The Synthetic & Rayon Textiles Export Promotion Council (SRTEPC) has called upon Mr. Suresh P. Prabhu Commerce and Industry Minister to reduce GST rate on MMF Yarns from 18% to 12% and allow refunds of accumulated input-tax credit at the fabric stage. Mr. Narain Aggarwal, Chairman SRTEPC has informed the Commerce Minister that 18% GST rate on MMF Yarn has made the cost of poor and common man’s fabric costlier. In the GST regime duties on Spun Textured Fully Drawn Warp & Knit Yarns is 18% and 5% GST on fabrics with no refund mechanism and this has resulted in huge accumulation of unutilised input tax credit (ITC) with the weavers. Moreover there are still various duties/taxes such as transmission charges electricity duty cross subsidy on electricity bill water cess green tax local body taxes road taxes labour cess etc. which are not adjusted with GST. Average percentage of such blocked un-rebated State input taxes and duties is about 5% of FOB value of the textile exported. The exporters feat that due to the existing fiscal anomalies if protective measures are not taken on urgent basis then exports are likely to decline very soon and its is going to have a deep impact on employment generation and exchange earnings in India Mr. Aggarwal pointed out. SRTEPC Chairman said that the non-refund of accumulated ITC has forced the weavers to raise the prices of Man-made fabrics which has made it uncompetitive as compared to Bangladesh Vietnam and China. It has affected the exports badly. Moreover it implies that tax is tax is exported which may not be the intention of Government of India he aded. Mr. Narain drew the attention of the Commerce Minister to the fact that while Man-made fibre and yarns are subjected to 18% rate of GST and 5%-7.5% import duty Cotton textiles are placed under 5% GST and had been enjoying the duty advantage since last 2 decades. This has leads to a conclusion that an industry which is subject to higher taxes and import tariffs should be compensated accordingly to remain competitive in the international market.
Source: Tecoya Trend
In a major relief to small exporters, the government on Wednesday allowed such businesses to supply items on the basis of a letter of undertaking (LUT) without furnishing a bond and a bank guarantee. However, the notification said the LUT facility will not be available for those who have been prosecuted under the existing law for evading taxes above Rs 2.5 crore. This would improve the cash flow for exporters who are struggling to get refunds under GST due to delay in filing invoice-level returns. Since the GST rollout, the exporters needed to submit a bond to be able to avoid the levy of integrated GST on items of export. In the pre-GST regime, exporters received upfront exemption on paying domestic taxes, but the mechanism changed to provide refunds on taxes paid instead of exemptions under GST. “LUT facility extended to all exporters except those who have been prosecuted of any offence involving GST evasion ofRs 2.5 crore or above. This would bring a relief to small exporters (having export turnover of less than Rs 1 crore) who were earlier required to submit a bond along with bank guarantee, which was resulting in procedural hassles and cash flow issues for the exporters,” Abhishek Jain, tax partner, EY India, said. It’s expected that the GST Council, which will meet on Friday, will announce a mechanism for exporters to claim refund on the basis of summarised return (GSTR 3B) and GSTR 1 filed for July and August so far. As per the original rules, the refund to exporters was contingent on them having filed all the three (GSTR-1, GSTR-2, GSTR-3) invoice-level returns. However, due to glitches faced by the GST network, the council had deferred filing comprehensive July return to October.
Source: Financial Express
With several states facing technical issues following the roll-out of the goods and services tax (GST) regime, a Group of Ministers led by Bihar Deputy Chief Minister Sushil Modi on Wednesday met senior officials of Infosys Ltd, which manages the GST Network portal, and reviewed the progress made to resolve the GSTN glitches. “There are 27 states which constitute the Model-2 States (of GSTN) where there are problems with the back-end work…and we have requested Infosys to develop software for (these) states and progress has happened on this front” Modi said, after the meeting here. “…they (Infosys officials) have told us that each state will be provided technically qualified persons (to help them with GSTN).” “The states, which have not used IT systems, are facing problems and the GoM is trying to solve issues in association with Infosys and GSTN. Since our last meeting on September 16, a lot of issues have been resolved and things have become much easier and we are expecting things to continue to ease over the coming days,” he said. The chairman of the GoM said that though summary returns for outward supplies had been filed by 52 lakh dealers for July, only 33.43 lakh dealers had filed detailed GST returns for the month ahead of the October 10 deadline for the filing of the returns. Modi said Infosys will provide the names and numbers of dealers who have not filed detailed returns and SMS would be sent to them to file returns. He also said that the IT system developed by Infosys Ltd for the GST network was standing up to the filing pressures on it and that this was evident in returns filed for August. “As on September 20, only 15.29 lakh returns were filed but in the next 24 hours as many as 13 lakh returns were filed. From 15.29 lakh it became 28.64 lakh on September 21,’’ Modi said.
