Hike in maroon yarn rate fails to dampen hosiery industry’s spirits

Ludhiana: In a jolt to the woollens’ manufacturers, who were pinning hopes on the Uttar Pradesh government’s tenders for 1.5 crore maroon sweaters for schoolchildren, the rate of yarn has shot up by Rs 30 per kilogram. Manufacturers’ prospects of making a decent profit from this tender have been hit, but they are not willing to step back.
Businessmen said due to a very high demand, the rate of yarn has gone up to Rs 240 per kilogram from the last month’s Rs 210 per kilogram.
Vinod Thapar, chairman of the Knitwear Club, said, “Since the last month, there has been an increase of almost Rs 30 in the rate of yarn used for the manufacturing of maroon sweaters. There is a shortage of yarn due to the sudden high demand as manufacturers — who are certain that they will bag the tender due to their eligibility and competitive rates, and those who have already got orders — have started manufacturing sweaters. In addition to this, there is a large number of traders who have given advance orders for the yarn. These traders have tied up with the manufacturers for purchase of sweaters and instead of giving advance payment, they have decided to supply them the yarn.”
Thapar added, “The hike in rates will certainly bring down the profit margins, but despite that we are willing to execute the orders, as we have got work after a gap of six months.”
Harish Kairpal, finance secretary of Knitwear Club, called the hike a phenomenon that happens every year. “The situation is likely to continue for another one-and-a-half month till the 1.5-crore piece tender is executed. The sweater manufacturing industry is very upbeat about the UP tender and even the increased rates have failed to make any impact on the demand of the yarn. Some manufacturers and traders, who have quoted low rates, will have to suffer losses.”
A manufacturer said, “The rates of yarn of colours other than maroon have not increased. The maroon shade’s demand is high because of the UP government’s tender. The hike in the cost will lead to a huge increase in our cost of production and we will have to bear losses, as already the rate quoted by us is very low.”
Massive competition for first time
This is for the first time that such a high number of firms responded to the tender for the supply of school sweaters. Sources in the industry said till last year, there were about seven manufacturers from Ludhiana who would participate, but this year for every tender, there were over 50 bidders, of which 90% were from Ludhiana. The latest trend is the outcome of the online tender system, which has come into place for the first time.