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India : Punjab spinning mills jostling for cotton stock (November 23, 10)

India : Punjab spinning mills jostling for cotton stock

The spinning industry in Punjab is under pressure due to escalating input costs. Despite a bright outlook for cotton crop and an all-time high price of cotton in the open market (about Rs 4,250 per maund, one mound is 37.324 kg), the spinners are not finding an easy access to the required quantity of cotton.

The Group CEO of Saluja Exports V K Goyal told that during this part of the year, the spinning mills ideally have a stock of about 60 days, that has now decreased to 30-40 days.Goyal added that, the forecast of increase in output to 32.5 million bales of cotton which is higher than last year’s output of 29.5 million bales, did not help the spinning units in running the spinning mills at full capacity.

“There is no gainsaying that the spinning units have been able to pass on the price revision of cotton but the margins are under immense pressure due to increasing cost of power, inflation and wages”. He added that the Government has allowed the export of 5.5 million bales that leaves 27 million bales for domestic market. Domestic consumption of 26 million bales would leave about 1 million bales as the opening stock for next year, which is too less.

According to Rana Polycot CEO M S Punni the increase in cotton price is a global phenomenon. Due to bad crops in Pakistan and China the cotton price has gone through the roof. The regulation of cotton exports could have helped the industry absorb the volatility of cotton price.

I S Dhuria of Vardhman Textiles apprised that the industry faces acute labour shortage this time of the year. Due to Diwali and Chatpuja, labourers go to their native states. The assembly elections in Bihar also made a dent on the availability of labour this year. The lower capacity utilisation hit the bottomlines.

There is a perception among textile units in the north that the cotton prices would slide in mid-December. As a consequence the yarn prices would drop even for stock purchased at a higher price.

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