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Sat May 17, 2008

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Coimbatore, May 09, 2008 (Asia Pulse Data Source via COMTEX) -- South India Small Spinners Association has appealed to Prime Minister Manmohan Singh to recommend a moratorium of up to two years for repayment of interest and principal amounts to bankers.

The plea comes in the wake of yarn prices in export market being 7-8 per cent below domestic prices, forcing many spinners to return to domestic market, causing a market glut.

Moreover, the cotton textile industry was facing the worst ever crisis following 'abnormal' hike in prices of cotton due to competing purchase of raw cotton by international shippers for exports, steep decline of exports due to appreciation of rupee against the US dollar and sudden hike in the interest rates because of the measures taken by the RBI to contain inflation, SISSPA said.

In a memorandum to Singh, a copy of which was released to the press, SISSPA President R Kuppuswamy said such a situation had wiped out the little profit the spinners were making, pushing majority of the units in the red.

This has resulted in units defaulting in their interest and principal repayments to the bankers or availing funds at higher interest rates to honour their commitments with the bankers and thus ending up in more trouble, he said.

With market showing no signs of improvement, SISSPA requested Singh to recommend a moratorium "depending upon the level of exposure to reduce the burden and further insulate both the industry and bankers from the problem of NPAs."

Copyright 2008 APU Newswire. All rights reserved.

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