INDIA’S recent T20 World Cup win sparked wild celebrations. Yuvraj Singh drove back a Porsche while RP Singh was gifted a Merc by a sports channel eager to cement its connection with the game. Why, even Piyush Chawla, who didn’t throw a ball in South Africa, saw his bank swell by Rs 20 lakh. But some of the workers who made the sweet spot on the triumphant cricketers’ willows sweeter find themselves without a job. “When the country is rejoicing Team India becoming Twenty 20 champions, the sports goods industry has no reason to celebrate. There are no exports to speak of and we have retrenched a fifth of our workforce. And more worryingly, this only seems to be the beginning,” laments RC Kohli, director of the Jallandhar-based Beat All Sports, makers of the famous BAS brand of cricket gear.
The rapid appreciation of the Rupee against the dollar has resulted in the thriving export-dependent textile and sports goods clusters in Ludhiana, Panipat and Jallandhar on the verge of grinding to a halt.
Ram Niwas Gupta, president, Panipat Handloom Exporters Association, says that due to the huge losses, all companies are now cutting down shifts and some of them are even closing down. He estimates that a quarter of the more than 5 lakh people the Punjab and Haryana textile belt employs, have been rendered jobless.
Rajesh Kumar, a 23-year-old migrant labourer from Bihar, is in despair. He had come to Panipat three years ago and was earning just enough to support his family back home. This time around Diwali he planned to get married and bring his wife along. But one fine morning when he turned up for work at a readymade garments unit in Panipat, he was told by his employer to look for another job. Thousands of workers in Panipat like Rajesh have been asked to go back home.
The dollar was Rs 46 against the rupee not too long back, and in the last three to four months it has come down to Rs 39. This is the worst scenario we have ever faced. All the companies are making a 15% loss on every transaction. Companies in Panipat are losing almost Rs 200 crore every month,” adds Mr Gupta.
“Due to the appreciation of rupee we cannot compete with international prices and we have no other option other than cutting shifts and jobs. We were aware of hedging but have never done it,” says Avinash Chander, MD, Paliwal Overseas, a Panipat-based supplier to retail giants such as Wal-Mart.
“Hedging is usually done to protect ourselves and not to make profits. It’s more of a conservative strategy than a profit making one. Usually when hedge, we look at the options available and take advice from the bankers. But none of us expected this kind of an appreciation,” says Vardhaman Group director Sachit Jain.
According to Rakesh Rati, president, Northern India Cotton Association, farmers are not getting a good deal, forcing them to go for alternate crops. “Cotton is exported in two ways, either directly or through the principle buyers like spinning mills and garment exporters. So when these principle buyers cannot assure the farmers of a good price the farmers will produce less,” says Mr Rati.