Source: Indian Express
A move to rationalise both “processes” and “rates” across some product categories to ease out the “pain points” has been initiated and this could be taken up at the next meeting of the GST Council on October 6, Revenue Secretary Hasmukh Adhia told The Indian Express. While he predicted that a rebound in growth is expected in the wake of the restocking by trade and the impact of the ongoing festival season, Adhia said that transition issues are likely to be sorted out over the next one year or so. “Rationalisation has to be done for sure. The Finance Minister has said that we will wait for revenue trends to emerge but some rationalisation is required and an exercise has been initiated for that. The final decision is to be taken by the GST Council. The Council has done some work on rates already to ease the pain points,” Adhia said in an interview that will be published tomorrow. The Revenue Secretary also indicated that concerns raised by exporters and small scale industries would also be taken up by the GST Council. On process rationalisation, Adhia indicated that some of this will happen in the October 6 meeting (of the GST Council). On the rationalisation of rates, the issue of eliminating classification disputes and on some items where not much revenue is involved, the rates could be lowered, he added. While the process of clubbing of some of the tax slabs is an issue that has been left for the future, some items can move from one (slab) to the other (slab) and that is also part of the rate rationalisation under consideration, he said. On criticism from several quarters that GST rollout was hurried and the GST Network was not allowed to go through a trial process, Adhia said: “As far as the right planning is concerned, in fact, one has to make a beginning and any time you begin there will be initial problems. It is not that you can always have a system in which hundred per cent safe landing can be done. At any time you start such a (reform), you will learn from experience that what are the pain points. So, no time is a good time, in that sense. If we keep waiting for so long, then we will not be able to do it. But these are initial transition problems.” He said that transition problems and initial hiccups were “expected and those are to be solved by experience only”. “Some of things we couldn’t have visualised at all, so those things we realised only by experience,” he said. Finance Minister Arun Jaitley had last Sunday reiterated that there was scope for reduction in tax slabs under the Goods and Services Tax (GST), suggesting that once there is revenue buoyancy, the country would have “space for improvement to think in terms of bigger reforms such as lesser slabs”. On Saturday, RSS chief Mohan Bhagwat had asked the government to not allow informal sectors such as small and medium enterprises, self-employing cottage industries, and agriculture to suffer, and called for “sensitivity” and “efficiency” on the part of the administration in reaching benefits to the last man. Adhia said the government expects the transition issues to be over within a year and real benefits of GST will start in due course. “I hope within a year, transition problems will be over. After one year, we will see the real benefits of GST for everybody, even the vyapaari (trader) will feel it’s very simple. Right now, the fear of unknown is also there plus it’s a new learning experience for the tax practitioners,” he said.
Source: Indian Express
MUMBAI: The RBI's repo rate -the interest banks pay for short-term borrowing from central bank -has been recommended as the new benchmark to price loan rates, including home loans. The suggestion comes from a panel set up to look into an external benchmark -similar to the London Interbank Offered Rate (Libor) used in global markets. Apart from the repo rate, the panel had suggested interest rates on treasury bills and certificates of deposits as benchmarks for fixing loan rates. Once borrowings are linked to the repo rate, they will be repriced every three months as against once a year at present. Bank customers have for long complained that floating rate loans only move when interest rates rise. Banks, on their part, have argued that since deposits are based on fixed rates, they cannot pass on any change in rates to all borrowers simultaneously . To address this issue, the RBI panel has said that banks should raise deposits at floating rates. Some bankers, however, say that borrowers do enjoy the advantages of market rates.“Since all prepayment charges have been waived, borrowers can easily refinance their loans,“ said a banker. The RBI has been in search of a bellwether for loans which will reflect market rates for over a decade. Initially, loans were linked to the prime-lending rate (PLR) of banks -the rate reserved for best customers. However, since banks were lending at rates below the PLR, the RBI decided to ask banks to come up with the base rate -the lowest rate at which they could extend loans. After taking charge as governor, Raghuram Rajan had observed that banks were refusing to pass on rate cuts on the grounds that reduction in the repo rate brought down their marginal cost of funds. Since its introduction, the marginal cost of lending rate (MCLR), too, had failed to keep up with changes in the policy rate. “Arbitrari ness in calculating the base rateMCLR and spreads charged over them has undermined the integrity of the interest rate setting process. The base rate and MCLR regimes are also not in sync with global practices on pricing of bank loans,“ the RBI report said. The panel has said that once introduced, borrowers should be allowed to switch to the new benchmark without having to pay any conversion or refinance cost. In its report, the panel has observed that Libor is the most widely used benchmark. It's preferred in 90% of interest rate derivative contracts, 30-50% of corporate loans, 84% of floating rate bonds and 15% of retail mortgages. However, there is a trend globally to move away from using interbank offered rate quotes for pricing.
Source: The Times of India
The Reserve Bank of India (RBI) Wednesday sharply scaled down India’s growth estimates by 60 basis points to 6.7 per cent from 7.3 per cent for 2017-18 and cautioned the government on a fiscal stimulus saying that such fiscal actions undercut macroeconomic stability. RBI Governor Urjit Patel, while unveiling the bi-monthly monetary policy statement in which the central bank kept its key policy rate, the repo rate, unchanged at 6 per cent, said with the combined fiscal deficit of the Centre and state governments in the region of over 6 per cent of the GDP, the “national fiscal stance can hardly be described as tight”. “In other words, we should be very cautious lest fiscal actions undercut macroeconomic stability,” Patel said, responding to a question on the impact of a fiscal stimulus on the economy. While five members of the six-member Monetary Policy Committee (MPC), including Governor Patel and Deputy Governor Viral Acharya, voted in favour of keeping the repo rate steady, one member, Ravindra H Dholakia, wanted a 25 basis points cut in the repo rate to 5.75 per cent. However, the RBI slashed the statutory liquidity ratio (SLR) — the portion of deposits to be invested in government securities — by 50 basis points to 19.50 per cent. Patel said farm loan waivers and implementation by states of the salary and allowances award could push up headline inflation by about 100 basis points (one percentage point) above the baseline over 18-24 months, a statistical effect that could have potential second-round effects. Patel’s warning has come amid reports that the central government is planning to come out with a fiscal stimulus package of around Rs 40,000-50,000 crore to revive the sagging economic growth. On growth projections, the RBI said the loss of momentum in the first quarter of 2017-18 and the first advance estimates of kharif foodgrain production are early setbacks that impart a downside to the outlook. “The implementation of the GST so far also appears to have had an adverse impact, rendering prospects for the manufacturing sector uncertain in the short term. This may further delay the revival of investment activity, which is already hampered by stressed balance sheets