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SISSPA presents Pre-Budget Memorandum
12
Feb '08
The South India Small Spinners Association, Coimbatore, would like to thank the Union Finance Minister, Mr P Chidambaram, for extending 15% margin money subsiby for SSI Textile Sector in the modified Technology Upgradation Fund Scheme for the 11th Five Year Plan period and we are grateful to you for your keen interest in the development of the Small and Medium Enterprises like our member mills.

We would like to bring to your kind notice, the issues concerning the Spinning Sector, which requires your immediate attention.

1.BANK INTEREST:
The Bank Interest rates have gone up by 4% due to the measures taken by the Reserve Bank of India (RBI) to contain the inflation in our country. You may be well aware that the Textile Spinning Sector is a highly capital and labour intensive.

Present hardening of the rupee against the American Dollar has upset our countries exports and this has affected Small Spinners in a big way since lot of exporter's source their requirements from us.

The sudden hike in the interest rates has caused a huge burden and has severely effected the viability of the units and already lot of units have started approaching their respective bankers to reschedule their loans fearing that if they default on their obligations to banks, will result in their assets being classified as Non-Performing Assets (NPA).

In view of the above, we humbly request you to consider our plea sympathetically and to reduce the rate of interest for both working capital and term loans, which was prevailing during the year 2006.

2.MORATORIUM:
The whole of Cotton Textile Industry is facing the worst crisis ever because of the following important factors.
- Steep decline of exports due to appreciation of rupee against the dollar.
- Sudden hike in the interest rates by the financial institutions because of the measures taken by the RBI to contains inflation.
- Abnormal hike in the prices of raw material (Cotton) due to competing purchase of raw cotton by international shippers.

The sliding yarn market has made matters worse for the spinners. Yarn prices in the Export Market is currently reeling 7% to 8% below the domestic prices, thereby forcing many to turn to domestic market sale and causing market glut.

This scenario has wiped out the little profit the spinners were making and has pushed majority of the units in the red, there by resulting in the units defaulting in their interest and principal repayments to the bankers or the promoters are availing funds at higher interest rates to honour their commitments with the bankers, thus ending up in more trouble.

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