The Hindu Business Line : Lack of insurance hits powerloom units

Coping with the losses can be doubly hard with the inability to make good the damage because of no insurance cover and fixing damaged machinery and property to get things back on track.

Mumbai , Aug. 4

MUHAMMAD Laik Qureishi considers himself lucky.

In the recent floods that inundated Bhiwandi and damaged almost two lakh of its looms, his 100-loom unit at Nadi Naka escaped the rising waters. However, about 20 feet away, Aman Bhaiya's looms are silent. Three tonnes of yarn lie in the slush outside — a total loss.

But Qureishi knows how it feels. He lost goods and machines at another unit situated on low ground.

Bhiwandi today is a desolate landscape. Vehicles negotiate giant ruts in the road, becoming giant puddles with every brisk rain.

Problems began for small businesses when the swollen Nadi Naka river, dam water and incessant rain led to the city being flooded by about five feet of water. Godowns filled and goods floated. Workers had to rescue whatever and whomever they saw, many ultimately huddling on the terraces of their godowns for several hours despite the heavy rain.

In this `powerloom city', which is estimated to have seven lakh looms, approximately two lakh looms are affected, according to Mr M.Y. Momin, President, Bhiwandi Powerloom Weavers' Federation Ltd.

He said: "Many of the looms are situated on the banks of the river (Nadi Naka or Lokmanya Tilak Ghat). Most of the units either have 24, 36 or 40 looms each. Stocks have not been insured and a large part of them have been lost. Very few factories are insured."

He added that a total of five lakh workers were employed in Bhiwandi's powerloom industry alone. Coping with the losses can be doubly hard with the inability to make good the damage because of no insurance cover and fixing damaged machinery and property to get things back on track.

According to Mr Momin, while it was very difficult to assess the powerloom industry's damages here, he said that it might work out to roughly Rs 10,000 a machine — working out to Rs 200 crore only on getting damaged machinery to start running again.

Adding to its woes is the banking sector's aversion towards lending to this segment, despite the Centre's various sops and the technology upgradation fund , which provides funds at subsidised rates to the textile industry.

Mr Momin said that when applying for loans, local banks would demand that applicants get four guarantors for their loans and that all the properties they owned be put up as collateral.

Most powerloomers approach moneylenders for their needs. The standard `rate', according to one businessman, was currently at 15 per cent. To normalise operations, which could take a month, many powerloom owners say they will barter goods and get repairs going. A great deal of raw materials, finished goods and equipment such as combing machines, electric motors, and some shuttleless looms have been damaged.

Though disorganised, almost 95 per cent of the country's grey fabric is produced by this sector. According to Mr Aloke Banerjee, Head, Domestic Business, Bombay Dyeing, 80-85 per cent of the grey fabric produced in the country is converted into sheets and home linens. He added that it was a huge financial loss for big textile companies in India as well because many outsourced a part of their production from Bhiwandi.

A large number of small and medium-sized units also order goods on a job work basis.

No solutions have been forthcoming from the Government over the industry's problems, and the powerloom fraternity are not expecting it.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page