Kolkata-based knitwear manufacturer Dollar Industries Ltd, which had been registering 5-8 per cent growth in turnover on a year-on-year basis for the past couple of years, is likely to close FY20 with flat growth.

According to Managing Director Vinod Kumar Gupta, the growth will be muted in the first two quarters of FY20, post which there could be a marginal pick-up in demand during the festival period.

“The fourth quarter is usually a heavy quarter for the hosiery industry and the market remains bullish between March 15 and July 15, when there is heavy buying. Traders and distributors start stocking up from February. However, this year, the rumours of a possible lockdown had affected sentiments and the distributors were not picking up stocks. This affected demand,” Gupta told BusinessLine .

The hosiery industry usually ramps up production in the fourth quarter to cater to the spurt in demand in the months following March up to July. But the sluggish sales this year have impacted the industry badly and there has been a huge pile up of inventory. Dollar has lost close to ₹100 crore in March alone due to poor sales and the inventory pile up.

Production is currently closed due to the lockdown. Even when things normalise, most companies in the industry including Dollar will go for a staggered ramp-up of production due to the inventory pile-up.

Tirupur unit

Dollar has production units in West Bengal, Tirupur and Ludhiana. It recently commenced work at its spinning mill in Tirupur after receiving permission. However, it was subsequently closed because of the clause which holds the management responsible for any employee testing positive for Covid-19. The clause further states that the unit can be sealed for three months and an FIR filed against the management.

“The conditions under which we have been allowed to operate are quite stringent and not very easy to adhere to,” said Gupta.

It would be difficult to ramp up production to pre-lockdown levels immediately because a number of migrant workers who have gone back to their villages would take at least two months to come back.

“The ones who could not go back when the lockdown was announced will look to move back to their native after this is lifted; hence there will be a shortage of manpower,” he said.

Demand to pick up

However, since hosiery is considered an essential item and not a luxury one, the industry could start recovering faster than those that call for more discretionary spending.

To boost sales, Dollar is looking to incentivise retailers increase their shelf space. It is also looking to boost online sales through its own website as well as through e-commerce portals such as Amazon and Flipkart.

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