Home / Knowledge / News / Textiles / Several MP textile firms seek debt restructuring
Several MP textile firms seek debt restructuring
14
Aug '12
The anticipated decline in cotton acreage has started affecting the textile sector in central Indian state of Madhya Pradesh. Several textile companies, which have taken loans and are not in a condition to repay, are approaching their banks for capital debt restructuring (CDR) in order to get rid of the crisis.
 
Mr. Tarun Baldua, Chairman of Madhya Pradesh Textile Mills Association and President at Maral Overseas Limited, told Fibre2fashion, “There is a drought like situation in the whole country and the cotton acreage is expected to be reduced next year by almost 10 to 12 percent. As a result, a shortage in the supply of cotton fibre is anticipated and the cotton prices have already started increasing.”
 
“But, on the other hand, the prices of yarn, fabrics and finished garments remain the same. They are not changing in the international market. Hence, the textile and garment manufacturers in Madhya Pradesh might have a tough time due to the disparity between the raw material and finished product prices,” he reasons. 
 
When quizzed about several textile firms in the state seeking loan restructuring, he mentions, “Debt restructuring is required because textile companies are not being able to pay their dues as the market conditions are not favourable to the industry. Also the acute economic slowdown in Europe is adding to the woes of the textile sector”.
 
Explaining the procedure of CDR to Fibre2fashion, he says, “Financial institutions provide loan to any organization and when a group of financial institutions provides loans and a problem of repayment of principal or interest occurs, then the concerned board or the body of financial institutions, which takes care of such loans which are not being repaid properly, comes into picture and decides the loan restructuring method that is conducive to all loan giving financial institutions.”
 
“In the existing scenario where garnered profits are not enough for the textile mill owners to pay their dues to the financial institutions, the Central Government and RBI have opted to give some breather to the textile industry by agreeing to restructure Rs. 4.5 million worth of Indian textile sector loans on a case-to-case basis,” he avers.
 
The Madhya Pradesh textile sector is also demanding direct subsidy benefit under the Central Government sponsored Technology Upgradation Fund Scheme (TUFS). “The TUFS subsidy is allowed to companies which are either modernizing their planting machinery or expanding to new capacities.”
 
“As per the scheme, the textile commissioner provides 5 percent interest subsidy to fabrics and looms and 4 percent to other textiles on their capital investment. So, now we are demanding a refund of the applicable 4to 5 percent subsidy as against the 12 percent interest rate charged by the banks,” he informs.
 
“The textile commissioner should pay the 4 percent to the bank and the bank should charge only 8 percent from us so that our cash flow can be managed smoothly. Otherwise, the process becomes delayed. Hence, we are demanding the direct subsidy benefit,” he adds.
 

Fibre2fashion News Desk - India

Must ReadView All

Textiles | On 27th Apr 2017

Maharashtra govt working on second textiles policy

The textiles department of the government of Maharashtra is working...

Apparel/Garments | On 27th Apr 2017

EC takes action to make garment sector more sustainable

The European Commission (EC) has presented a set of focused actions...

Textiles | On 27th Apr 2017

Seven new organisations join ZDHC Programme

The Zero Discharge of Hazardous Chemicals (ZDHC) Programme from...

Interviews View All

Rajiv Sirohi
Shara

‘Portugal is taking away a major share of the mill made sector.’

Pratik Bachkaniwala
Palod Himson Machines

Fabric processing machines are picking up

Marazban F Velati
Sutlej Textiles & Industries limited

No training can be effective till the candidate believes in it.

Iago Castro Asensio
RCfil Distribuciones S.L.

Iago Castro Asensio, International Business Manager of RCfil...

Marcel Alberts
Eurofibers

Coating at a fibre level is a practice not usually seen in the...

Steve Cole
Xerium Technologies

Steve Cole of Xerium Technologies discusses the industry. Xerium is the...

Mike Hoffman
Gildan Activewear SRL

Gildan Activewear, a manufacturer and marketer of branded clothing and...

Sonam & Paras Modi
SVA

Sonam and Paras Modi's Sva Couture is synonymous with head-turning...

Wendell Rodricks
Wendell Rodricks

"We should not compare India and the West. There are things we do that...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

news category


Related Categories:
April 2017

April 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search



X