMA), demand for grey cloth and fabric has been declining in spite of the festive season in the market. "In the last week of December we had Christmas and New Year. Followed by that, in the middle of January we had Makar Sankranti. In spite of such back-to-back festive season, demand for grey cloth and fabric has been hitting downhill. Moreover, this has impacted demand of ready made garments as well. Several of our members have incurred losses worth crores of rupees," added Dalal.
Such has been the impact of declining demand that almost 10 per cent of the 2,000-odd members have temporarily shut down their production. Most of the members at MCMA are involved in manufacturing or trading of grey cloth and fabric in and around Ahmedabad.
Earlier, to battle high input costs and lower margins, several members of MCMA had opted for outsourcing production temporarily. However, a few months back they had begun producing it on their own, hoping for the festive season to bail them out.
"Weavers in Ahmedabad imported looms under the Technology Upgradation Fund Scheme (TUFS) and improved their quality. With the availability of job work and increasing overheads, mills had found outsourcing a better option. But as the festive season was nearing, many returned to production hoping for the demand to rise. Instead, demand fell by around 20 per cent," said a member of MCMA.
Apparently, by outsourcing weaving work these mills used to save anywhere between 5 per cent and 10 per cent of their costs. Moreover, it had brought good news for the weavers as well since their margins became better from 2.5 per cent to 5 per cent.