of banks and corporates,” the central bank cautioned. Taking into account these factors, the RBI said it is revising downward the projection of real GVA (gross value added) growth for 2017-18 to 6.7 per cent from the August 2017 projection of 7.3 per cent, with risks evenly balanced. Several experts, including former Finance Ministers Yashwant Sinha and P Chidambaram, had recently expressed concern over the slide in the GDP growth to a 13-quarter low of 5.7 per cent in the first quarter of fiscal 2018. “This revision takes into account the slump in growth estimated by the Central Statistical Office (CSO),” the RBI said. However, it clarified that the projection of growth of 6.7 per cent for the year 2017-18 as a whole is consistent with an acceleration in the second half to 7.1 per cent in the third quarter and 7.7 per cent in fourth quarter. “The RBI’s surveys point to robust consumer confidence and buoyant business expectations for the third quarter of 2017-18,” the central bank said. The MPC said real GVA growth slowed significantly in the first quarter of 2017-18, cushioned partly by the extensive front-loading of expenditure by the central government. “GVA growth in agriculture and allied activities slackened quarter-on-quarter in the usual first quarter moderation, partly reflecting deceleration in the growth of livestock products, forestry and fisheries. Industrial sector GVA growth fell sequentially as well as on a year-on-year basis. The manufacturing sector, the dominant component of industrial GVA, grew by 1.2 per cent, the lowest in the last 20 quarters,” it said. The RBI also cautioned against a pick-up in inflation. “Inflation is expected to rise from its current level and range between 4.2-4.6 per cent in the second half of this year, including the house rent allowance by the Centre,” the RBI said. The MPC observed that CPI inflation has risen by around two percentage points since its last meeting in the first week of August 2017. “These price pressures have coincided with an escalation of global geo-political uncertainty and heightened volatility in financial markets due to the US Fed’s plans of balance sheet unwinding and the risk of normalisation by the European Central Bank. Such juxtaposition of risks to inflation needs to be carefully managed,” it said. Although the domestic food price outlook remains largely stable, generalised momentum is building in prices of items excluding food, especially emanating from crude oil. “The possibility of fiscal slippages may add to this momentum in the future,” it warned. In a statement later in the day, the Ministry of Finance said, “We have noted that this decision has been made by the MPC in the light of the underlying analysis which implies: a downward revision of the real GVA growth forecast for 2017-18 from 7.3 per cent to 6.7 per cent, which leads to a widening of the output gap; and a marginally upward revision of the CPI inflation forecast for the second half of the year meaning an average inflation for the year 2017-18 as a whole of less than 4 per cent.” Chanda Kochhar, MD and CEO, ICICI Bank, said the RBI’s announcement to keep the policy rate unchanged was on expected lines. “The MPC has not viewed the recent growth slowdown as being structural in nature and is expecting it to be transient with growth prospects likely to improve over the medium term. By retaining the focus on inflation targets, this policy ensures that the confidence of the investors on the Indian macro-economic indicators will continue. Further policy action will be contingent on the evolution of the output gap and its impact on the inflation trajectory,” she said. India Inc expressed disappointment over the status quo on the interest rate front at a time when economic growth is facing turbulent times. FICCI president Pankaj Patel said: “In the context of the current industrial situation, we felt that there was need for a further cut in the repo rate. Growth conditions remain under strain which is reflected in the persistently weak investment activity and the first quarter GDP growth numbers. While Reserve Bank of India in the policy statement cites inflationary pressures to remain a concern, FICCI feels that we need to give equal consideration to growth prospects. At this juncture, we need a feel-good factor in the economy that would motivate people to spend and buy more.”
Source: Indian Express
RBI keeps policy repo rate unchanged at 6%. On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.0 per cent. Consequently, the reverse repo rate under LAF remains at 5.75 per cent. The marginal standing facility (MSF) rate and the Bank Rate will also remain unchanged at 6.25 per cent, according to the Fourth Bi-monthly Monetary Policy Statement, 2017-18, issued by the MPC. The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth. The MPC observed that CPI inflation has risen by around two percentage points since its last meeting. These price pressures have coincided with an escalation of global geo-political uncertainty and heightened volatility in financial markets due to the US Fed’s plans of balance sheet unwinding and the risk of normalisation by the European Central Bank. Such juxtaposition of risks to inflation needs to be carefully managed. Although the domestic food price outlook remains largely stable, generalised momentum is building in prices of items excluding food, especially emanating from crude oil. The possibility of fiscal slippages may add to this momentum in the future. The MPC also acknowledged the likelihood of the output gap widening, but requires more data to better ascertain the transient versus sustained headwinds in the recent growth prints. Accordingly, the MPC decided to keep the policy rate unchanged. The MPC also decided to keep the policy stance neutral and monitor incoming data closely. The MPC was of the view that various structural reforms introduced in the recent period will likely be growth augmenting over the medium- to long-term by improving the business environment, enhancing transparency and increasing formalisation of the economy. “The Reserve Bank continues to work towards the resolution of stressed corporate exposures in bank balance sheets which should start yielding dividends for the economy over the medium term,” the MPC resolution said. The MPC reiterated that it is imperative to reinvigorate investment activity which, in turn, would revive the demand for bank credit by industry as existing capacities get utilised and the requirements of new capacity open up to be financed. Recapitalising public sector banks adequately will ensure that credit flows to the productive sectors are not impeded and growth impulses not restrained. In addition, the MPC suggested some measures that could be undertaken to support growth and achieve a faster closure of the output gap: a concerted drive to close the severe infrastructure gap; restarting stalled investment projects, particularly in the public sector; enhancing ease of doing business, including by further simplification of the GST; and ensuring faster rollout of the affordable housing programme with time-bound single-window clearances and rationalisation of excessively high stamp duties by states. (RKS)
Source: Fibre2Fashion
New Delhi: The Union Cabinet today gave its ex-post facto approval to the renaming of Kandla Port in Gujarat as Deendayal Port. The Kandla port, one of the top 12 major ports in the country, had been rechristened as Deendayal Port in the name of Hindutva icon Pandit Deendayal Upadhyaya, the government had said last week. “The Union Cabinet chaired by prime minister Narendra Modi has given its ex facto approval of the renaming of Kandla Port as Deendayal Port”, official statement said. Ports in India are generally named after the city or town in which these are located, it said, adding that the government, in special cases, after due consideration have renamed ports after great leaders in the past. By renaming the Kandla port as Deendayal Port, a “grateful nation would be remembering the invaluable contributions made by one of the greatest sons of India, Pandit Deendayal Upadhyaya”, the statement said. This will inspire people of Gujarat, particularly the youth, who may not be fully aware of the contributions made by the great leader, the statement added.
