Rising Re dents Ludhiana exports

Export-oriented units (EoU) located in Ludhiana and Lalru, whose exports are worth Rs 1,000 crore, are in the doldrums. The appreciation of the rupee in the last few weeks has affected the actual earnings of the export houses.

Most of the export-oriented units which registered favourable returns last quarters, are likely to have an unfavourable balance sheets this quarter.

The setback has come when many textile units in Punjab are expanding, taking benefit of the textile upgradation fund (TUF ).

Most of the units were relying on the global market for their expansion plans because, due to stringent laws, the dyeing of yarn is not allowed in the European market thus making India a cost-effective option for those countries

According to Neeraj Saluja, managing director of SEL Manufacturing Company Ltd, a leading exporter of garments from Ludhiana, the strenghthening of rupee was a big setback and they were going to lose about 12 per cent on their export earning.

Kamal Oswal, vice-chairman of Nahar Industrial Enterprises Ltd, told Business Standard that this was the booking season for the domestic players and the exporters had to quote higher prices due to appreciation of rupee that made Indian garments and yarn uncompetitive in the global market.

The fallout of the hardening of rupee would be caluculated after the companies receive the final orders.

Ludhiana based Supreme Yarns Ltd, that exports about 25 per cent of its output, had a hedging of Rs 8 lakh crore at the rate of Rs 44.65 per dollar.

According to Vice-President (Finance) of the company Rajeev Bhambri this could save them for next three weeks but thereafter the situation would become precarious.

The 8-10per cent of appreciation of rupee has really affected our bottomlines, says H S Cheema, president Textile Association Punjab-Himachal-Chandigarh units and the joint managing director of Cheema Spintex, a 100per cent EoU.

"Since we manufacture an intermediatory product, until the price of the garment is revised in the global market, we can't escape the rupee appreciation," said Cheema.

He added that the currencies of other developing countries like China, Thailand and Brazil have also appreciated but not to the extent of Indian rupee.