LUDHIANA: After the ending of lockdowns in other states and the resumption of the movement of finished goods, the city industrialists are now facing fund crunch.
According to businessmen, for over two months, the payments from majority of their customers for already supplied orders remained pending due to lockdown and now they are short of funds to execute the new orders immediately.
In wake of the situation, businessmen are either overdrawing their bank limits or are requesting their dealers to increase credit days till the time the payment cycle resumes back to normal.
Harish Kairpal, finance secretary of Knitwear Club, said, “On the one side, there was a glimmer of hope of resumption of businesses back to normal with lockdowns in other states ending fully and movement of goods starting, but on the other hand we have got into soup because we are short of funds to execute new orders.
The funds shortage is because majority of customers based in other states failed to make full payments for the already supplied orders in March and April.
Due to this, our fund situation has touched critical levels where we only have enough to pay for the expenses like salaries and bills.
As far paying for our raw material and other high amount purchases is concerned, we are forced to overdraw our bank limits.” According to Jagbir Singh Sokhi, president of Sewing Machine Development Club, “More than 90% of the sewing machines and parts made in Ludhiana are supplied to other states like Uttar Pradesh, Madhya Pradesh, Rajashthan, and Karnataka.
Due to lockdowns in these states for a long time, the payment cycle has been disrupted as our customers failed to make us our old payments citing the closure of markets and no sales.
In addition to these old payments, the payments for the orders of goods, which we were unable to supply to them during lockdown has also got invested with our customers.
Which means double investment and if this was not enough, we have started getting new orders too but we do not have money to execute them and left with no option than to request our suppliers to supply us raw material on credit, who are complying to it but as a common trade practice charging interest according to the credit period.”
Ludhiana businessmen face fund crunch as payments for previous orders still pending
