S K Birla Group-owned Digjam Ltd. today announced the temporary closure of its Jamnagar mill due to cash crunch. Digjam is one of the biggest exporters of woollen and worsted fabrics in India.
The company said it has stopped the manufacturing of woollen and worsted fabrics "in view of extremely tight liquidity and working capital position".
Digjam exports its products to US, Canada, Middle East, Far East, Japan, Australia, U.K, Italy, Germany and other European countries.
In its latest quarterly disclosure, Digjam incured a loss of Rs 10.12 crores during the quarter ending June 30, 2018. As of June 30, 2018, Digjam suffered from a working capital crunch of Rs 74.77 crore.
The company was posting weak financial results since the last 3 financial years. In FY18 Digjam posted a loss of Rs 32.11 crore while in FY17 and FY16 the losses were Rs 22.16 crore and Rs 9.86 crore respectively. Moreover the revenues were also displaying a downward spiral. the revenue in FY 18 was just 59.01 crores, which is 37 per cent lower than FY16 revenue.
In 2016, UK's luxury fabric maker Holland & Sherry had partnered with Digjam to launch operations in India. The monogrammed pin-striped suit that Prime Minister Narendra Modi wore during the India visit of former US President Barack Obama was reportedly made using Holland & Sherry fabric.
As per Digjam's latest annual report, Digjam Limited faced substantial challenges arising out of economic slowdown in its key export destinations Europe and USA and also due to corporate restructuring by a few major US customers besides the downtrend in the demand cycle. This has been compounded by increased competition from China. These operational challenges resulted in significant losses.
Digjam has a market capitalisation of Rs 45 crores. Digjam took a beating on the stock exchanges today. The company's stock was down by 4 per cent and trading at Rs 5.14.
The closure comes at a time when winter season is just about to begin. When the demand for woollens and worsted fabric spikes.
For four consecutive years Digjam has been the conferred with highest exporter award by the Export Promotion Council of India. Its Jamnagar mill was the first mill to be honoured with "Accredited mill" status by internationally renowned Dupont.
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