The mill sector, it appears, has been unable to take advantage of the steep slide in the price of cotton.
Poor off take of yarn, tight liquidity and bottleneck in supply chain have handicapped the textile industry in this region.
J Thulasidharan, Managing Director, Rajaratna Group of Mills told BusinessLine that Indian cotton is the cheapest available fibre in the world today. Yet mills do not have the wherewithal to procure the cotton at the current level as the spinning mills are yet to resume operations in full swing, are holding about 1-1.5 month’s stock and the liquidity position is tight.
With major cotton producing states such Madhya Pradesh, Maharashtra and Gujarat reporting huge spike in Covid-19-related cases, movement of goods has been hit. “Goods are moving, albeit slowly,” he said, adding “export of the fibre is picking up”.
Thulasidharan, who is also the President of Indian Cotton Federation (ICF) said the price fall would not affect the cotton farmer. “Cotton Corporation of India is procuring the produce; the farmers would anyway get the minimum support price. While the acreage of all other cash crops such as maize, groundnut and wheat among others has fallen, cotton alone has registered an increase in acreage. Further, farmers consider cotton a viable crop compared to others, due to strong MSP backing.”
“The anxiety now is over the record closing stock that we would be left with this year. It is expected at around 120 lakh bales,” he said.
As the weaving and dyeing units are yet to resume operations, the mills in the South are in a fix.
“There is huge uncertainty. So mills are taking a cautious call,” said Prabhu Damodharan, Convenor, Indian Texpreneur Federation, referring to cotton purchase.
With the spinning sector operating at less than 40 per cent of its capacity, Damodharan says, “even at this level, yarn stocks have started to pile up. Demand will grow, but in stages. Every sector of the textile value chain should become operational for things to bounce back.”
“Certain sectors have started to show signs of recovery. For instance, those engaged in making of inner wear and kids wear have started placing order for yarn, home textiles market is also showing signs of recovery but fashion wear and high-end brands are yet to resume activity,” he said.
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