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'Textile production cut for indefinite period' – SIMA chief
Jun '11
The spinners of the country had decided to implement a one-third cut in production for a week from May 24, in order to reduce the over 500 million of yarn inventories lying with the mills. However, towards the end of May, they once again decided to extend the cut for a fortnight, as there was only a slight improvement in off-take of yarn.

Dr Selvaraju, Secretary General - Southern India Mills Association (SIMA) however says, “The production cut is not for a fortnight but for an indefinite period till normalcy is reached. The current situation is very bad. Mills are incurring huge losses. The stock piles have still not cleared up”.

Speaking exclusively to fibre2fashion, he said, “The domestic as well as export demand is yet to touch normal levels. The domestic consumption, which normally used to be around 210 million kgs, is about 150 million kgs right now. It is down by almost 60 million kgs mainly due to the pollution issue in Tirupur and Erode”.

Revealing more, he said, “As per the current production in the country, yarn exports should be around 100 million kgs, as opposed to 50-55 million kgs right now, which is mainly due to suspension of exports for about 2-3 months.

“The market is very dull. Many countries and buyers are not willing to enter into contract with Indian yarn makers. The domestic buyers are also dictating a lot of payment terms. All mills are carrying high cost inventory of cotton. During the peak season, prices of cotton were around Rs 63,000 per candy (1 candy = 356 kg), after which there has been a 33% fall.

“Added to this, the Government has enhanced the cotton export limit from 5.5 to 6.5 million bales (1 bale = 170 kg), which is going to create a scarcity. As per previous estimates, the closing stock was 2.75 million bales, which means a stock-to-use ratio of just around 10 percent, while in China and other countries; stock-to-use ratio is about 40-50 percent.

“With the new decision to export an additional one million bales, several hundreds mills will have to close down, during August, September and October, till they get the new cotton. The decision to export one million bales was taken, on the estimates that cotton production will reach 33.9 million bales. However, the latest Cotton Advisory Board (CAB) figures collated from various states estimates output at 30.9 million bales.

“The traders today are holding around 1.5 million bales of cotton which they want to export and not sell it to mills here. The farmers have already sold their cotton and whatever is now available, is only with the trader. The policy is not going to benefit even a single farmer”, he concluded by saying.

Fibre2fashion News Desk - India

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