Cotton Spinning Mills Face Decline In Domestic Cotton Output

Rise in cotton prices this year has caught off guard Cotton Spinning industry with low cotton stocks as domestic output is set to decline double digit in season 2015-16.

The industry is suspecting heavy squeeze in margins as demand-supply imbalance is stoking cotton imports and new crop arrival is delayed due to late sowing of cotton.

"High off-mark cotton crop estimates has put industry in a precarious situation as most spinners are likely to run dry of raw material before the new crop arrival," says Sanjay Jain, Northern India Textile Mills' Association (NITMA), VP, Senior Vice president.

"The cotton demand supply imbalance is likely to prolong till beginning of November due to late sowing owing to delayed rain this year," he said.

He sought a reliable mechanism to provide estimates on output, crop arrival and expected yield to evade such a situation in future.

"Prices are up 30% up in spot markets and likely to further increase due to demand and supply imbalance," he said. The spinning industry is in dire need of fiscal incentives, he said.

 

India exported over two-million bales in the last year to Pakistan in October, November and December due to low prices prevailing at the time.

Now, shoe is on the other foot. As the demand supply imbalance has fuelled cotton contracts for imports from Australia, Brazil, Pakistan, West Africa and the US, he said.

"Most firms are not in a position to enter import contracts as shipments will be delayed and prices are on rise," he said.

"The country could end up importing over 2-million bales to bail over the situation," says Rakesh Rathi, president Indian Cotton Association Limited.

"Imports will bailout industry along coastal areas but land locked industry in North will be dependent on supply from central states," he said. The Association has sought incentives to bailout the industry.

The cotton output in domestic market is expected to fall by 15% for season 2015-16 after preliminary estimates pegged it at 38.4 million bales.

"It is unlikely that output will cross 325 lakh bales this year," says Jain blaming initial cotton output estimates for the situation.

"Cash rich firms that have adequate stock are in advantage while most of the industry is caught in a muddle," he said.

In last few years Cotton processing industry largely maintains stocks for three months while small players rely on weekly for fortnight purchase to evade brunt of volatility in prices of cotton.

"The yarn manufacturers are likely to worst affected as moderate demand has left little scope for rise in price of products," he said.

"Contracts for cotton imports are on rise as stock situation is set to tighten in coming months," he said.

"Now, it is entirely a traders market as most are likely to hold cotton stocks to allow further price rise," Jain said.

 

Source:economictimes.indiatimes.com

India To Import Pulses From Mozambique Through Government Channels

 India, the world's biggest consumer of pulses, will help Mozambique in cultivation of pulses and import them through government-to-government deals in the coming years, Telecom Minister Ravi Shankar Prasad said on Tuesday.

Prices of pulses are ruling near record highs in the south Asian country as output trails supplies. The government-to-government deals will help India secure supplies of pulses, Prasad told reporters after a cabinet meeting.

India is likely to import 100,000 tonnes pulses from Mozambique in the 2016/17 financial year ending on March 31 and aims to double it in four years, he added.

India, which consumes nearly 22 million tonnes of pulses annually, sources yellow peas and lentils mainly from Canada and the United States, chickpeas from Australia and Russia, and green gram and pigeon peas from Myanmar and Mozambique.

Pulses production of India stood at 17 million tonnes in 2015-16, while imports were 5.79 million tonnes.

 

Source:economictimes.indiatimes.com

India's June Oilmeal Exports Down By 48%

 Oilmeal exports fell by 48 per cent to 88,514 tonnes last month due to tight local supply of oilseeds and continuous price disparity in the global market, industry body SEA said today.

The country had shipped 1,69,699 tonnes of oilmeal, used as an animal feed, in June last year.

Even during the April-June quarter of current fiscal, the overall export of oilmeals declined by 61 per cent to 1,86,293 tonnes compared to 4,73,676 tonnes in the year-ago period, the Mumbai-based SEA said in a statement.

According to the Solvent Extractors Association of India, the fall in exports was mainly "due to lesser availability of oilseeds for crushing and continuous disparity in exporting oilmeals in international market".

As per the SEA data, export of ricebran extraction fell significantly to 1,500 tonnes in June this year from 34,328 tonnes in the year-ago period.

Similarly, castorseed meal shipments declined to 40,591 tonnes from 77,134 tonnes, while rapeseed meal exports dropped to 43,636 tonnes from 56,139 tonnes in the said period.

   


However, the export of soyabean meal rose marginally to 2,672 tonnes in June from 2,098 tonnes in the year-ago.

Out of the total exports, a maximum of 76,775 tonnes of oilmeal was shipped to South Korea in June, followed by Vietnam at 4,158 tonnes, Indonesia at 2,070 tonnes and Thailand at 1,595 tonnes.

