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CITI urges govt to defuse grave crisis; relief package sought

06 Jul '11
4 min read

Dwelling on the precarious situation that the industry is caught up now, Mr. Mukund Choudhary, Managing Director, Spentex Industries Ltd and President, NITMA said that because of the restrictions placed on export of cotton yarn last year, over 300 million kgs of cotton yarn remained with the mills on 31st March 2011. Domestic demand, which has been declining from January 2011 onwards, continues to fall steeply and therefore the stocks with the mills have increased to approximately 500 million kgs. The loss on 500 million kgs because of the price decline of Rs 90 per kg would work out to Rs 4500 crore. Viewed against this, the total loss to the textile industry on stocks of raw materials and cotton yarn would work out to over Rs 11,000 crore.

Mr. Jaipuria observed that the spinning mills have invested more than Rs 40,000 crore during the last 10 years in capacity building and modernization, which would mean that about Rs 5000 crore per annum has to be repaid by them to the banks. The interest payment on these loans would amount to another Rs 2000 crore. Thus, Rs 7000 crore would have to be repaid by the spinning mills to banks in the current year. The other segments in the value chain also have huge repayment commitments. “Against these imponderables and vicissitudes, a comprehensive relief package at the earliest can only ensure the survival of the textile industry,” he added.

Confederation of Indian Textile Industry (CITI)

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