Acute Shortage Of Poy Seen Ahead, Idbi Concerned

The Industrial Development Bank of India had convened a meeting among the major producers of polyester-oriented-yarn (POY) and financial institutions this week in order to evaluate the present status of the POY industry and its future prospects.

The IDBI, along with the Industrial Finance Corporation of India (IFCI) and Industrial Credit and Investment Corporation of India (ICICI), has an exposure of over Rs 1000 crore in the POY industry.

The high level meeting among several major industrialists, officials from the IDBI, IFCI and ICICI and some commercial banks observed that excess capacity is the main drawback of the industry and this supply exceeding consumption was perceived to be the primary reason behind stagnant rate of growth in the industry.

The points which emerged during the meeting was that : most producers have cut down production to tackle excess capacity; some producers have cut prices and given huge discounts to reduce inventory piling; there is no new investment coming in this industry and this might lead to a shortage and lastly, export of POY to foreign markets is not being explored by the producers.

The meeting also highlighted the existing problems in exporting POY to overseas markets. According to the producers, POY manufactured in India is not globally price competitive. This is because the cost of financing POY projects, the price of power and cost of raw materials are very high in India compared to the international prices.

The structured meeting, with its specific agenda, was the first of its kind called by any financial institution and was attended by 12 major POY producers.

The industry pointed out that presently, the POY industry was manufacturing around 48,000 to 50,000 tonnes per month whereas the consumption is around 42,000 to 44,000 tonnes per month.