Source: Financial Express
The cotton market is beginning to show signs of pressure, top officials of the Cotton Association of India (CAI) said. According to Nayan Mirani, its outgoing president, there is going to be a lot of cotton the world over. “Cotton prices are likely to witness a depressing trend. The supply situation will dictate the price, while other factors may also factor into the price situation,” he said, addressing the 95th AGM of the association. “In spite of reports of losses due to recent hurricanes in the US cotton belt, the size of the US crop is expected to be larger. Indian acreage for the current season (October 2017-September 2018) is expected to jump by about 12% compared to last year. Expecting yield to increase by about the same percentage points, India will have a bumper crop. If this scenario turns out to be correct, it may create a situation that will warrant India government to support farmers by kicking in the minimum support price (MSP) operations”. Among many factors that have led to the increase in Indian acreage, an important aspect has been the shift from oil seeds and pulses to cotton due to lack of remunerative prices. There has been a stagnancy in prices of these commodities, and the government had to apply MSP for these products, he said. According to Mirani, the cotton price is under pressure, as the mill demand is not high. To exacerbate this situation, confusion is prevailing with regard to the implementation of the GST.
Source: Financial Express
Following the overall success and growth of NITRA during last one year, Sh. Sanjay Kumar Jain, MD of TT Limited would be continuing as Chairman, NITRA - the pioneering textile R&D organization in the country. NITRA council members unanimously formed its leadership team for the year 2017-18 during its 41st AGM held on 18th Sept.’17 at NITRA, Ghaziabad. Sh. S. K. Kapoor MD, Surya Processors Ltd. would also be continuing as its Dy. Chairman. Young and dynamic entrepreneur Sh. Dinesh Nolkha, MD, Nitin Spinners Ltd. has been inducted as the Vice Chairman. While taking over the charge again, the Chairman profusely thanked every member of the council for their guidance that had helped NITRA grow during his tenure.A Glance at NITRA’s Office-Bearers for the Year 2017-18 Sh. Sanjay Kumar Jain, Managing Director of TT Limited, a vertically integrated textiles company (fibre to fashion) having its manufacturing units in various states of the country. Sh. Jain is a Double Gold Medalist from IIM, Ahmedabad and a Rank Holder Cost Accountant and Company Secretary. He is young, dynamic and articulate in dealing with the core issues of textile industry. Sh. Jain says the priority of his team would be to strongly pursue NITRA’s core activity research and development in the need-based areas so that the organization can provide yeoman support service to the industry. In addition, adding value NITRA’s other services like technical consultancy, training and testing will also be prioritized. Sh. Jain is also the Chairman of CITI, Immediate Past Chairman of NITMA, Vice President of FOHMA and WBHA. He is also on the committees of TEXPROCIL, SIMA, FICCI Textile Group and various bodies. Sh. S. K. Kapoor, Managing Director of Surya Processors (P) Ltd., a company established in 1986 and engaged in weaving and processing of different types of value added Non-Denim and Denim fabrics. Sh. Kapoor is a Mechanical Engineer and fully dedicated to the textile industry. Right from the beginning, his main goal was quality and keeping that in mind the company has been modernising at regular intervals. Sh. Kapoor has got a name in the market for quality and fair dealings. In addition to managing the company successfully, Mr Kapoor is also actively involved in various industrial bodies for the welfare of textile units. Sh. Dinesh Nolkha, is a Chartered Accountant and Cost & works Accountant by qualification. He has a brilliant academic career having secured 4th rank on All India Basis in ICWA Final Exam. in 1991 and merit holder in ICAI Exam. He is the Managing Director and a co-founder of Nitin Spinners Ltd. located at Bhilwara, Rajasthan and spearheaded continuous expansion to make the company worth Rs.900 crore till date. The company is exporting more than 60% of its produce to more than 50 countries across the globe. As the Managing Director of the company Sh. Dinesh Nolkha’s primary focus is on overseas marketing and sales promotion of the company. In addition to this, he is also responsible for the production facilities, expansion projects, day to day operations & marketing activities of Nitin Spinners Ltd. A very young and energetic Sh. Nolkha is also Vice President of Mewar Chamber of Commerce and Industry.
Source: NITRA Press Release
While Garware-Wall Ropes appears to be well-positioned to innovate its product offerings, Sarla Performance Fibers is yet to make its mark given the growth potential that it has. Nonetheless, both stocks appear to be reasonably valued for now. The word ‘textile’ is commonly associated with fabrics, garments, and household bed/floor linen etc. As India's textile industry continues to grow from strength to strength, technical textiles, a relatively less known domain, is fast emerging as one worth watching out for.
What are technical textiles (TTs)?
Technical or engineered textiles are products that are used for functional purposes. TTs consist of textile materials and output that is exclusively used for high-end performance and technical functionalities because of their durability, as opposed to conventional textiles, which focus more on aesthetic and decorative characteristics. TTs have applications in multiple areas of economic activity and can be segregated into 12 segments, as seen below:- India’s TT industry is heavily dependent on imports, that have grown at a compounded annual growth rate (CAGR) of 8 percent since FY07-08. The degree of reliance can be eventually reduced through investments in technology-heavy products. Therefore, the scope for import substitution is immense. Among all TT categories, Packtech forms the largest segment. However, Geotech is predicted to grow faster than the others at a CAGR of 30 percent. Some of the examples of high-growth potential TTs include shade nets, crop covers, baby diapers, sanitary napkins, and surgical disposables, among others. The global market value for TTs, which stood at nearly USD 144 billion in 2014, is projected to reach the USD 200 billion mark by 2020 (at a CAGR of 5.8 percent). Woven, non-woven, knitting technologies, and defence are likely to be some of the key market drivers for India’s TT sector. TTs involve significant scientific know-how, higher capital deployment, and sufficiently large manufacturing capacitites to meet specialised orders (that are typically placed by institutional clients). More often than not, the size of such requisitions is much greater in volume and/or value terms than regular textiles. A combination of these factors suggest that India’s TT space is primarily dominated by the organised units.
