A worrisome situation is looming on spinning mills of North India as is reflected by a press release issued by Northern India Textile Mills' Association (NITMA).
The governing body has decided to slash production by shutting down mills once a week.
The decision has been taken in the wake of excess spinning generated against poor demand for yarn from overseas markets. Spinning mills which usually run 24x7, ends up with excess of yarn stocks in warehouses with no buyers, thus pushing them to liquidity crisis.
“China, which has been a major importer of Indian yarns for the past few years, has cut down imports in the past few months, thus worsening the situation, leading to the accumulation of yarn stocks in Indian spinning mills,” reads the press release. It further put light on the losses incurred by owners and various options it is considering to reduce daily production.
Rajiv Garg, President, NITMA lamented that this downward trajectory might continue for next 3-4 months. The situation may change with the demand going up and improved market scenario.
The grave state of affairs of spinning mills can be realised form the fact that some textile units are considering of lowering the capacity to even half. Apart from unsafe market conditions, less borrowing/outstanding and stocks, weather and quality of inputs also seem unfavourable at present for mill owners.
Image Source: http://www.lakshmimills.com/