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Textiles debt restructuring may add up to Rs 5,000 crore

 

 

NEW DELHI: The government is working on a package to restructure loans to the tune of Rs 4,000-5 ,000 crore for the textiles sector but has ruled out a debt waiver.

Facing a slowdown, the textiles sector has been saddled with loans and has proposed a four-pronged strategy to deal with the burden, textiles secretary Rita Menon said. It wants the interest rate on the debt to be reset, besides seeking conversion of working capital into fresh debt, which will cost Rs 835 crore.

Further, companies have sought a two year moratorium on repayment of the restructured debt and have proposed a 4.5% interest subsidy on packaging credit.

Menon said she has already discussed the issue with the finance ministry and a detailed proposal will be submitted in the next few days. In addition, she is going to approach RBI Governor D Subbarao to allow banks to treat the restructured loans as standard assets that do not require higher provisioning. Under RBI norms, restructured loans are treated as doubtful or substandard assets that require higher provisioning.

This makes banks wary of loan recast. One way to deal with the issue is deal with loans under the corporate debt recast cell, an inter-bank forum that enables banks to recast loans without making higher provisions.

"In principle we had asked them to consider this and this week we will take to them the numbers. Probably we will able to get it true to our abilities," Menon said.

An analysis by the ministry shows that demand for cotton fabric dipped by around 19%, while there has been a 15% fall in demand for cotton yarn, 5% for blended yarn.

 

Rgds/saurabh

CITI organises Cotton Farmers Meet in Bhilwara

CITI organises Cotton Farmers Meet in Bhilwara

October 20, 2011 (India)

Confederation of Indian Textile Industry (CITI) through its Cotton Development and Research Association (CDRA) organized a farmers meeting in Bhilwara, Rajasthan on 19th October 2011. Shri P.D.Patodia, Chairman of CITI’s Standing Committee on Cotton presided over the function and Shri Mukund Choudhary, Vice Chairman of CITI was the Chief Guest. Over 2000 cotton farmers from Bhilwara, Banswara and other nearby districts of Rajasthan attended the meeting. Representatives of spinning mills, ginners and cotton traders were present in large number. Scientists from RVK, Bhilwara and Banswara and officers of the State Government’s Agriculture Department were among the participants. Shri P.D. Patodia in his welcome address highlighted the work done by CITI- CDRA during the past four years in Rajasthan, including the Frontline Demonstration Programme implemented in about 1500 villages for dissemination of production technology and integrated pest management practices. Government of India’s funds of nearly Rs. 50 lakh were utilized for implementing the programme, including import subsidy of Rs. 1400 per cotton farmer. Referring to the likely cotton production of 355 lakh bales in the current cotton season, he complemented the cotton growers of the country for enabling the country not only in achieving self sufficiency in cotton production but also providing sufficient quantity for exports. He however, pointed out that cotton yields in India were still much below the world average of over 750 kgs per hectare and there was an urgent need to improve them. He appealed to the cotton growers to replicate the example of Gujarat which has achieved the high cotton production of over 103 lakh bales in 2010-11 as compared to about 39 lakh bales in 2002-03. He complemented the State Government of Rajasthan for encouraging drip irrigation by liberalizing norms for subsidy. Shri Patodia also highlighted the work done under the collaborative cotton project being implemented by CITI-CDRA for the past four years in association with State Government of Rajasthan and Bayer CropScience, Mumbai covering 50000 acres involving over 37000 cotton farmers. Sharing Brazilian cotton success story, he appealed to the cotton farmers to ensure adequate plant population and adopting high density planting system for improving yield. Shri Mukund Choudhary, Vice Chairman, CITI in his address pointed out that Bhilwara wasg the spinning hub of Rajasthan selling huge quantities of cotton yarn to all important destinations, both domestic and overseas and therefore improvement in cotton production in these districts assumed considerable importance. He stressed the need for strengthening the linkage between cotton growers and the textile industry as it was beneficial for both of them. In this context he explained that CITI had persuaded Government of India to associate all the stakeholders in implementation of the Technology Mission on Cotton and CITI-CDRA thus could do useful work for farmers under Mini-Mission II of TMC for the past seven years. Initially, CITI-CDRA worked for three years in Maharashtra and for the past four years, it was working in Rajasthan for the benefit of cotton farmers.

RGDS/SAURABH

Uzbek cotton sales in 2011 will not be to western companies

Uzbek cotton sales in 2011 will not be to western companies

The 7th International Cotton and Textile Fair took place in Tashkent on 12-13 October without a single buyer from a western company represented among the delegates.

In 2011, for the first time, all the cotton and textiles sold at the Uzbek cotton fair will be destined for CIS countries and countries further east including China, Bangladesh, Vietnam, Japan, UAE, Iran, Turkey, Pakistan, South Korea and Singapore.

