Spinning Mills across the country, which had a stock of more than 500 million kgs of cotton yarn following last year’s restrictions on exports, have reported significant easing of the cotton yarn stock position. This was due to cut in the production by the Mills across the country.
Shishir Jaipuria, chairman, Confederation of Indian Textile Industry (CITI) stated from May 23, 2011, onwards spinning mills all over the country had resorted to significant production cuts. Presently, 25-30 per cent of capacity for cotton yarn production in the country is lying closed. Meanwhile, restriction on export of cotton yarn has been lifted by the government and current cotton yarn exports are comparable with those of the same period last year.
“There has also been some positive movement in domestic demand for cotton yarn and he expects this trend to continue,” he said.
Jaipuria stated that from a peak level of 500 million kilo grams, cotton yarn stocks with the mills have now come down to around 350 million kilo grams and he expects these to come down further in the coming months.
He added that the festival season in the country starting from September onwards is expected to see significant improvement in demand for all textile products and this would also help the spinning sector to dispose of their accumulated stocks of cotton yarn.
Meanwhile, CITI has requested the government for a comprehensive relief package for the spinning industry in order to tackle the losses suffered by the industry in recent months because of restrictions in cotton yarn exports, fluctuation in cotton and cotton yarn prices and accumulation of stocks both of fibre and yarn.
With the improvement in the demand position, spinning industry is expected to come out of its present problems during the second half of the current fiscal. However, the mills will find it extremely difficult to repay loans and find working capital in the coming months because of the huge losses they suffered during the first half of the fiscal, Jaipuria said.
CITI has sought a two year moratorium or repayment of loans and interest and a few other facilities from the Reserve Bank of India, in order to avoid the accounts becoming Non Performing Assets and added that the industry is confident that the current challenges can be met with the help of the relief which the industry has sought fromgovernment and the RBI and this will help the industry to revive its operations in full during the coming months and to avoid retrenchment of any workers.
