Cotton yarn stocks down by 150 million: CITI

The spinning industry, which had a stock of more than 500 million kgs of cotton yarn following last year's restrictions on exports, has reported significant easing in the cotton yarn stock position, the Confederation of Indian Textile Industry (CITI) said.

In a statement made by Shishir Jaipuria, Chairman, CITI, from a peak level of 500 million kgs, cotton yarn stocks with the mills have now come down to around 350 million kgs and is expected to come down further in the coming months. "The festival season in the country starting from September onwards is expected to see significant improvement in demand for all textile products and this would also help the spinning sector to dispose of their accumulated stocks of cotton yarn. In fact, from May 23, 2011 onwards spinning mills all over the country had resorted to significant production cuts. Currently 25–30 per cent of capacity for cotton yarn production in the country is lying closed."

Restriction on export of cotton yarn has been lifted by the government and current cotton yarn exports are comparable with those of the same period last year. There has also been some positive movement in domestic demand for cotton yarn and he expects this trend to continue, the industry body stated.

Earlier, CITI had requested government for a comprehensive relief package for the spinning industry in order to tackle the losses suffered by the industry in recent months because of restrictions on cotton yarn exports, fluctuation in cotton and cotton yarn prices and accumulation of stocks both of fibre and yarn.

Moreover, with the improvement in the demand position, spinning industry is expected to come out of its present problems during the second half of the current fiscal. However, the mills will find it extremely difficult to repay loans and find working capital in the coming months because of the huge losses they suffered during the first half of the fiscal.

"CITI has sought a two year moratorium for repayment of loans and interest and a few other facilities from the Reserve Bank of India, in order to avoid the accounts becoming Non Performing Assets. The industry is confident that the current challenges can be met with the help of the relief which has been sought from government and the RBI. This will help the industry to revive its operations in full during the coming months and to avoid retrenchment of any workers," Jaipuria added.