February 2020 Issue Apparel February 2020 issue | Page 106

INDUSTRY INSIGHTS
ENERGY ACCOUNTS
FOR ALMOST HALF THE
PRODUCTION COST WITHIN
THE TEXTILE VALUE CHAIN.
THE PRICE AND RETURN
Even though mills began witnessing movement,
their earnings remain to be justified. This is
because not only were the spinners selling at
lower prices but they were also trading below
minimum support prices (MSP) across India.
However, as per reports, experts, keeping this
bullish trend in mind, hint that cotton imports
during 2019–20 were estimated to be at 28.20
lakh bales and cotton exports were estimated to
be at 51.20 lakh bales.
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I APPAREL I
February 2020
HOPE ALONG THE HORIZON
Amidst signals of hope, ICRA Limited, too, in a
recent report, mentioned that export volumes
within the trade have seen an upward movement
during the last two months of 2019, which was
witnessing de-growth during the May–September
bracket. Based on an analysis it conducted across
the industry, ICRA mentioned that the spinning
industry is going to experience profitability in 2020.
The report specifically carried a hopeful insight for
spinners as it mentioned that in the initial quarters
of 2020, the performance and demand for Indian
yarns will improve, courtesy of exports. This also
hints at favourable pricing.
However, the ICRA study has also revealed
that 2020 has not started with a bang for the
spinners. The spinners have registered de-growth
of around six per cent in the first half of FY 2020,
owing to feeble export demand and increasing
competition from other producing countries and
sluggishness in domestic consumption levels.
With the industry recovering from the slowdown
and hoping for a brighter 2020, the Maharashtra
state government has announced power subsidy
of up to R3.77 per unit to power looms, spinning
mills, and garment units in the state. Thanks to
this move, the spinners in the state now heave
a sigh of relief. With business suffering, them
having to spend on working capital and excessive
electricity cost was proving to be a further
hindrance. Energy accounts for almost half the
production cost within the textile value chain, so
with mills in India struggling to pass on elevated
cotton prices to consumers, this strategic move
can help them to make up for the losses.