According to figures published by the CottonCampagin website, Russian companies have bought around 40% of the cotton produced in Uzbekistan this year, the remaining 60% will be bought up by Asian traders.

Demand for Uzbek cotton gradually declining

At the recent trade fair Uztsentrimpex, the centralised company which coordinates the sale of cotton, has signed contracts to supply around 600,000 tonnes

We can hardly expect sales volumes to fall by as much in subsequent years. Western traders have simply been replaced now by Russian and Asian buyers"
Tashkent consultant

of ‘white gold’ with a value of more than US$550 million. This is around 50,000 tonnes less than the sales volume one year ago.

The fall in cotton sales has been attributed to the refusal of European and American firms to buy cotton cultivated with the exploitation of forced labour including forced child labour, experts in Tashkent believe.

However, analysts also say that the boycott that western companies have mounted against Uzbek cotton has not had a significant impact on the sales of raw cotton, since the reduction in export volumes began before western companies stopped buying the cotton from Uzbekistan.

In 2007, the quantity of cotton sold at the Uzbek cotton fair fell by more than 50% compared to the previous year – from 1.7 million tonnes in 2006 to 650,000 tonnes in 2007.

“We can hardly expect sales volumes to fall by as much in subsequent years. Western traders have simply been replaced now by Russian and Asian buyers,” said

	Logo of 2011 Tashkent cotton fair

one employee of a consultancy in Tashkent, who asked us not to give his name.

USA and Europe won’t buy cotton harvested by children

The boycott of Uzbek cotton by European and US firms began in 2008. To date more than 60 companies have stopped buying Uzbek cotton, including famous clothing brands and chain stores such as Burberry, Levi Strauss & Co, Marks & Spencer, Target, H&M, Gap, C&A and Wal-Mart, the Responsible Sourcing Network claims.

On 12th October, as the International Uzbek Cotton Fair 2001 opened its doors, these companies signed a declaration that they would not allow cotton harvested by children to be used in the production of their goods. They have committed to maintaining the boycott until the Internationl Labour Organization (ILO) confirms that Uzbekistan has ceased entirely its use of forced child labour to harvest cotton.

 

Low costs luring Indian textile makers to Bangladesh

New Delhi, Oct 16

Many Indian garment makers have shifted base or opened new units in neighbouring Bangladesh to take advantage of low labour cost and duty concessions on exports to US and European markets.

"Labour cost in Bangladesh is almost one-third of that in India. Average monthly labour cost in India is over Rs.7,000 per person, while it is just around Rs.2,500 in Bangladesh," said D.K. Nair, secretary general of the Confederation of Indian Textile Industry.

"More than 35 Indian textile firms have opened factories in Bangladesh so far, most of them in the recent months," Nair, who oversees the apex industry body for the $55-billion Indian textile industry, told IANS.

Some of the leading Indian garment exporters like Shahi Exports, House of Pearl Fashions, Jay Jay Mills and Ambattur Clothing are using Bangladesh as an important destination in their journey to the western markets.

According to Bangladesh's Board of Investment, Indian textile firms have invested nearly $80 million in 35 factories.

Bangladesh, which is categorised as a least developed country (LDC), enjoys duty-free access to European markets, while Indian firms have to pay 9.6 percent duty.

"If you take duty concessions, labour and other costs into account, garments produced in Bangladesh is almost 20 percent cheaper," said Nair, alluding that it thus becomes difficult for Indian firms to compete globally.

This apart, the aggressive monetary tightening policies of the Reserve Bank of India (RBI) in the recent months has also made cost of capital expensive and further added to the woes of Indian textile makers.

O.P. Lohia, chairman and managing director of Indo-Rama Synthetics , a leading polyester fibre maker, said Indian companies were attracted to Bangladesh despite relatively poor infrastructure and uncertain political situation.

"Textile companies are facing cut-throat competition. Profit margin is very low and 15-20 percent cost difference is a big thing. So people are getting attracted to Bangladesh," Lohia told IANS.

He said even China is not able to stand the competition and is losing its share of exports in US and European markets to Bangladesh.

"Textiles is perhaps the most labour intensive industry. In Bangladesh labour is not only cheap but also easily available when you compare it with India and China," Lohia said.

Besides labour cost and duty advantage, raw materials and real estate costs are also cheaper in Bangladesh.

In a bid to help the domestic industry, Indian Commerce Minister Anand Sharma said the government has adopted a multi-pronged strategy to address the concerns of garment makers and exporters.

"I am aware that there is a serious concern on exports to the US and European countries," Sharma said, adding that the government will provide incentives to exporters in the form of interest subsidy and duty benefits.