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MD Dewani
Mumbai, Sept 20: Some veteran cotton traders refuse to go by the demand-supply projections issued recently by the Cotton Advisory Board (CAB) and maintain that the closing stock of cotton at the end of the season which will expire on September 30, 1999 may be more than 42-43 lakh bales though the CAB has placed it at 39.50 lakh bales.
On condition of anonymity, they argue that the current crop may not be less than 164 lakh bales, though the CAB has estimated it at 163 lakh bales. Similarly, imports might not be less than 9 lakh bales, though the CAB has placed them at eight lakh bales.
These sources also doubt whether mills will be able to consume 145 lakh bales this year as predicted by the CAB, against their last year's offtake of 143.24 lakh bales.
In this context, they refer to the recent observations by the Indian Cotton Mills' Federation chairman Sudhir Thackersey that ``in 1998-99 the Indian textile industry suffered a negative growth. Spun yarn production plummeted by six per cent and totalfabrics production by over three per cent.
From the published figures of financial performance, it is seen that even mills having good track records have been incurring losses.This is indicative of deep-rooted and widespread malady in the textile industry as a whole. It is worrisome that no signs of recovery are in sight.
The per capita availability of cloth in the country has hovered between 28 and 30 square metres during the last four years. It has almost reached a plateau and the scope for increase in the foreseeable future appears to be limited.
Under this situation, sources argue that it may be difficult to assume that cotton consumption by mills in the current season might be higher than in the earlier one.
Sources also point out that much more cotton is being absorbed in loose form than assumed by the CAB at present. Unfortunately, no convincing exercise is undertaken to ascertain this by maintaining a close watch on the ginning activity.
If the quantity ginned is correctly ascertained andwhat is actually pressed is deducted from it, one can arrive at the quantity actually consumed in loose form. It is not known why this is not done. The present system of estimating non-mill consumption of cotton is also questionable.
If these factors are taken into consideration, the closing stock of cotton in the country at the end of the season might be much bigger than the CAB's estimate in this regard.
Taking the opening stock for the season at 30 lakh bales and the current crop at 164 lakh bales (though it may be more if proper accounting is done for consumption in loose form) and import at 9 lakh bales, the overall supply may come to 203 lakh bales of 170 kg each.
On the offtake side, it looks irrational that while the CAB has reduced the likely consumption by small spinners from 6.54 lakh bales to six lakh bales, it has raised the possible offtake by mills to 145 lakh bales against 143.24 lakh bales in the previous season, though the mill circles do not as yet find any signs of recovery from thenegative growth suffered by the industry in the previous year.
Therefore if one assumes that mills may at the most achieve the previous year's consumption level of 143.24 lakh bales, then along with the small mill sector's consumption of six lakh bales and exports of one lakh bales, the overall absorption under these three heads can reach 150.24 lakh bales, indicating a balance of 52.76 lakh bales.
Even if one were to take away from this 9 lakh bales for non-mill consumption as assumed by the CAB the closing stock at the end of the season can be around 43.76 lakh bales.
Actually, the non-mill consumption of cotton is overestimated without any physical verification. If this is, suitably brought down, the closing stock can be still higher. Anyway, sources assert that the CAB has clearly under-estimated the closing stock at 39.50 lakh bales.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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