Basic HTML Version
Debt rescheduling indispensable
All the Indian cotton textile companies
without exception having reported heavy
losses throughout the year just gone by, the
Textiles Ministry felt constrained to concede
the industry demand for a comprehensive re-
lief package to get over the crisis, including
a moratorium on mills’ repayment of bank
loans and interest. In fact, the operating loss-
es of mills are more pronounced in the case
of cotton yarn and lower-end fabric manu-
facturers due mainly to extreme volatility
in cotton prices making them more prone
to severe liquidity risks. The Government’s
erratic and unpredictable cotton and yarn
policy is largely to blame for the plight of
thousands of spinning mills. The mid-year
announcement of a ceiling of 720 million kg of cotton yarn shipments,
which of course was lifted later, and the decision on export of an additional
10 lakh bales of cotton, besides the exportable surplus of 55 lakh bales,
added to the woes of mills. Higher inventories, coupled with liquidity pres-
sures, forced cotton textile mills to put off buying of high-cost cotton and
yarn. At one particular stage cotton prices shot by 40 per cent.
What has come as a morale-booster to the industry is the Centre’s pro-
posal to extend interest waiver on loans to those companies which were left
out under the subsidy scheme last year. Further, Fitch has rightly said that,
based on its study of working of mills faced with mounting cash losses,
immediate debt restructuring is indispensable. True, debt repayment capac-
ity of some companies has deteriorated further, leading to over-utilisation
of working capital limits. Debt restructuring has of course its drawbacks.
If, for instance, the extended moratorium on repayment of loans is made
available to all the companies, some of them needing no funds may also
opt for extension as done during the 2008-09 slowdown. Again, there is no
guarantee that debt rescheduling would yield the desired results in view of
the nagging uncertainties gripping the global economy, with its adverse
influence on the individual economies across the world.
As elsewhere, there is nothing to cheer on the domestic front too. The
Indian economy is on the slide with extremely poor stock market opera-
tions pushing the Sensex to far below the 16000-level, a steady erosion in
the rupee value and the steep decline in aggregate exports, with the rate of
growth in December at just 6.7 per cent. Of immediate concern are the US
slowdown and the EU debt crisis, since the two regions together absorb
about 60 per cent of India’s textile exports.
6
|
The Textile Magazine
jANUARY 2012
nd
Anniversary
ed i t i on
R. Natarajan,
Managing Editor & Publisher
Publishers
Gopali & Co.,
Quanta Zen Building, No.38, Thomas Road,
2nd Street, Off. South Boag Road, T.Nagar,
Chennai-600017. Ph.: 24330979, 42024951.
Fax: 044-24332413
Email: textile_magazine@rediffmail.com
textile.magazine@gmail.com
Website: www.indiantextilemagazine.com
Founder
M. Rajagopalan
Mentor
Rajagopalan Kalidasan
Managing Editor & Publisher
R. Natarajan (Mobile: 9381062161
(R) 24343475)
Assistant Editor
K.N. Ananthanarayanan (Mobile: 9003053132)
Executive Editor & General Manager
K. Gopalakrishnan (Mobile: 9840897542)
Editorial Correspondent
N. Balasubramanian (Mobile: 9840597082)
Email: balanatarajan.gopali@gmail.com
Marketing
G. Mohan
N. Anandan
Designer
E. Marimuthu
Mumbai
R. Balasubramanian
G 102, Shrinagar Co.Op. Housing Society,
P.L. Lokande Marg, Chembur (West),
Mumbai - 400 089. Ph.: 022-25252377.
Cell: 9323711291.
Email: r.balagopali@gmail.com
Coimbatore
Ganesh Kalidasan
Flat No.A1-42, TVH Ekanta
No.5/179, Masakalipalayam Road
Uppilipalayam, Coimbatore 641 015.
Cell: 97909 26388
Email: ganesh.kalidas@gmail.com
Bangalore
J. Saravanam
BS 23, 2nd Floor, Block ‘B’ Ittina Neela,
Nr. Gold Coins Club, Andapura,
Electronics City P.O.,
Bangalore - 560 100. Cell: 9880974765
Email: saravanam_j@yahoo.co.in
Member
INS / AINEC / IFSMAN
Edited & Published by R. Natarajan on behalf
of Gopali & Co., Quanta Zen Building,
No.38, Thomas Road, 2nd Street, T.Nagar,
Chennai-17, and Printed by B. Ashok Kumar
at Rathna Offset Printers, 40, Peters Road,
Royapettah, Chennai-14
The views presented herein are those of the authors. They
are not necessarily the views of the editor.
All rights reserved. Neither this publication nor any part
of it may be reproduced in any form or by any means, nor
may it be printed, photocopied or stored on microfilm with-
out the written permission of the publisher.
TEXTILE MAGAZINE
THE