Here are a couple of stocks that might be worth looking into:-
Garware Wall Ropes
(GWR) – (CMP: Rs 880, Market Cap: Rs 1925.62 crore)
GWR is one of India's leading players in the technical textiles sector, providing specialised solutions to the cordage and infrastructure industry worldwide. The company manufactures high-performance polymer ropes, fishing nets, sports nets, safety nets, aquaculture cages, coated fabrics, agricultural netting, and geosynthetics. On the back of stable prices of aquaculture products, the management foresees a demand uptick on this front. Expansion into new markets and faster growth in value-added products is likely to boost GWR’s exports (that currently constitute around 47.5 percent of the top-line). Additionally, increased emphasis on infrastructure and defence expenditure by the government, coupled with a good monsoon season in most areas of India, is expected to augur well for the company’s domestic business across segments. Should GWR succeed in introducing more innovative products in the aquaculture, agriculture, geo-synthetics, and coated fabrics space, the company’s margins could witness an upswing going forward. At 16.2x FY19 estimated earnings, a low debt-equity ratio and consistent return ratios, GWR’s valuations seem inexpensive given its strong TT capabilities.
Sarla Performance Fibers
(SPF) (CMP: Rs 46.3, Market Cap: Rs 386.62 crore)
SPF is engaged in the business of manufacturing and export of yarns spanning variants such as polyester, nylon textured, twisted, dyed, covered, high tenacity, and sewing thread. A shift in the product mix towards industrial and performance yarn is likely to strengthen SPF’s turnover by virtue of better realisations per unit. Growth prospects of the company will be mainly driven by the domestic business (due to de-bonding of SPF’s Vapi-based factory) and higher exports through Sarla Overseas Holdings, a wholly-owned international subsidiary that supplies the company’s output to markets predominantly in North America. Nonetheless, the company’s raw material procurement through imports, constituting approximately 49 percent of the total cost, remains an important monitorable. The incremental performance for SPF largely hinges on an improvement in its US operations. Bringing down the losses at its US-based manufacturing subsidiary and improving the capacity utilization at the South Carolina facility (from the current level of merely 15 percent) remain critical areas of concern. FY18 is likely to be a lacklusture year for SPF since most of the company’s funds invested in expanding and upgrading its US facilities are unlikely to yield any major results. Nevertheless, at 7.95x FY19 projected earnings, the undemanding valuation beckons attention. While the asset turnover rate is low at the moment, any improvement in the same would have a positive rub-off on earnings.
Source: moneycontrol.com
Kolkata: The Federation of Seed Industry of India (FSII) on Wednesday raised its concern on the increased challenges and risks of illegal selling of unapproved GM cotton seeds during the ensuing Kharif season to Indian cotton farmers. In the recent past, some newspaper publications have highlighted the growing menace of few state level local companies producing and selling Bt. cotton hybrid seeds to cotton growing farmers with unapproved GM technologies like Ht. (Herbicide Tolerance) in some cotton growing states in India. Dr. Ramasami, Chairman of FSII, while highlighting his concern for farmers, agricultural practices and cotton production in India said, “Such unauthorized sale of cotton seeds with unapproved technologies can put our farmers at possible risk of significant farming losses, without recourse like farmer insurance claims, owing to its unregulated production and distribution. We would sincerely request concerned government authorities and stakeholders to take strict action against perpetrators in accordance with local laws. Indian farmers are always enthusiastic to demand and accept the latest tools and technologies for their crops to counter varied challenges in their fields. Their demands can be met only through innovative tools and technologies introduced responsibly and in compliance with due regulatory processes and laws of the country.” Dr Arvind Kapur, Vice Chairman, FSII added, “FSII and its member companies stand resolved to cooperate with the regulators to identify these illegal players who are tarnishing the image of research based seed companies and causing possible farming threats to local farmers.” FSII, the voice of the research based Indian seed Industry and its member companies comprising of major players in the INR 5000 crore seed market in India, is committed to follow systems and best agronomic practices, seed regulations, regulated application of science and technology to Indian agriculture systems, high investments in research & development, transferring knowledge and skills to the farming community, thus producing and selling high quality seeds to ensure higher gains without any possible risks for Indian farmers. Mr Bipin Solanki, Senior Vice Chairman, FSII further added, “Regulatory and legal compliances are of highest priority for FSII members, who are committed to adopt and bring in technology applications to Indian agriculture legally through sustained research and innovations, while understanding the needs of the Indian farmers.” FSII and its member companies believe that all such technologies would play an important role in positioning Indian agriculture as a major player on the global stage while helping to achieve the government’s objective of “Doubling Farmers’ Income by 2022.” FSII will continue to provide unstinted support to the Government of India’s initiatives whilst keeping the interests of India’s farmers paramount. FSII members commit their unstinted support to the government and regulatory agencies in this endeavor.
Source: The Economic Times
Hyderabad: With cotton being sowed on 49% of the cultivation area in Telangana, the state’s agriculture department is concerned about prices decreasing in the open market this year. International prices of cotton will also play a major role in deciding the crop’s prices this year, said senior officials from the department, who are monitoring the situation. Cotton produce in state-run agricultural market yards will begin arriving from next week. For the first time since Telangana’s formation, the area of cotton cultivation in 2017-18 touched nearly 19 lakh hectares, which is more than 50% higher than the previous year’s 12.4 lakh hectares, which had yielded 24.7 lakh metric tonnes of the crop. This year, production is expected to touch 28 lakh metric tonnes, said a senior official from the agriculture department. “Countries like China, Vietnam and Bangladesh which import cotton will set the prices. Depending on that, the prices will fluctuate in the open market. Traders get orders from abroad only after those countries assess their leftover stock from the previous year,” explained the official, who did not want to be named. He added that the Cotton Corporation of India (CCI), which purchases stock from farmers at the minimum support price (MSP), has been requested to monitor the arrivals in state-run markets as well. Another official from the agricultural marketing department, which runs the state-run market yards, admitted that this year’s excess production was a result of the “advice” farmers had been given last year (by the department) to not opt for cotton. “Because of that, production was a little less, and prices in the open market were higher than the MSP. Seeing that, farmers opted for cotton on a huge scale resulting in this unprecedented sowing this year,” she said, also not willing to be quoted. In view of the situation, CCI is also expected to set-up 59 additional centres (84 existing) across the state. The minimum support price (MSP) for cotton for 2017-18 has also been revised to Rs4,320 per quintal, against the previous year’s Rs4,160. According to a note prepared by the agriculture department, after Maharashtra (42.06 lakh hectares) and Gujarat (23.36 lakh hectres), Telangana is the third highest in cotton cultivation, area-wise, in India this year. The agriculture department official stated that CCI will start purchasing cotton once the arrivals start, mostly in November. “Problems will arise if the international market/demand reduces the price in the open market. Farmers are expecting good prices like last year when cotton was fetching about Rs5,500 per quintal. We don’t know what will happen once arrivals start coming in,” he added.
