Textile Companies In Deep In The Red
Major textile companies in the country are deep in the red. Collectively, losses sustained by 50 major textile companies listed on BSE . Have touched Rs 206 crore in the second quarter of the fiscal. They collectively posted a net profit of Rs 223 crore in the same quarter the previous fiscal. However, there is still some silver lining. The turnover for 50 companies during the quarter increased 23% to Rs 8,414 crore, data provided by the Confederation of Indian Textile Industry (CITI) shows.Nitin Spinners, Patspin India, GTN Industries, RSWM and Bombay Dyeing have seen the sharpest declines in profitability in the second quarter. The profitability of these companies fell by a whopping 11,598%, 7,257%, 398%, 925% and 828% respectively for the period, according to CITI data. Only a few companies managed to stay in the green during the first half of the fiscal. Textile production grew a mere 0.3% during the first six months of the current fiscal compared to 5% registered in the same period the previous year.
"In the remaining two quarters, even turnover will decline. For smaller units, already there is significant production loss," CITI deputy chairman Shishir Jaipuria said in a presentation to Ficci. The textile sector has an overall weightage of 11% in the general index of industrial production (IIP) and constitutes 14% of manufacturing sector. The Economic Times in second half is generally lower, Jaipuria said.
"This fiscal would see significant negative growth." Already 7 lakh jobs are estimated to have been lost and another 5 lakh may be lost by March 2009, he said. The government should increase duty drawback rates reduced earlier and provide 4% interest subvention on export credit at least till March, Jaipuria said. Stating that cotton prices in the country are 20% higher than international prices because of unreasonably high minimum support price (MSP), the CITI deputy chairman said that working capital loans should be provided at 7% interest to enable mills to buy cotton.
