Karnataka woos textile industries from Tamil Nadu

Coimbatore: Highlighting the problem being faced by textile industry in Tamil Nadu, such as power and pollution, Karnataka has invited entrepreneurs to invest in that State.

Inaugurating a ‘global investors meet’, a roadshow to showcase advantages for the industries investing in Karnataka, on Friday, Karnataka Textile minister, R Varthur Prakash, said Government has brought out innovative schemes to attract investment in the textile sector.

There was no no power cut in the State and availability of labour was in plenty, he said, adding, Karnataka did not have any pollution related issues for processing sector The policy ‘Suvarna Vastra Neethi’, was framed in such a way, understanding the requirements of textile entrepreneurs from Tamil Nadu, Prakash said.

Karnataka woos textile industries from Tamil Nadu

Karnataka has seen an approximate new investment of more than Rs 2,700 crore during the last policy period, with more than Rs 2,800 crore investments in the pipeline, a release, quoting him, said on Saturday.


Made in Italy textile machinery workshops in India

ACIMIT, the Association of Italian Textile Machinery Manufacturers, is organizing two important workshops in Mumbai and Ichalkaranji (India). Italy’s response to the strong demand for technology by the local textile industry.

India is the world’s second largest market in terms of value for textile machinery imports (amounting to 1.11 billion euros). Italian technology is especially in demand. In fact, 133 million euros worth of Italian textile machinery was sold to India in 2011, a 19% increase compared to the previous year.

“Our companies have been observing developments in India for some time now,” states Sandro Salmoiraghi, President of ACIMIT, “Business opportunities have multiplied, particularly in recent years, owing in part to the incentives set up by the Indian authorities to promote the modernization of local industry.”

To meet this growing demand for Made in Italy textile machinery, ACIMIT is organizing two important events with Indian textile manufacturers. Mumbai and Ichalkaranji will play host to two workshops to be held on May 8 and 10, at which various Italian machinery manufacturers will be presenting their latest technology proposals.

The following Italian machinery manufacturers will be taking part: Canalair, Cs Automazione, Fimat, Flainox, Itema, Jaeggli Meccanotessile, Ptmt, Smit, Testa. The workshops, organized by ACIMIT, are part of the “Machines Italia in India” program financed by the Ministry for Economic Development, which has entrusted the organization to the Federmacchine group (the Federation of Italian Manufacturers of Capital Goods).

“Machines Italia in India” is an initiative aimed at supporting the internationalization activities of businesses in the sector, in an area that is currently experiencing some of the most intense economic development anywhere in the globe.


US: Wal-Mart launches Women in Factories programme

Wal-Mart will look to empower women working for its suppliers

Wal-mart  has today (5 March) announced the launch of its Women in Factories programme, a five-year initiative that will empower 60,00 women working in its supplier factories in India, Bangladesh, China and Central America.

The scheme will teach women critical life skills related to communication, hygiene, reproductive health, occupational health and safety, identifying personal strengths and gender sensitivity. Up to 8,000 women will also receive leadership training to develop the work and life skills necessary for personal and career development.

The programme will be rolled out to 150 factories in India, Bangladesh, China and Central America over the next five years, initially launching in Bangladesh and India in 2012. The programme was designed and implemented in collaboration with CARE in Bangladesh and SWASTI in India, and will be evaluated by Northwestern University in partnership with DAI and Mission Measurement.

Meredith Menhennett, senior manager of ethical sourcing at Wal-Mart, and in charge of the training programme, told just-style that Wal-Mart will fund the programme for two years, and that after the two years, it expects the programme to become self sustaining.

“During the two years of funding that the foundation give, the first round of training will be conducted by our NGO partners, and at the same time they will be teaching and mentoring the HR team to continue the programme,” says Menhennett.

“The second round of leadership will be conducted by the factory with the active support and teaching of the NGO partners. And they will continue to have the NGO and and Wal-Mart’s support.”

While the Wal-Mart is emphasising the social benefits it expects to see through the programme, it also expects that there will be business impacts as well. Menhennett highlighted how the nutrition, programme, for example, will help to reduce illness and worker absenteeism, which will have a positive impact on the companies they’re working for.

“Empowering women not only improves their lives but it is also good for customers and business across the industry,” says Michelle Gloeckler, senior vice president of Home for Walmart. “By educating and empowering women in factories and creating a stronger supply chain, suppliers realise greater efficiencies in their factories, which should result in higher quality products, lower prices and more reliable product availability for customers.”

TN textile industry unhappy with power tariff hike

The power tariff increase by Rs 1.50 per unit has come as a rude shock for the ailing textile industry, Southern India Mills’ Association (SIMA) said on Friday.
Reacting to the new power tariff announced by Tamil Nadu Electricity Regulatory Commission (TNERC), SIMA Chairman, S Dinakaran said the association was having a lot of faith on TNERC that it will follow some rationale in fixing the revised tariff.

Though Tamilnadu Generation and Distribution Corporation (TANGEDCO) had proposed hike of Re 1 per unit for the High Tension (ht) consumers, TNERC has recommended much higher tariff than the demand, he said.

