Textile body seeks higher working capital limit from Centre

Southern India Mills' Association (SIMA) today approached the Centre for remedial measures, including enhancing working capital limit by 50 per cent, to help the industry overcome the impact of demonetisation.
The spinning sector was already reeling under recession due to sharp fall in yarn exports and the withdrawal of around 86 per cent of the currency in circulation has led to severe shortage of funds for regular operations such as purchasing raw material (cotton) and sale of finished goods, it said.
SIMA Chairman Senthil Kumar said, a representation was sent to Union Textiles Minister Smriti Irani appealing the government to announce a slew of remedial measures for mitigating the financial impact of demonetisation of high value currencies on the textile industry.

The textile retail showrooms and shops across the nation have been hit by the cash-crunch and low sales as customers were "starving" for currencies, he said.
The stocks have started piling up across the value chain of the industry and the textile units were not in a position to collect any receivables, he noted.
Therefore, cash flow of the textile industry has been seriously affected, Kumar said adding the cotton price has also increased by around Rs 2,000 per candy as the arrivals in the market came to a grinding halt during the first 10 days after demonetisation.
It has improved to the level of 50 to 60 per cent, he said adding, still "It might take at least six months for the textile industry to reach normalcy in its performance."

Though the government had announced two months moratorium for loans up to Rs 1 crore, the textile industry needed at least one year moratorium period for repayment of the dues and interest, he said.