In continuation to my previous article on APPLY STRATEGIC COST MANAGEMENT TO TAKE BENEFIT OF GST am happy to share an opportunity for the Cost Accountants and its chapters to come up and save the problems of an Indian tradition which is on the path of getting depleted.  In my previous article I accentuated on the B2B network and its huge opportunity for companies to come forward and reap the gains from this unorganised players who are about to leave various industries due to GST. Cost Accountants and cost chapters can play a huge role to save the industry and its players and workers from the sudden death of GST related gaps. From the problem mentioned throughout in the article one will get clear idea and ABC and efficient cost allocation is not at ll followed which has lead to this sudden death of an industry growing from 16thcentury.

Currently Indian textile industry is under immense threat due to GST related issues. India’s biggest market of sari weaving is Varanasi.  The sari business in the city that has a textile tradition which goes back to at least the 16th century. We all know the Varanasi Sari demand and its quality over the last several decades. GST related issues have ripped the business by 50% and most of the weavers are leaving the profession and heading for Auto Rickshaw drivers etc where they can earn better. Banarasi silk saris rates has fallen to less than half of the Rs 800-Rs 1,000 a week which one used to get  making in September last year. In Varanasi’s Jaitpura-Chhora colony of weavers have abandoned their craft. This segment of sari is an export denominated market where we all know the demand and the price at which they are sold.

GST related issues are placing brakes on then growth of this industry. Most of the weavers and players cannot figure out when to generate bills, how much GST will be applicable and whom to charge.GST regulations require these enterprises to file three returns per month along with all documents on sales, purchases and tax levied and paid which turns out to be a massive problem for these traders and weavers who have little knowledge of the organised mode of business. This segment is highly unorganised and creates immense opportunity for the companies who are larger in this industry to employ or rather develop business relationship with these dying weavers to grow their business. A win-win proposition for both. Access of larger markets and sudden evaporation of middlemen within the industry have left these weavers under no business opportunity.
In my previous article I depicted the picture of creating direct contact with the unorganised players to create new markets and opportunities by educating and developing technological dependent opportunities to remove the traditional barriers. Cost Accountants across India can find huge practicing opportunity at lesser fee but with huge long term loyalty of clients by educating and working together with the weavers.
 The cost accountants can bridge these gaps through their existing business partners or through their clients who can get in direct touch with these weavers or unorganised players to create new opportunities. Around  90%  of the business is in the unorganised sector employing large numbers of weavers who are uneducated and unable to handle the technicalities of GST. Hence  cost accountants and the chapters can come up and get huge batch of client tale who might not be able to pay huge fee but a moderate fee and technical support can make huge opportunity to explore.

Till July, they did not charge any tax at all from customers, choosing to absorb the cost themselves. Efficient costing methods like ABC and target costing can help these weavers to make substantial profit without even increasing the price.  I find this one of the best example and opportunity for the cost Accountancy profession to support not only Varanasi weavers but other weavers placed in different location.

Efficient cost management will help the industry to offer healthy credit facility without making jaw dropping business outlook for the long term. Efficient cost management and working capital management will lead to compilation of GST related invoicing deadlines and also growth of the industry.  Suppliers of raw material such as fibres and zari  (gold or silver thread)  have  stopped giving weavers material on credit and started insisting on immediate payment. They simply don’t have money in their pockets. This is gray area since cost accounting tools are being avoided and hence due to no knowledge of the subject working capital shortage has turned into a anaconda swallowing up such a huge Rs 5000cr  market.

Most of the weavers and players cannot figure out when to generate bills, how much GST will be applicable and whom to charge. They are unable to figure out how much GST to charge for a sari in which they have used both polyester and cotton – a popular combination for cheaper power loom saris. 

Its an huge opportunity for the practicing community of cost accountants and their clients to create a new market opportunity for these weavers who are shifting into become Auto Rickshaw drivers.Its an opportunity for the profession to convert an unorganised market into organised players with efficient capital and cost managmenet.