Cloth Subdued, Cotton Lacklustre

Despite the festival season, activity remained limited on the Mumbai Mulji Jetha Cloth market last week. Even upcountry reports were discouraging.

The demand for saris, suitings and shirtings were scattered at upcountry centres on account of the Raksha Bandhan. Delhi and Rajasthan even lacked the demand for saris and suitings. Now with the end of the festival, renewed demand is expected only for the Pooja and Dassera festival. Upcountry traders feel that the demand would pick up only during the September festival.

Meanwhile, the excise duty rules for process-house had been announced applicable from August 1. According to the new rules excise payments by process houses would be made on a chamber basis.

 

In all about 7,500 chamber houses are in existence and excise duty would be levied on them. In view of the demand from mills the change in duty has been undertaken . Mostly powerlooms and process houses refrained from making payments of excise by hook or crook. They would now have to make payments with the result that the government's income would increase 100-fold.

Bhilwara and Surat are the ones most affected by the change. Upcountry reports have indicated that the demand for suitings and shirtings had been satisfactory and Calcutta as well as the Assam traders were lifting these varieties. Rajasthan and Madhya Pradesh have also reported good demand for woollen cloth and ready-made items like sweaters, shawls, blankets etc.

Century Industry has already started booking for September - October only at current prices, indicating that the mills would not go for a further hike in prices. On the other hand, a prominent Mumbai-based mill sold 600 bales of dhoti to South Indian traders, undercutting the price by Rs 10-12 per metre. This could upset the local markets, with upcountry traders offering the same at lower prices.

The demand for mulls, cambric have dropped. Overall the demand for August, so far, has been poor compared to July. The traders are now looking expectantly at September.

Cotton: With the virtual end of supplies and depleting stocks with trade as well as farmers, sellers were now determining the price level, on the Mumbai cotton market last week. This was higher for the stockists to unload. Besides, mills having limited stocks as well as financial strength for purchases, unmindful of prices and hence on moderate mill buying, prices moved up by Rs 100-150 per candy. In fact, the declining trend has changed for the better.

According to trade, the monsoon has been fairly good in most parts of the country. However, Vidarbha and Aurangabad areas lack sufficient rains. At the same time, monsoon has been unfavourable in Guntoor and nearby cotton producing areas. The general opinion is still optimistic with about 10 per cent more cotton output than the current year's production of 170,000 bales.

Even the textile commissioner had announced that no fresh export quota would be announced of the season. The Maharashtra State Co-operative Cotton Growers' Marketing Federation has been trying to get further export quota to relieve the burden of about 8.5-9 lakh bales unsold with the federation. Even such reports help prices to hedge up to a small extent. However, in the long run it will not be helpful. Traders are having very difficult time as far as the outstanding payments from the mills are concerned. According to reliable reports, from only one Mumbai mill traders have to recover more than Rs 11 crore. Besides, a prominent south Indian mill has yet to clear cotton outstandings of Rs 22 crore.