You are here: Home » Finance » News » Banks

Stressed assets in textiles sector ease, but need more support

Slowdown in demand has been a major issue helping lower profit margins for textiles players

Stressed assets worth thousands of crores in sector posing a threat to the system have eased over past few months due to favourable policy suport from the government, industry experts said.
 
At a deliberation on the 'Investment opportunities in Maharashtra in textiles sector' in Make in India summit here on Sunday, Dilip Jiwrajka, Managing Director of Alok Industries, said, "Stressed assets were created due to high interest rates. In early nineties, lots of investments were made in textiles sector (perhaps to take advantage of the Technology Upgradation Funds Scheme or TUFS money was raised to creat nee capacity). Investors availed funds at 3.5% of interest rate which has now risen to 10.5%."

But now, with revised TUFS in place and lots if incentives and capital subsidy announced by the government, the stressed assets have eased, he added.

For the first time ever, government of Maharashtra has introduced a scheme under which upto 30% of capital subsidy is granted for self financing. Capital subsidy was allowed only for those projects that were financed by banks.

"Allowing capital subsidy only on banks' financed projects mean we are encouraging mills to take loan from banks. For the first time we are encouraging investors with self financing. The government might resolve the streased assets issue temporarily. But for long term, we need to encourage promoter's equity in the company," said Sunil Porwal, Additional Chief Secretary (Textiles), Government of Maharashtra.

Stressed assets problem in other sector could be because of global factors (economic slowdown), but textiles sector faces its own inherent problems. Elevated labour and raw material costs coupled with a slowdown in demand has been a major issue helping lower profit margins for textiles players.

Emphasising the need for value addition, the chief minister of Maharashtra Devendra Fadnavis assured the industry with more policy support. The government of Maharashtra haa already announced 16 textiles parks and one mega textiles cluster in major cotton growing regions.

Fadnavis also throws idea of setting up an apparel park in the state.

"Global economic slowdown has given us an opportunity to increase our market share in the world market at 5% as compared to over 30% of China. We need to do everything in five years. We are confident that we can achieve that with all your supports", Fadnavis said. Subhash Desai, Minister of Industries, Government of Maharashtra, wooed investors too.

image
Business Standard
177 22
Business Standard

Stressed assets in textiles sector ease, but need more support

Slowdown in demand has been a major issue helping lower profit margins for textiles players

Dilip Kumar Jha  |  Mumbai 



Little success for SDR as banks scout for promoters

Stressed assets worth thousands of crores in sector posing a threat to the system have eased over past few months due to favourable policy suport from the government, industry experts said.
 
At a deliberation on the 'Investment opportunities in Maharashtra in textiles sector' in Make in India summit here on Sunday, Dilip Jiwrajka, Managing Director of Alok Industries, said, "Stressed assets were created due to high interest rates. In early nineties, lots of investments were made in textiles sector (perhaps to take advantage of the Technology Upgradation Funds Scheme or TUFS money was raised to creat nee capacity). Investors availed funds at 3.5% of interest rate which has now risen to 10.5%."

But now, with revised TUFS in place and lots if incentives and capital subsidy announced by the government, the stressed assets have eased, he added.

For the first time ever, government of Maharashtra has introduced a scheme under which upto 30% of capital subsidy is granted for self financing. Capital subsidy was allowed only for those projects that were financed by banks.

"Allowing capital subsidy only on banks' financed projects mean we are encouraging mills to take loan from banks. For the first time we are encouraging investors with self financing. The government might resolve the streased assets issue temporarily. But for long term, we need to encourage promoter's equity in the company," said Sunil Porwal, Additional Chief Secretary (Textiles), Government of Maharashtra.

Stressed assets problem in other sector could be because of global factors (economic slowdown), but textiles sector faces its own inherent problems. Elevated labour and raw material costs coupled with a slowdown in demand has been a major issue helping lower profit margins for textiles players.

Emphasising the need for value addition, the chief minister of Maharashtra Devendra Fadnavis assured the industry with more policy support. The government of Maharashtra haa already announced 16 textiles parks and one mega textiles cluster in major cotton growing regions.

Fadnavis also throws idea of setting up an apparel park in the state.

"Global economic slowdown has given us an opportunity to increase our market share in the world market at 5% as compared to over 30% of China. We need to do everything in five years. We are confident that we can achieve that with all your supports", Fadnavis said. Subhash Desai, Minister of Industries, Government of Maharashtra, wooed investors too.

RECOMMENDED FOR YOU

Stressed assets in textiles sector ease, but need more support

Slowdown in demand has been a major issue helping lower profit margins for textiles players

Slowdown in demand has been a major issue helping lower profit margins for textiles players
Stressed assets worth thousands of crores in sector posing a threat to the system have eased over past few months due to favourable policy suport from the government, industry experts said.
 
At a deliberation on the 'Investment opportunities in Maharashtra in textiles sector' in Make in India summit here on Sunday, Dilip Jiwrajka, Managing Director of Alok Industries, said, "Stressed assets were created due to high interest rates. In early nineties, lots of investments were made in textiles sector (perhaps to take advantage of the Technology Upgradation Funds Scheme or TUFS money was raised to creat nee capacity). Investors availed funds at 3.5% of interest rate which has now risen to 10.5%."

But now, with revised TUFS in place and lots if incentives and capital subsidy announced by the government, the stressed assets have eased, he added.

For the first time ever, government of Maharashtra has introduced a scheme under which upto 30% of capital subsidy is granted for self financing. Capital subsidy was allowed only for those projects that were financed by banks.

"Allowing capital subsidy only on banks' financed projects mean we are encouraging mills to take loan from banks. For the first time we are encouraging investors with self financing. The government might resolve the streased assets issue temporarily. But for long term, we need to encourage promoter's equity in the company," said Sunil Porwal, Additional Chief Secretary (Textiles), Government of Maharashtra.

Stressed assets problem in other sector could be because of global factors (economic slowdown), but textiles sector faces its own inherent problems. Elevated labour and raw material costs coupled with a slowdown in demand has been a major issue helping lower profit margins for textiles players.

Emphasising the need for value addition, the chief minister of Maharashtra Devendra Fadnavis assured the industry with more policy support. The government of Maharashtra haa already announced 16 textiles parks and one mega textiles cluster in major cotton growing regions.

Fadnavis also throws idea of setting up an apparel park in the state.

"Global economic slowdown has given us an opportunity to increase our market share in the world market at 5% as compared to over 30% of China. We need to do everything in five years. We are confident that we can achieve that with all your supports", Fadnavis said. Subhash Desai, Minister of Industries, Government of Maharashtra, wooed investors too.
image
Business Standard
177 22
Widgets Magazine

More News

Widgets Magazine
Widgets Magazine
Advertisement

Upgrade To Premium Services

Welcome User

Business Standard is happy to inform you of the launch of "Business Standard Premium Services"

As a premium subscriber you get an across device unfettered access to a range of services which include:

  • Access Exclusive content - articles, features & opinion pieces
  • Weekly Industry/Genre specific newsletters - Choose multiple industries/genres
  • Access to 17 plus years of content archives
  • Set Stock price alerts for your portfolio and watch list and get them delivered to your e-mail box
  • End of day news alerts on 5 companies (via email)
  • NEW: Get seamless access to WSJ.com at a great price. No additional sign-up required.
 

Premium Services

In Partnership with

 

Dear Guest,

 

Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.

Enjoy Reading!
Team Business Standard