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Textile mills caught in throes of crisis
Textile mills caught in throes of crisis. Spinning and textile mills are on the verge of closure as the industry is facing severe shortage of raw material - Cotton - in Telangana State. The industry in the State is one of the largest producers of the fabric in the country.
Unavailability of cotton is one of the factors that plunge mills into trouble
Hyderabad: Spinning and textile mills are on the verge of closure as the industry is facing severe shortage of raw material - Cotton - in Telangana State. The industry in the State is one of the largest producers of the fabric in the country.
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The other important factors that has plunged the textile industry in deep crisis are continuous decline in the prices of finished goods and compounding financial debts due to non-payment of loans. Telangana has about 10 lakh spindles of which 8 lakhs run on cotton and balance on other fibres like synthetic and viscose.
The labour and capital intensive spinning and textile mills are in deep trouble due to unavailability of cotton, Telangana Spinning and Textiles Association General Secretary M Ananta Reddy said . He said the “unfair trade practice” adopted by the Cotton Corporation of India (CCI) was the main reason for shortage and the increase of cotton prices making the total textile industry unviable.
During every agricultural season, the CCI procured maximum cotton in the states of Telangana and AP also. The CCI was procuring about 85 lakh bales of cotton across the country. In Telangana alone, the CCI was purchasing 50 lakh bales. It required only 50,000 bales per day to be allocated through e- auction to run the textile industry in Telangana State.
The “Cotton Lint sales policy” adopted by the CCI was not consumer- friendly. “The textiles mills are not being allowed to buy required cotton. The Corporation is supplying only 40 per cent of the total requirement of cotton to the mills,” he said. The unavailability of cotton was forcing the companies to stop production or to procure cotton from Maharastra or Madhya Pradesh at higher prices.
It also resulted the state losing between Rs 60 and Rs 70 crore as year on VAT. Reddy said that the issue was brought to the notice of the Union Government and CCI for several times but no action had been taken to address the crisis. The Association demanded stabilisation fund consisting of cotton working capital loan .
The delay in addressing the problems of textile industry would make several hundreds of textile units in the country economically unviable resulting in large scale NPAs (Non Performing Assets) in the textile industry.
The cotton segment, spinning and weaving segments, are suffering from April 2014 onwards due to glut in the export market caused due to policy changes in China and the duty structure in EU, China and the Americas, Reddy said the prices of finished goods, cotton and synthetic yarns have been on continuous decline over last 18 months.
Most of the textile units were suffering huge losses between 15 and 20 per cent of turnover and are under severe strain. The Association is also demanding a two year moratorium on term loans and conversion of working capital into working capital term loan while giving flexibility to repay loans over long period between three and five years.
By Patan Afzal Babu