Source: Livemint
Telangana : Collector asks farmers to keep moisture content low for better price. The district administration here has estimated that cotton production this season would be about 60 lakh quintals and proposes to open sufficient number of purchase centres to facilitate smooth procurement operations. Reviewing the state of cotton production and arrangements for its procurement in the district, the District Collector Gaurav Uppal along with officials from Agriculture,Marketing and representatives of ginning mills, said on Wednesday that measures were being taken to ensure the Government-announced minimum support price (MSP) for cotton is delivered to farmers without any hassles. “Cotton Corporation of India (CCI) has agreed to set up procurement centres in Kondamallepally, Chityala, Mall, Miryalaguda, Chandur and Nakrekal mandals,” he said. In addition to it, arrangements for 13 more ginning mills in the district should also be notified soon, he instructed the officials. Advising farmers to observe caution regarding moisture content in cotton, as it would determine prices, he said, long-staple cotton with 8% moisture will be paid ₹4, 320 per quintal and those containing up to 12% would fetch ₹4, 147.20 per quintal. Medium-staple cotton will fetch ₹4,020 for the same quantity. “Farmers bringing cotton with moisture less than 8% will be given an additional 1% incentive value of that same quality,” he added.
Carry ID Cards
He further advised the farmers to carry valid ID cards issued by the Marketing Department when they approach the CCI centres and a photocopy of their account passbooks to help credit the sale proceeds directly into the beneficiary’s accounts. “All such centres will be supervised by a district-level officer and no complaint arising out of procurement issues will be taken lightly,” Mr. Uppal cautioned.
Source: The Hindu
The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 55.02 per barrel (bbl) on 3.10.2017. This was lower than the price of US$ 55.36 per bbl on previous publishing day of 2.10.2017.
In rupee terms, the price of Indian Basket decreased to Rs. 3606.86 per bbl on 3.10.2017 as compared to Rs. 3617.76 per bbl on 2.10.2017. Rupee closed weaker at Rs. 65.55 per US$ on 3.10.2017 as compared to 65.36 per US$ on 2.10.2017. The table below gives details in this regard:
|
Particulars |
Unit |
Price on October 3, 2017 (Previous trading day i.e. 2.10.2017) |
|
Crude Oil (Indian Basket) |
($/bbl) |
55.02 (55.36) |
|
(Rs/bbl) |
3606.86 (3617.76) |
|
|
Exchange Rate |
(Rs/$) |
65.55 (65.36) |
Source: PIB
The Việt Nam Textile and Apparel Association (VITAS) yesterday proposed that the regional minimum wage (covering four regions in the country) not be increased next year. A 6.5 per cent increase in the regional minimum wage for 2018 had been decided in August this year by the National Wage Council and submitted to the Government for final approval. Amounting to an increase of VNĐ180,000-230,000 (US$8-10) a month, it was said to be the lowest wage increase ever in the country. However, at a conference on the effects of wage and social insurance policies on textile enterprises in Hà Nội yesterday, VITAS proposed that there be no increase in the minimum wage in the next one or two years, since several enterprises are already struggling with wage increases in the last decade. In the 2007-2017 period, minimum wage in domestic enterprises increased by 21.8 per cent, leading many enterprises to reduce workers’ bonuses every year and use machines instead of labourers, said VITAS. Trương Văn Cẩm, vice chairman of VITAS, said that increasing the regional minimum wage does not ensure increases in workers’ living standards because “wage increases often drag along increases in commodity prices and increases in the cost-of-living. “Moreover, constantly increasing minimum wage reduces competition and shifts the labour structure, preventing enterprises from expanding production and robbing labourers of job opportunities,” he said. Social insurance premiums also increase when minimum wages increase. For the Hưng Yên Garments Corporation with 15,000 workers, the increase in social insurance premiums would go up by VNĐ18 billion ($792,000) per year, said Chairman Nguyễn Xuân Dương. “Five out of our 14 member enterprises are already struggling. It will be hard for us to stay in business if the minimum wage keeps increasing.” Dương said. “In fact, several textile enterprises in our Hưng Yên Province have closed down.” Apart from the minimum wage, VITAS has also proposed that adjustments be made soon to address what it seems as drawbacks in Labour Code 2012, which covers overtime, severance pay, unemployment benefits, health and occupational safety and labour discipline.
