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Debt relief would help revive textiles industry - SIMA
31
May '12
The Indian textiles and clothing industry is the largest and most labour intensive industry employing 35 million people directly and another 45 million people indirectly particularly women and rural masses.

The unprecedented and huge price fluctuation of all fibres from October 2010 onwards and demand recession for all textile products from January 2011 onwards in the global and domestic markets have seriously affected the entire textile value chain and driven the units to huge losses.

The textiles and clothing industry has incurred loss to the tune of over Rs.11,000 crore due to the volatility in cotton and yarn prices. In order to overcome from the crisis, SIMA has been pleading the government since July 2011 to restructure the debts of the textile industry so as to avoid the textile units becoming non-performing assets. Though the government was very sympathetic on the grave situation of the industry, the issue of repeated restructuring became a barrier.

In the above circumstances, the Textile Ministry has engaged M/s. BOB Capital Markets Pvt Limited to conduct a study about the requirement of the textile industry, which was later submitted to the Ministry. The Textile Ministry made a presentation at the Finance Ministry about the recommendations made by BOB Capital Markets Pvt Ltd for restructuring package for the textile industry.

In a Press Release, Mr. S. Dinakaran, Chairman, The Southern India Mills' Association (SIMA) has stated that according to the press release issued by the Textile Ministry, the government nod for loan restructuring for textile industry has been obtained following a meeting with Finance Minister on May 29, 2012. As against the total outstanding debt of Rs.1,55,809 crores of textile industry, the debt restructuring proposal has been made for Rs.35,000 crores.

Further the Ministry of Finance would also recommend to the RBI for a two year moratorium on term loans, special provision in NPA norms to avoid asset reclassification and working capital eroded to be converted into working capital term loan repayable over a period of three or five years.

Mr. Dinakaran has stated the recommendations came as a great relief for the ailing textile industry and would give a new lease of life to it, particularly for the textile mills in Tamilnadu and Andhra Pradesh, which have incurred huge cash losses during the last year.

SIMA Chairman has hoped that since the textile units have already started making marginal profits, the industry would revive soon and perform well. He has stated that the industry would be in a position to pay the interest and improve its liquidity position with the announcement of the package.

Mr. Dinakaran has thanked the Hon'ble Textile Minister, Hon'ble Finance Minister, Hon'ble Prime Minister, Mr. V. Narayanasamy, Hon'ble Minister of State, Parliamentary Affairs, Prime Minister's Office, Personal, Public Grievances and Pension, Government of India and Hon'ble Members of Parliament from the States of Andhra Pradesh, Tamilnadu and few MPs from North, who unanimously supported the cause of the textile industry irrespective of their political affiliations to help reviving the textile industry from the crisis.

SIMA Chairman has stated that the package would sustain the employment of about 90 million people, both direct and indirect, across the country particularly rural women and people below the poverty line. Chairman has stated it is also a win-win situation for both the banks and the industry.

Southern India Mills' Association (SIMA)

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