Tirupur Textile Industry Stares At Rs 15,000 Crore Loss Due To COVID-19
On March 24, the Managing Director of DSP Garments, a well known innerwear brand in Tirupur, Surya Prakash, told his family that he was going to Bengaluru on business. He had been undergoing treatment for depression for the past 20 days. The reason – teetering losses in business, thanks to a series of unfortunate events, culminating in the global Coronavirus situation.
But Surya Prakash did not go to Bengaluru. He went to Coimbatore’s Residency Hotel, booked a room on the sixth floor and took his life. Surya Prakash was only 34 years of age.
It is not known how much of a loss Surya Prakash had to bear. But what is for sure is that the textile industry of Tirupur is reeling under the shock of the virus.
Even before Section 144 was imposed on March 24 across the state of Tamil Nadu, Tirupur wore a deserted look.
The Manchester of India or the Dollar City, famed for its large textile industry, is usually a crowded congested city with Tamil and Hindi ringing out together as migrant workers and locals work side by side to make a living.
As The Lede entered the garment factory belonging to Raja M Shanmugam, a large firm called Warsaw International, no one was willing to shake hands.
An assistant told The Lede that in Tirupur nowadays, no one extends a hand. A vanakkam with folded palms is in order.
Raja Shanmugam, who is also the president of the Tiruppur Exporters’ Association is a worried man. He is anxious about the future of the textile industry.
“In Tirupur, as you know, we are all exposed to the Western markets, particularly European Union and America. Both markets have dwindled because of this Coronavirus crisis. All the governments have shut down the businesses in entirety in European Union as well as the US and Canada too. This is the greatest evil situation that we have experienced in our lifetime,” he began.
Shanmugam had held a meeting last week with all associations that represent different units in Tiruppur’s textile hub. In that meeting, which was attended by big and small textile factories, it was decided that all firms will continue to work and that the associations would help everyone get support from the government.
But despite this decision, all companies, large and small are staring at huge losses. “Tirupur is doing a turnover of around Rs 2500 crore per month. So if you compute this January and February itself, it comes to Rs 5000 crore. In this month, Rs 2500 crore worth of business is happening, but everything has been put on hold. So now no shipments have been allowed and those which are on the high seas right now, they are a big question mark because they are not likely to get clearance. There is no one there to clear the goods and take it to the warehouse. So this is the worst situation that we have faced. In these three months alone we have taken a big hit to the tune of Rs 7500 crore,” laments Shanmugam.
But the damages are, in reality, far worse. Franklin Augustine, a shipping company owner told The Lede that the industry was in fact looking at double the losses.
“No orders are to be taken for the next three months. The government has said there will be no exports for the next three months. We will know the status only in July,” he said.
With another three precious months gone, Tirupur’s losses are pegged at Rs 15,000 crore.
How COVID-19 Collapsed Tirupur
Raja Shanmugam explains that when the Coronavirus first hit China in December 2019, the impact was felt by the textile industry but not to a very large extent.
“Actually when the epicentre was in China, we suffered because there was no supply of certain raw materials for the dye and certain accessories for the garments. But we received the goods, even though they were delayed and we have managed to accomplish the orders that we had to for European Union and American brands.
But unfortunately since February end and the beginning of March, the epicentre moved to EU, US and Canada. So we got stuck in entirety. Because payments for all the orders which got shipped in January and February are expected to be made this month. That has totally got stranded because no brand’s office is working and everyone is on a forced holiday. Banks are not functioning either. There is a lot of confusion,” he said.
One of the largest employers in the country, the textile industry of Tirupur has been bleeding since demonetisation. GST then struck and made matters worse. And now the Coronavirus has delivered a big blow that the industry is not likely to recover from very soon.
“Unless and until governments and banks come forward to extend a helping hand, it is not going to be resolved by the industries alone. All the Western countries have already started infusing fresh funds into their economic system. When developed countries are taking such proactive steps to safeguard the economy of their countries, a developing country like India needs to show much more vigour to come forward and help us tide over the crisis. Otherwise this crisis is going to have a cascading and catastrophic impact all across the country, country’s economy and the livelihood of millions and millions of people all across the country,” he said.
Dealing With Coronavirus
What textile companies are now doing is to wait and watch the situation unfold in great nervousness. They are hoping that Europe and the US would settle down and that their orders will be taken in, albeit delayed.
“We had left it to the individual companies to take the call. It depends upon their position with the buyers and their orders, whatever they have undertaken. We cannot commonly dictate terms to any industry. Some of the brands are expecting that there will be a recovery in one or two weeks’ time and then there would be a demand for garments. So they asked the manufacturers to proceed without stopping. There are mixed advocacies all around,” said Shanmugam.
