The depreciating value of the rupee against the dollar (that touched Rs 49 per dollar on Friday) failed to bring cheers to the textile exporters in Punjab. The textile manufacturers of Punjab, who mainly export yarn to major countries in the European Union, West Asia and the US, have been severely hit by the uncertain market condition across the globe.
The Director of Cheema Spintex Lalru, near Patiala, told Business Standard that when the value of the rupee appreciated to Rs 39 per dollar a few months back, they resorted to hedging. Now with the value of dollar going haywire they were perplexed. Cheema Spintex exports about 85 per cent of its volume.
Rajiv Bhambri, vice-president of Ludhiana-based Supreme Yarns, also acknowledged the loss to the exporters due to unexpected fall in the value of the rupee, as most of the units had borrowed from hedge funds. He added that this was going to affect the trading houses and units with single product. The players with the integrated textile manufacturing houses can absorb the shock to some extent, due to greater margins in the value-added products.
Most of the exporters in Punjab had resorted to hedging between Rs 42 to Rs 45 per dollar in the wake of the appreciating rupee.
Neeraj Saluja, managing director of SEL Manufacturing Co Ltd, told Business Standard that it would help the exporters if the situation persisted for some time. “If the market remains volatile and there is lack of consistency, the situation will not improve”.
Satish Bagrodia, director of Winsome Textiles said that they clocked in an export of about Rs 150 crore last year. They did not resort to any cover as their exports were equalised by the import of capital equipment needed for expansion. The dwindling rupee may help to compete in the international market, but the fall in global demand is expected to hit the business by 20-25 per cent.
The US and the UK are the largest consumers of garments and any kind of market imperfections in these economies hit our bottomlines, said Bhambari.