Dinakaran also said such an abnormal power cost will lead to permanent closure of over 2,000 spinning mills, which would have cascading effect on hand loom, power loom, garmenting and other labour intensive sectors in the state.

The proposed tariff will be the highest in the country for HT consumers, Dinakaran said and appealed to the Chief Minister Jayalalithaa to exempt the ailing textile industry from the tariff hike at least for the next two years.

Meanwhile, Tirupur Exporters’ Association (TEA) requested the TNERC to reduce the power tariff hike to 20 per cent for exporting units. TNERC had hiked tariff by over 37 per cent.

In a press release, TEA president, A Sakthivel said a special consideration has to be given for the exporters, who have to compete in the international market in a cost effective manner.

The knitwear exporting units have been already affected by various adverse factors and at this juncture, the increase in power tariff to this extent would make them less competitive, he said.

All textile mills on brink of closure: Trade Unions

PUDUCHERRY: A joint meeting of leaders of all trade unions here today said textile mills in Puducherry- AFT mills, Sri Bharathi Mills and Swadeshi Cotton mills-are on the brink of collapse as successive governments have failed to heed pleas to tone up these three undertakings.

AITUC Secretary V S Abishegam said in a press release that managment of the Rs 500 crore AFT mills not paying workers salaries on the 10th day of each month.Government should take steps to modernise it so that workers could be saved the uncertainty of its future, he said.

An announcement should be made in the coming budget session of the Assembly in this regard, Abishegam said.

New York cotton futures rebound

Plexus Cotton Limited reported that New York (NY) futures rebounded this week, as May advanced 224 points to close at 89.58 cents, while December gained just 68 points to close at 88.95 cents.

In our last report we argued that cheap cotton may actually be a lot less plentiful than what statistics lead us to believe, because China has absorbed a lot of excess cotton into its balance sheet and a big chunk of the remaining exportable surplus is located in relatively expensive origins like Australia and Central Asia. Thanks to a depressed NY futures market, the US has been one of the more ‘affordable origins’ recently, which has allowed it to conclude a decent amount of export business over the last couple of weeks.

US export sales for the week of March 15 were once again above expectations at 200’400 running bales for the current marketing year, plus there were another 87’100 running bales sold for August onwards shipment. What’s remarkable apart from the volume sold is that 19 markets participated in the buying, signaling that US cotton is currently one of the more attractive as well as one of the more reliable origins available. Commitments for the current season now amount to 11.9 million statistical bales, whereof 6.4 million have so far been exported.

When we look at the US balance sheet, we have supply at 18.3 million bales (2.6 beginning stocks and 15.7 crop), from which we need to deduct 3.4 million for domestic mill use and 11.9 million bales in export commitments. This leaves theoretically around 3.0 million bales of uncommitted cotton, but since our statistics are based on a snapshot at the end of July, we have to reserve around 0.9 million bales for domestic mills use between August and October and there are probably around 0.5 million bales in export commitments for August onwards that will be supplied from existing stocks. In other words, there are not much more than 1.6 million bales for sale at this point and some of these bales may already be spoken for, because there are still around 1.4 million bales in ‘optional origins’ sales on the books.

Typically one would expect to see price rationing and a slowdown in activity in a tightening supply situation like this, but what we are witnessing is actually the opposite, as US export sales have been accelerating in recent weeks and prices have been trending lower due to a bearish outlook for new crop. There is no incentive for anyone who is holding cotton to keep sitting on it, because the market offers no carry and the statistical picture for next season is still rather depressing. Therefore, old crop cotton gets pushed out the door as fast as possible, which in turn tightens the remaining supply even further and forces a steeper inversion, thereby creating even more of an incentive to let go of existing stocks.

As the US races towards a sold out position, the futures market could turn into a dangerous bear trap for the many shorts that remain in May and July. Based on our calculation above, the amount of uncommitted US cotton amounts to just 1.6 million or an equivalent of 16’000 contracts, while the open interest in May and July futures amounted to over 139’000 contracts or 13.9 million bales as of this morning. Although we realize that some of these open futures may have offsetting options positions against them, the amount of open interest remains rather high compared to what is left for sale in the US.

So what is this huge short interest in May and July futures against? For one, there are still over 30’000 contracts or 3.0 million bales in unfixed on-call sales on May and July, and merchants hold sold short futures or options against many of them. Then there are basis-long positions in foreign growths, such as Australia, Brazil or various African origins, where a physical long is being ‘protected’ with a short futures or options position. The last category involves speculative short positions, with large specs/hedge funds currently holding the largest short position in over three years, with 8000 contracts in net shorts and 44’000 contracts in outright shorts. Although some of these shorts may belong to December, specs typically play in nearby futures for liquidity reasons.

So where do we go from here? We don’t like the current set-up in the futures market, where the trade and speculators are both leaning towards the short side, while inactive index funds are holding the longs. Since the US is almost sold out, we believe that it won’t take much to spook these shorts into covering their positions in a less than orderly fashion. As we have pointed out last week, we don’t think it is a good idea to be short nearby futures and would advise to do any short hedging in the December contract instead.

Plexus Cotton Limited