Small size yarn spinners will be in trouble for the first 6 months of 2023 due to increased cotton prices. However, according to experts, a good monsoon can bring a lot of improvement in the coming 6 months. If we look at the whole year, the cotton bale which was available for Rs 35,829 in 2022 has increased to Rs 46,700 per bale in 2023. The rise of 30 percent in one year is troubling the small traders a lot. If experts are to be believed, this is gradually affecting the margin and volume growth of the home textile industry. At the same time, with rising interest rates, it is also reducing the purchasing power of the consumer class. According to a report by India Ratings, about 10 per cent of the 2,100 spinning units in the southern parts of India are closed because they cannot afford locally produced cotton. Similarly, spinning mills in Gujarat and Ludhiana are also operating at less than 50 per cent capacity on an average.
To cool down cotton prices and boost domestic demand, the government has increased the minimum support price (MSP) of kharif crops, raised the MSP of cotton by 6.18 per cent to Rs 6,080 per quintal and restricted exports till domestic demand is met. Is.
Despite the government's focused efforts, analysts expect margin pressure on the textile industry to mount as companies are hesitant to pass on price hikes to consumers entirely. "While the government's increased MSP support for cotton prices may bring some relief to the farmers, the cost being passed on by the textile companies to the consumers will have to be monitored," Shah said.
Meanwhile, shares of cotton yarn spinning mills remained under pressure in CY22. KPR Mills, Ambika Cotton, Trident, Nahar Spinning, Nitin Spinners, Vardhman Textiles, Lakshmi Mills have slipped from 14 per cent to 46 per cent in CY22 so far. In comparison, the S&P BSE Sensex lost over 11 per cent during the same period, ACE Equity data shows.
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