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Profitability of spinning mills is cyclic – CEO, DCM Textiles
24
Dec '10
Mr Rakesh Goel, CEO - DCM Textiles
Mr Rakesh Goel, CEO - DCM Textiles
Rising and more recently, fluctuating cotton prices have kept the cotton-textile value chain on its toes. Cotton prices were quoting at Rs 41,500-41,700 per candy (1 candy = 355 kgs) yesterday, which is nearly double, than those prevailing from a year ago.

This has led to an inevitable price hike across the whole cotton textile value chain, beginning from cotton yarn to fabrics to apparel and right up to the consumer prices. The government's nod to permit exports of 5.5 million bales in October, too has added to the flare-up.

In a bid to understand the current and future situation, fibre2fashion spoke exclusively to Mr Rakesh Goel, Chief Executive Officer (CEO) of DCM Textiles, a division of DCM Ltd. DCM Textiles has a lineage going back over 120 years.

The exclusively cotton spinning plant of DCM Textiles is located in Hisar, Haryana and has 74,436 spindles, with plans to expand it to 100,000 spindles by 2012. DCM employs the latest technology in yarn spinning and finishing, to meet the highest global quality standards.

DCM has an export presence in 25 countries which include Spain, Portugal, Egypt, S. Korea, Brazil, Hong Kong, Italy, Bangladesh and Israel.

Mr Goel informed, “Raw cotton prices have seen an unprecedented rise. These prices are likely to sustain as demand slowdown is not visible at current levels and as also, yarn demand continues to be good in most of the big cotton yarn consuming countries.

“Cotton prices are likely to remain at high levels in near future as prices in the competing markets in USA & China, are also at higher price levels. Till there is a rise in production of cotton, by atleast 10 million bales in a year, the prices are not likely to come down”.

When asked as to how the ban on new cotton yarn export registrations, will impact DCM Textiles, he replied by saying, “The cotton yarn export restrictions from India are unfortunate. We have export obligations under EPCG license and against these obligations, yarn exports should be allowed by Government, if not as a general policy.

“Moreover if India wants to add value to raw cotton and convert its raw cotton exports to cotton yarn exports, obviously cotton yarn exports have to rise and any kind of restriction on these exports will only encourage raw cotton exports”.

To wrap up this informative interview, we laughingly asked him to comment on rumours that spinners are laughing all the way to the bank, since the last few months, to which he said, “The profitability of spinning mills is cyclic and over a cycle period of 4-5 years, the profit of spinning industries is nominal or much less as compared to other industries like pharmaceuticals, automobiles, etc. whereas the employment generation is much higher in cotton yarn spinning industries”.

Fibre2fashion News Desk - India

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