Rubber traders face Rs 400 cr loss as stocks pile up
Kottayam: With the markets coming to a standstill due to the lockdown declared amid coronavirus outbreak, rubber trade was badly affected. Products of 4500 traders worth Rs 400 crore have piled up. Also it has been two weeks since tyre companies stopped collecting raw materials, adding to the agony.
Many of the traders were engaged in the business taking overdraft from financial institutions. They will face huge loss in terms of interest.
Sometimes, the stock and land assets of traders are kept as security for overdraft amount. The money can be repaid as stocks are sold. Interest need to be paid only on the pending amount. But as the trade declined, repayment became difficult. With the financial year nearing an end, decision on overdraft renewal need to be taken.
As the price of rubber had increased recently, many retailers also had initiated the business. On an average around 50 tons of rubber have piled up at warehouses.
Though trade has come to a halt, many migrant labourers are still working at plantations and need to be paid wages. With shops closing, the rubber sheets have piled up in the sheds of many farmers.
Traders and farmers also fear when all the piled up stock reach market once after the lockdown, the price may decrease considerably.