Overcapacity grips ginning mills in Gujarat

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Ahmedabad | Published: April 8, 2016 6:04:25 AM

Cotton ginning factories in Gujarat have been facing overcapacity problem for the past two years. Around 1,300 ginning units in the state, which have a total capacity to process 2.5 crore bales of cotton, are producing only 90 lakh bales of cotton.

Cotton ginning factories in Gujarat have been facing overcapacity problem for the past two years. Around 1,300 ginning units in the state, which have a total capacity to process 2.5 crore bales of cotton, are producing only 90 lakh bales of cotton.

“Since there are so many units, and not enough cotton, 10 % of these units in the state have not even begun work this season. Capacity utilisation of most units is restricted to 25% to 40% at the most,” lamented Dilip Patel, president of All Gujarat Ginners Association.

Patel said that overcapacity problem has gripped the industry for the last two years. Speaking of the increase of accumulated losses for ginning factories, Patel expressed fears that a number of mills will face shutdown if banks and other financial institutions decide to speed up the recovery process.

Cotton yield has also suffered this year, due to lower amount of sowing done by farmers as well as climatic issues such as rain. “This year, the total yield in India is about 340 lakh bales of cotton. Two years ago, we saw the cotton yield reaching 430 lakh bales,” Patel said.

Ginning factories have also been affected due to a lack of parity in prices. Cotton Trade India Company’s Tushar Sheth says, “Ginning factories are facing a price disparity running up to lakh of rupees. While farmers are pricing the cotton high, the final products are not worth as much. Consumption is falling locally, as well as all over the world.”

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