Since the 1970's the textiles industry has grown rapidly. It has enjoyed preferential market access, duty free and quote free access to some of the largest markets in the world and provided employment to tens of thousands of people.
Despite the elimination of some quotas in 2005, the industry has held strong and Mauritius continues to be one of the largest exporters of textiles to both the United States and to the European markets.
In more recent times the introduction of the minimum wage has impacted the profitability of textile businesses who trade domestically. For the many textile businesses whose trade is centred around the export markets the rise in oil prices and the depreciation of the rupee against key global currencies such as the US Dollar, Pound Sterling and the Euro combined with global political and economic uncertainty has had an even greater impact on profitability.
Our team have had extensive experience in advising businesses in the textiles industry. Our experience includes:
- Appointed Receiver to a knitwear business which was unable to meet its financial obligations. The business ran into financial difficulties including the loss of a key contract, whilst experiencing rising operating costs and had failed to effectively manage its exposure to currency fluctuations and uncertainty. In this instance a rescue of the business was not possible, and we were instructed to realise the assets pledged to the lender.
- Appointed Provisional Liquidator of a textile company following a petition to the court by a overseas creditor due to non-payment of monies owed. We traded the business for a number of weeks with the support of the lender whilst we assessed the situation and built our strategy. The company applied to The Supreme Court and sought to remove the Provisional Liquidator. The directors with the assistance of their financial advisors convinced the Court that the company was profitable and could honour its financial obligations towards the lending institution and the creditors. However, the business found themselves in the same financially distressed position a few months or so later and on this occasion went into liquidation.