One more Surat textile firm goes bust

Soon Surat may earn a new sobriquet: City of vanishing textile firms. So many firms have vanished into thin air that serious questions are being posed on the very existence of Surat's textile industry.

And there seems to be no abatement in the vanishing act. On Monday one more textile firm, Hema Silk Mills, has vanished from the city duping weavers and traders to the tune of Rs 4 crore.

The firm, situated at Kohinoor Market, Ring Road, was owned by Ramchandra Sharma, a native of Jaipur in Rajasthan.

According to industry sources, some cheques issued by the firm had bounced in the previous week. Sharma had assured the creditors that they would be paid on Monday.

But that promise also vanished into thin air along with the owner. Some of the creditors have also file a case against the owner with the Salabatpura police.

Weavers are believed to have suffered the most due to the latest vanishing as the had purchased huge quantity of high quality grey over the past few weeks.

"We have not received any complaint regarding Hema Silk Mills from our members, but it is certain that the firm has vanished. The loss, according to preliminary estimates, is around Rs 3.50-4 crore," Devkishan Manghani, vice-president of Federation of Surat Textile Traders Association, told Business Standard.

Manghani blamed the weavers and traders for the increasing trend of vanishing firms.

"Majority of the weavers and traders supply goods to just about anyone. No checks or inquiries are made, which gives ample opportunity to the cheats, who purchase goods on credit, sell them and then disappear with the money. The business community will have to become a bit more watchful, before doing business, especially with the new firms," he said.

According to industry sources, the trend of vanishing firms is on the rise, mainly because of the cash crunch situation in the market.

"Most of the firms are under the grip of recession. Several co-operative banks of Surat are also facing problems. With this many genuine operators have no other option but to down their shutters," said an industry sources.

"However, this does not mean that all the vanishing firms are genuine ones. Most of them are run by cheats, whose only intention is to collect money and disappear. Lodging criminal cases against the cheats will not solve the problem. The textile industry, on the whole, will have to become more vigilant, which is the only way of curbing instances of vanishing firms," he added.