South Korea and Vietnam are the top two destinations for export of oilmeal for India.

 

Source:economictimes.indiatimes.com

Power Cost May Drop After Coal Import Probe

A probe into the Rs 29,000-crore coal import scam, where the value of coal from Indonesia for power plants was allegedly inflated by companies, seems set to lower electricity tariff in several states, including Maharashtra.

At least four state electricity regulatory commissions — Maharashtra, West Bengal, Andhra Pradesh and Tamil Nadu — have written to the Directorate of Revenue Intelligence (DRI) seeking details of the probe. "We have had discussions with the DRI and have requested for a detailed report on the over-invoicing of power plant equipment, besides inflating the value of coal. This will have an impact on the tariff pertaining to power plants under our jurisdiction in Maharashtra," said a senior MERC official.

The DRI estimates that tariff could come down by 50 paise to Rs 1.50 per unit. It has referred the case to the "Forum of Regulators" comprising chairpersons of the Central Electricity Regulatory Commission (CERC) and all the state monitors.

The DRI has alleged that power-generating companies, including public sector undertakings like Tamil Nadu Electricity Board, NTPC, Mahagenco, and others have indulged in over-invoicing of the imported coal. TOI was the first to report the scam in December 2014. All the companies have denied any manipulation.

The DRI findings have also reached the Supreme Court as part of an appeal. Energy Watchdog, represented by senior lawyer Prashant Bhushan, has challenged an order of the Appellate Tribunal for Electricity that directed the CERC to award compensatory tariffs to Adani Power and Coastal Gujarat Power (Tata Group) based on the power purchase agreements for their power plants in Mundra.

The compensatory tariff is linked to the increase in coal prices owing to a change in Indonesian laws, thereby leading to hike in the import prices. DRI has alleged that it is not true. At least 20-odd applications seeking compensatory tariff are pending before CERC and the various SERCs.

 

Source:timesofindia.indiatimes.com

India Explores Iran Market For Textiles Exports

 In an attempt to reduce dependence on the European Union and United States for growth, Indian garment exporters are exploring opportunities in Iran.
 
A delegation led by the Ministry of Commerce and accompanied by over half a dozen industry officials recently met with their counterparts there. The Indian delegation discussed a host of issues including prevailing taxes and relaxation in policy support for hassle-free export of textiles to Iran.

 
 
“Although the United States and the European Union are important markets for us, we are exploring new markets for textiles exports to reduce our dependence on these two regions,” said Rashmi Verma, Secretary, Ministry of Textiles, on the sidelines of an event in Mumbai.
 
India has remained absent from Iran’s markets not because of preferential treatment like European Union, but on account of extremely high import tax levied by the Iranian government. An import tax of 200% was levied on apparels and textiles until two years ago which has been gradually slashed to 55% and 32%, respectively.
 
Following the Indian delegation’s visit, however, tax authorities in Iran have agreed to reduce import duty on textiles and apparels to a 20-25% level or even lower over the next two years.
 
Exploring new markets has become critical for Indian textiles exporters due to falling shipments to traditional markets such as the United States and the European Union, which account for over 60% of India’s textiles and apparel exports.  
 
Owing to preferential treatment given to the countries like Pakistan, Vietnam and Bangladesh, textiles shipped to such buyers works out to be uncompetitive for Indian exporters. Consequently, India’s exports have declined over the last few years.
 
After setting a target of $47.5 billion at the start of the fiscal year ending March 2016, India’s textiles exports managed only $38 billion, a marginal decline from $40 billion in the previous year. With a host of incentives and a Rs 6,000 crore package announced in the last few months to boost textiles and apparel exports, the government has set a target of $50 billion for FY2017.
 
“The targets look achievable,” said Rahul Mehta, President, Clothing Manufacturers Association of India (CMAI).
 
Confirming India’s outreach, Mehta said Iran’s market size stands at $16 billion, of which only 40% comes from domestic sources. The rest is met through imports, largely illegal, he added.
 
“Interestingly, China’s market share in the world’s textiles and apparel segment has declined to 38% from 40% from a couple of years ago due to rising cost of production on higher labour cost. So, China is creating a vacuum which India can exploit to increase its market share from the existing 5%,” said Verma.
 
“Iran offers immense of opportunities for textiles and apparels exports for India being the Islamic country a gateway for European markets with a combination of western and traditional taste,” said Mehta.
 
Referring to an Ernst and Young report, Texprocil chairman R K Dalmia forecasts India’s textiles exports to rise by 9% CAGR (compounded annual growth rate) to $62 billion in five years from $40 billion in 2016. The domestic textiles market is set to grow 5.2% annually to $80 billion by 2021 from $62 billion in 2016.

 

Source:business-standard.com