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Meeting discusses restructuring Indian textile sector debt
06
Feb '12
A high-powered committee met last week to deliberate on restructuring the debt of the Indian textile industry.

The committee compromised of officials from the textile and finance ministries, officials from the Planning Commission and representatives of banks who had lent to the textile sector.

This meeting was called upon from a request by the stake holders in the textile industry who had raised apprehensions of their debts turning in to non-performing assets if the loans were not restructured.

Though details of the meeting were not immediately available, it is anticipated that the government may lend a sympathetic ear, considering that the industry is the second highest employment generator.

The Confederation of Indian Textile Industry (CITI) had calculated the overall debt of the Indian textile industry at a massive Rs one trillion and losses were estimated at Rs 110 billion.

In a report released last week, Fitch Ratings had said, “Cash losses for cotton yarn manufacturers and lower-end fabric companies in the first half of fiscal 2011-12, impaired their debt repayment capacity leading to several instances of over-utilisation of working capital limits.

It added, “Some Fitch-rated textile companies defaulted in YTD FY12 due to an inability to obtain a timely increase of working capital facilities, as banks tightened lending criteria for the sector.

“Refinancing risks would increase for distressed textile companies in 2012 as the Reserve Bank of India and the Finance Ministry have rejected the proposal for restructuring of textile loans”, it concluded by saying.

Fibre2fashion News Desk - India

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