Below are some of the challenges faced by KG mills due to price fluctuations:
- Price Fluctuation-Susceptible Profits from Cotton and Yarn.
- Apart from the seasonal availability of cotton in India due to agro-climatic conditions, global trade & geo-political relations play a significant role in cotton and yarn prices.
- With low yields in FY21-22 across India, cotton/yarn prices almost doubled over the period, and textile manufacturers had their working capital tied up or exhausted, leading to slumped growth.
- Intense competition compels manufacturers to cap the price of finished goods at a certain level - but restricts them from charging an increased price of raw materials from their customers.
- Limited Access to Investors.
- Based in Coimbatore, KG Mills had limited access to the lender community. Not only are the number of lenders limited in the geography, but there was also a limited range of debt products available
- Existing lenders were unwilling to lend in incremental limits and, therefore, were not contributing significantly to the business’ growth.