Migrant Workers & Health Hazards
Migrant workers who are largely from Bihar and Odisha have settled in Tirupur with their families. These are trained workers who are seen as a valuable resource by the owners of textile firms. There are around 6000 migrant workers in the city, solely there to make a living.
As the restrictions became more stringent and a lockdown appeared inevitable, most migrant workers headed right back home. Some factory owners stepped in to stem the tide and assure the workers that they would be safe in the factories. But the majority have deserted Tirupur.
“We don’t want to lose the workforce. The workforce here – who come from Kashmir to Kanyakumari are settled here and provide support to the industry. We cannot leave them in the lurch either. Their going home is also a big risk because if at all any infection is there, the spread would be very speedy. So we have told them not to go on leave to their hometown.
Those who are here, we have taken many precautionary steps like advocating cleanliness and hygienic conditions, how to keep themselves safe and how to maintain their surroundings. This is being advocated to them and also to their homes because they have to protect their children and elders. So now awareness is being spread. Instead of leaving them in the lurch, we are trying to retain the workforce with minimum salary or shifts, whatever is possible. That decision, collectively, on humanitarian grounds only we have taken,” said Raja M Shanmugam.
But garments are made by hand and passed from worker to worker in an assembly line of sorts. The virus can spread through the surface of the garments or the tables in these factories. Not only that, masks are in short supply and the thousands of textile workers are making do with what they can.
“In our company they have stitched masks for all workers with organic fabric,” Anburaj, a garment worker, told The Lede. “There are workers here from all states. They have all been given awareness about Coronavirus. So far we do not have any Coronavirus cases in our company. To prevent it, the management is doing whatever needs to be done.”
Another garment worker confirmed the same to The Lede.
“There are people from other states who are working here,” Anuradha, a garment worker told The Lede. “We are stitching masks here by ourselves. We don’t have any problem due to Coronavirus. They are giving us awareness. They are giving us liquid handwash and soaps. We are working under good safety conditions in this company. We do not have any issues due to Coronavirus.”
“We are creating awareness about hygiene among the workers,” said Raja Shanmugam. “We are telling them to maintain a distance of one metre between each worker. We are telling them not to put their arms over another’s shoulders. We have given them all masks. Though they are not medical masks, they filter dust. It will help if people keep a distance. We have asked workers to wash hands 4-5 times a day. We have asked them to convey this to their families also. We have asked anyone with symptoms to self report and self quarantine. We have also got the equipment to check temperatures. We have advised everyone to mop the floors with disinfectant,” he said.
But small and medium businesses have been forced to shut shop since the state government declared a lockdown on March 24. It is only the bigger factories that continue to run their businesses.
A Body Blow To Tirupur
“It will take at least one year for Tirupur to come out of this hit,” said import-export firm owner Franklin Augustine. “Many of the migrant workers have already left. To bring them back is going to be a big task. These workers have already learnt the job so they can go to Gujarat or Uttar Pradesh to work in the textile industry there.”
A relief package is eagerly anticipated by the textile company owners of the city. It is not likely to provide a big boost to their flailing businesses, but any relief, they say, is better than none at all.
The global economic crisis had already reduced Tirupur’s exports by half in the last two years. Before that, demonetisation and GST added to its woes.
Rewind further to 2011 and the Madras High Court’s ban on all dyeing plants that were polluting the river Noyyal, brought the industry to a grinding halt.
And in the 2008 global financial crisis when large banks in the US turned turtle, Tirupur went under along with them.
The Coronavirus is the latest in a series of hammerings taken by the gritty businessmen and women of the southern city.
When The Lede contacted the government of Tamil Nadu to find out how bad the economic impact would be, a senior bureaucrat, who did not wish to be named, said the initial rough projection was that 2% of growth would be shaved off.
“We are giving business to Tirupur,” said the bureaucrat. “The government has given orders to make masks. Of course it may not make up for the entire loss of their business but it is something,” he added.
There are no estimates as to how much business Tirupur's textile companies will get from the Tamil Nadu government through this.
Tirupur stands in grand isolation at present. Residents of neighbouring districts like Coimbatore are wary of entering or associating with people from Tirupur due to fear of the Coronavirus. And this is simply because the city was a proudly busy business hub.
The lifelines of Tirupur - Palladam, Somanur, Mangalam and Thirumuruganpoondi upto Kangeyam - now paint a stark and desolate picture as its bee hives of small and medium sized enterprises and 10,000 workers have come to a halt.
The future is uncertain for this city thanks to a virus that has threatened to overwhelm the world. Tirupur will have to pick up the pieces of the ruin left behind. Whether the poorest of its workers will have jobs to come back to, post the 21-day lockdown announced by the Prime Minister, is anybody’s guess.
(We regret an error in the name of the company owned by Mr Raja M Shanmugam. It was incorrectly named as Varsha International. The name has now been corrected to Warsaw.)