Source: Vietnam News
Representatives from trade unions and employers associations will put forward a request to the European Union and the United States to consider extending preferential treatment – also known as the Generalized System of Preferences (GSP) – for a number of Cambodian products. The joint statement was released after a closed-door meeting of the Labor Advisory Committee on Minimum Wage for 2018 on Tuesday. “The trade unions will make the request individually to the US, the EU and many other countries, as well as buyers of well-known brands, to be more open in facilitating preferential treatment for Cambodian products, particularly garment and footwear, and to place more orders,” the joint statement reads. Preference systems let developing countries export certain goods to donor countries at reduced tariff levels. At present, Cambodian footwear, textiles and garments are excluded from the US GSP. Som Aun, president of the Cambodia Labor Union Federation, one of the leading trade unions in the country, told Khmer Times that since the minimum wage has been revised upwards several times in the last 10 years, there is now a need to make Cambodian products more competitive by increasing preferential treatment. Heng Sour, deputy director of the Secretariat of the Labor Advisory Committee and spokesman for the Ministry of Labour, urged the EU and the US to open their markets further to Cambodian products. “Unions and employers will appeal directly to these countries and ask them to make good on their promises because wage growth will continue in the country, as it is supposed to happen,” he said. “The ILO BFC (International Labor Organization Better Factories Cambodia) is already present in the country, and we have strengthen the inspection capability of our officials to ensure the working conditions comply with the requirements of the US and the EU. “If the EU and the US do not respect their promises they will lose credibility. Other countries will hesitate to trust their word,” he added. Kaing Monika, Deputy Secretary General for the Garment Manufacturers Association in Cambodia (GMAC), said he admires the initiative shown by stakeholders in the garment sector in coming together and taking action to help the industry. “This is very positive for Cambodia. For the first time, unions have allied with employers to demand more orders from international buyers and more access to international markets,” he said. “We are getting closer and closer to each other now, which is very important for a stable and productive industrial environment. More importantly, this builds confidence among all international buyers and the international community. “It’s also important to note that our competitiveness seems to rely heavily on trade preferences. We mainly grow in markets where we are granted trade preferences. With no GSP, it’s quite hard to compete and grow our market share.” According to Cambodia’s General Department of Customs and Excise, exports of garments and footwear rose by 7.2 percent to $7.3 billion in 2016, up from $6.8 billion in 2015. The US and the EU, Cambodia’s biggest export markets, accounted for nearly 65 percent of Cambodian exports. Cambodia already enjoys quota-free and duty-free access to the EU market under the Everything But Arms (EBA) treaty. However, Cambodia’s footwear and garment industry has been exporting under the US most-favoured nation (MFN) programme which requires paying import tax of below 35 percent as the US government charges high tax rates to protect local industries.
Source: Khmer Times
Apparel manufacturers have urged the government to ensure stable prices of power and gas to help boost their businesses along with long-term policy support to remain competitive in the global market. At a roundtable at a Dhaka hotel on Wednesday, the participants discussed the readymade garments sector’s (RMG) present situation and possible moves to improve while some of them also called for efficient functioning of all of the country’s ports. Bangladesh Garment Manufacturers and Exporters Association (BGMEA) organised the roundtable attended by several ministers, officials from different ministries, exporters and manufacturers. “The prices of gas and electricity are very important for us when we make business plans. That’s why we want the price predictability for a certain period for starting a new business,” said Tapan Chowdhury, president of Bangladesh Textile Mills Association. The frequent price hikes were hampering their businesses, he said. Tapan also added that more incentives in the primary textile sector would help to supply more raw materials for the RMG sector. The primary textile contributes about 85% in knitwear and 45% in woven sectors. Former adviser to the caretaker government M Tamim said: “Price predictability of gas and electricity is very import when it comes to investment. Businessmen become sceptical when it remains unpredictable. “The government must ensure this predictability, even if it has to subsidise, for a certain period.” He also urged the government to make a final decision on whether the businesses would continue with their private captive power projects to run their factories when power cuts occur. Newage Group Vice Chairman Asif Ibrahim suggested promoting the improvement and remediation in the apparel sector safety the country has achieved after the Rana Plaza disaster, adding that the government should provide fiscal and non-fiscal incentives for further development. However, Mohammad Hossain, director general of Power Cell, a technical arm of Power Division, Ministry of Power, Energy and Mineral Resources, urged the manufacturers to install latest technology and increase power use efficiency. Regarding the present situation of the apparel sector, Centre for Policy Dialogue’s fellow Mustafizur Rahman said: “I agree that this has been passing through a critical time for different reasons. But I want to see this challenge as an opportunity.” He called for more efficient functioning of the seaport and airport in Chittagong, and Mongla and Payra ports. “Global export rate has been recovering quickly and Bangladesh is still the top choice for garment retailers and international brands.” Former BGMEA president Anisur Rahman Sinha, also chairman of Opex Group, said the country’s garment business has not declined. “But profitability has fallen along with confidence of international brands and buyers due to a bad image created by the Rana Plaza disaster.” Addressing the roundtable, Commerce Minister Tofail Ahmed asked the Accord and Alliance, two foreign garment factory inspection agencies, to leave Bangladesh after their tenures end by June next year. He said these agencies were not needed any more. But the government may extend their stay by six more months to complete their unfinished works. The Accord and Alliance want to extend their tenure for three more years from June next year up to 2021, but the government is yet to respond officially. State Minister for Power Nasrul Hamid said the country’s gas crisis will end by April next year as the government will begin import liquefied natural gas (LNG). “In the next three years, the government will ensure uninterrupted power supply to the industrial units. So you can plan in line with this.” “However, industries built outside the designated economic zones will not be given any power connections. We have already announced the power policy for until 2041. But we cannot say anything now about the power prices,” he added. Hamid said the government start giving gas connections to the industrial units from April next year and asked the manufacturers to make business plans from now. “The government’s investment in the power sector is $21 billion and this amount needs to be increased to $30 billion to ensure uninterrupted power supply to the industrial units.” But, the government has been receiving only $200 million every year as revenue from the garment sector, he added. “While paying such low revenue, the garment manufacturers are demanding infrastructures worth of $3 trillion. Where will the rest of the money come from?” The state minister asked the manufacturers to increase contribution to the government exchequer while adding more value to their products. Wednesday’s roundtable was moderated by BGMEA President Siddiqur Rahman. The other participants included Shahriar Alam, state minister for foreign affairs, Shafiul Islam Mohiuddin, president of FBCCI, and National Board of Revenue Chairman Nojibur Rahman.
