Press Information Bureau

Government of India

Ministry of Textiles

12-December-2012 18:03 IST

Cotton Advisory Board (CAB) has estimated 2011-12 cotton production at 353 lac bales, consumption at 252 lac bales and exports at 128.81 lac bales.

Despite the increase in production, record cotton exports helped sustain Indian cotton prices during cotton season 2011-12 above MSP levels. By July 2012, domestic cotton prices crossed international prices, causing several textiles mills to import cotton from cheaper international destinations. The volatility in cotton prices in cotton seasons 2010-11 and 2011-12 resulted in textiles industry experiencing negative operating cash flows, low profit margins, skewed debt to equity ratio, inadequate debt service coverage ratio and low return on capital employed and necessitated a Rs.35000 crores debt restructuring package undertaken on a case by case within the RBI’s prudential guidelines.

This information was given by the Minister of Textiles, Shri Anand Sharma in a written reply in the Rajya Sabha today.

DS/RK

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Debt restructuring for textile borrowers implemented case-by-case to restore debt serviceability under banking prudential norms. Volatility in cotton prices and domestic prices exceeding support levels caused financial distress in the textiles sector-negative operating cash flows, low profitability, adverse capital structure and inadequate debt service coverage-necessitating a targeted debt restructuring package implemented on a case-by-case basis under banking prudential guidelines to restore debt serviceability and stabilise textile borrowers' capital positions.