Source: Dhaka Tribune
Oct 3 (Reuters) - ICE cotton futures settled nearly unchanged on Tuesday after hitting a six-week low earlier in the session amid expectations of a bountiful crop of the natural fiber in the United States. Cotton contracts for December settled down 0.05 cent, or 0.07 percent, at 67.52 cents per lb. The contract touched a low of 67.40 cents per lb during the session, the weakest since Aug. 22. "It is the advent of harvest and as the pipeline gets filled, prices will sink lower," said Keith Brown, principal at cotton brokers Keith Brown and Co in Moultrie, Georgia. "We have the largest crop in a decade but it is being delayed because of weather situations in different locations in the country." The U.S. Department of Agriculture (USDA) projected 21.76 million bales of U.S. cotton output for the 2017-2018 crop year in its World Agricultural Supply and Demand Estimates (WASDE) report released in September. That was higher than the 20.55 million bales of production estimated in the previous month. The USDA's weekly crop progress report on Monday showed about 17 percent of the cotton crop in the United States had been harvested by the week ended Oct. 1 as against a five-year average of 13 percent for the corresponding period. About 57 percent of the crop was in good or excellent condition compared with 60 percent in the prior week, Monday's report said. "With the crop quickly maturing and with harvest under way, the weight of condition rating and indices will likely carry less weight with traders as October progresses," Louis Rose, co-founder and director of research and analytics at Rose Commodity said in a note on Monday. Total futures market volume fell by 3,308 to 18,744 lots. Data showed total open interest fell 1,761 to 231,203 contracts in the previous session. Certificated cotton stocks deliverable as of Oct. 2 totaled 3,827 480-lb bales, down from 3,860 in the previous session. The dollar index was up 0.01 percent. The Thomson Reuters CoreCommodity CRB Index , which tracks 19 commodities, was down 0.01 percent.
Source: The Times of India
Cotton futures prices felt pressure Monday ahead of USDA’s latest harvest update in its weekly crop progress report. USDA says 17% of nation's cotton crop is picked, four points ahead of the five-year average. John Payne, a broker with Daniels Ag Marketing, told AgDay host Clinton Griffiths that except for a couple of bad storms, this cotton crop looks big. "We could be looking at carry outs that are double what they were a year ago," says Payne. "We're looking at almost 1.5 bales an acre, which is substantially higher than where we've ever been before." However, hurricanes and recent rains in the Panhandle are still unknowns. "I have a couple guys down there who called me sitting on five inches of rain [last week] just watching the fields go under water," says Payne. "This isn't the time of the year for that." Payne says cotton growers will want to focus on this month's crop production report from USDA. "We're going to get some data on what happened with Harvey and then the downgrade on the Georgia crop," says Payne. "If you take those two events out, this has been a fantastic growing season for cotton." Hurricane Harvey blew unpicked cotton and modules to pieces and bales sat submerged in water following the storm. "The folks up in the northwest part of Texas are sitting on fantastic production regardless of how much damage are we looking at," says Payne. "If we lose a million bales, we could simply find ourselves right back to where we thought we would be a month ago." Even so, prices remain substantially higher than last year. "A year ago, we made our lows at this time of the year," says Payne. "We're more likely to make our highs this year in the next couple months." He is cautious given the size of the expected crop. "We expect some downside risk to come," says Payne. " [If]those forecasts around Lubbock turns bad, I think the market rallies." Payne is still positive about cotton in the near term. "Cotton is the rosy story on the U.S. ag side right now, especially [compared to other] summer row crops," says Payne. "There isn't a lot of profit margin in any of the [other] markets, but cotton has it and you're going to continue to find production in the coming years."
Source: AGWeb
Target Corp. is setting a goal to source 100 percent sustainable cotton by 2022 for its owned and exclusive national brands in apparel, home and essentials, and the retailer is introducing a new policy to help guide the way. With Target one of the largest cotton importers in the U.S., the company hopes to make a significant impact on cotton imports with this commitment by helping to ensure its global supply chain sources responsibly by upholding worker safety and promoting responsible resource use. To achieve this goal, Target said it wants to have full transparency and visibility of where cotton is grown for Target’s owned brand products, to continually improve the value chain through collaboration with farmers, brands and retailers, and to leverage leading standards and certifying bodies to track and validate progress and report regularly. Target noted that it’s been nearly a year since it announced commitments around responsible sourcing and sustainable products, and since then the company has shared a closer look at its goals and progress in several areas, including forest products, chemicals, packaging and eliminating forced labor. Cotton is a “big deal” for its business since it’s used in so many products, Target said, and while cotton farming plays a major role in the economic well-being of communities around the world, the supply chain is complex. Target hopes to use its size, scale and influence to help the cotton industry tackle some major environmental and social challenges, while growing its investment in transparent and traceable sources. A key challenge, Target noted, is that there’s no industrywide standard definition for “sustainable cotton.” So, the company has formed a definition around a few important pillars. “To us, sustainable production uses water and chemicals as efficiently as possible, with methods that support soil health and promotes ethical working conditions,” the company said. Lalit Toshniwal, a principal fabric engineer on Target’s product design team, and his colleagues have been travelling around the world to visit cotton farmers and develop this goal for Target’s sourcing team. “We visited farms in India and Africa for a closer look at the different methods they use,” Toshniwal said. “There’s a very wide range, from small farms growing cotton in co-ops to larger farms that use more commercial practices. We also toured farms in the U.S., which tend to be much larger and have some of the most remarkable modernized equipment and practices.’ He said it was “eye-opening to see how access to data and technology, and support from government and local organizations to use sustainable practices contributes to much better farming conditions all around.” “But that’s far from the norm, so we’re putting our new goal in place to help address some of the biggest obstacles,” Toshniwal said. Toshniwal said based on what they learned, the team zeroed in on four major issues the company wants to help farmers address–that they are using water as efficiently as possible, especially important in areas where clean water is scarce; using chemicals and other inputs as efficiently as possible; improving soil health on the land where they farm, and promoting ethical working conditions–making sure no forced labor is used during the process. “We think Target’s efforts will help improve the industry in three big ways,” Toshniwal said. “First, we’ll work with vendors to map our supply chains and make them more transparent to understand where and how cotton is grown. Second, we’ll rely on programs such as Better Cotton Initiative, Organic and Cotton Leads, which we feel can best help us address the challenges that fall under our definition of sustainable cotton production. And third, we’ll push ourselves and industry partners to keep improving and supporting technological developments within cotton farming.” He said one example is Target’s recent partnership with the Center for the Advancement of Science in Space and the International Space Station to catalyze technological advancements in cotton farming. “We know that Target’s decisions have the potential to impact millions of people around the globe, from the people who create our products to the families they support and the communities where they live, while also improving the planet,” Toshniwal added. “And our cotton goal will support our work to ensure the products we deliver to Target guests are made ethically and responsibly.”
Source: Sourcing Journal Online
