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CRISIL’s analysis of nearly 1,700 MSMEs (annual turnover up to Rs 2.5 billion) shows that their working capital gap — or the difference between current assets and current liabilities (excluding short-term bank borrowings) — has widened consistently since the financial year 2015.
Short-term debt raised by these enterprises — for working capital needs — grew just eight per cent annually, which is significantly lower than their funding requirement.
The trend would have continued in the last financial year, too, for two reasons: one, the introduction of the Goods and Services Tax led to increased working capital requirements in the transition phase; and two, lower credit disbursal by banks to MSMEs. According to the Reserve Bank of India, credit to MSMEs in the manufacturing sector registered a negative growth of one per cent last fiscal.
–The working capital gap is a critical barometer of an enterprise’s ability to meet its daily financing needs for production and services. A widening gap means funding needs to be raised from financial institutions or from own sources, to scale up business.
The gap is widening faster for the services sector at 16 per cent annually, compared with 13 per cent for the manufacturing sector. This is largely because of payment delays, especially in the services sector.
In manufacturing, the gap is wider in the faster-growing industries such as auto components, electronic/electrical equipment and chemicals, where funding is required to buy raw material to match increasing sales. In services, industries which require high working capital deployment, such as logistics, distribution and construction-related enterprises, are witnessing widening gaps. Given that banks are very cautious about lending, NBFCs may continue to tap this big opportunity and expand credit to MSMEs.
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The European Union has proposed banning plastic products like cotton buds, straws, stirs and balloon sticks when alternatives are easily available in an attempt to reduce litter spoiling beaches and ocean beds.
The European Commission said its proposal would seek to cut marine litter in half for the ten most prominent items and avoid environmental damage estimated at over $250 billion over the next dozen years. EU Vice President Frans Timmermans said that utensils would not be banned completely, but steps would be taken to have them made out of sustainable materials when possible.
“You can still organize a pick-nick, drink a cocktail and clean your ears just like before,” Timmermans said.
He also made new proposals to ensure that it is the polluter that pays. The proposal will be assessed by the EU parliament and member states but Timmermans hopes to see results before May 2019.
And unlike so many EU proposals that are immediately criticized by consumer and environmental groups as too little too late, the reaction was largely positive on Monday.
“The only way to stop plastics pouring into our oceans is to turn off the flow at its source: production,” said Lasse Gustavsson, the European executive director of the environmental group Oceana, as he lauded the initiative.
European Green Party lawmaker Monica Frassoni also welcomed the initiative and added that “the scale of the problem means that we cannot rely on individual European countries to take action and must instead find a Europe-wide response.” The European Parliament has said that plastics production is now 20 times higher than in 1960s. The EU has also been spurred into action by China’s decision to no longer import part of the bloc’s waste.
The cotton trading remained modest amid firm spot rate and around 1,500 bales changed hands. The Karachi Cotton Association (KCA) spot rate remained intact at Rs 7,500 per maund, the traders said.
They said the buyers bought all qualities of lint offered by the ginners during the trading session besides spinners and mills purchased quality cotton on slightly higher prices during the session while leading ginners sensing future demand of quality lint offered fewer stocks on higher prices to the buyers.
Ghulam Rabbani, a senior trader said the buyers were accepting a bit higher prices as the leading millers and spinners bought around 600 bales at Rs around 7,525 per maund during the session.
He said the leading buyers would remain eager for quality lint on slightly higher prices on the back of growing demand of garments and yarn.
He said there leading end users would likely to go for further import of quality cotton in near future for meeting foreign and domestic end-products demands.
A senior broker said the private sector commercial exporters of Sindh and Punjab made deals for quality cotton at around Rs 7,550 per maund while ginners of Sindh offered raw lint to the buyers around Rs 5,975 per maund, depending on trash level.
Around 200 bales of upper Sindh changed hands at Rs 7,050 per maund, 200 bales of Mirpurkhas at Rs 6,975 per maund, 100 bales of Yazman at Rs 7,225 per maund and 100 bales of Multan changed hands at Rs 7,200 per maund.
He said market remained steadier tones as the buyers were looking for better lots for Rs 7,500 to 7,575 per maund. New York Cotton July 2018 Future closed at 86.18 cents per pound and October 2018 Future closed at 86.36 cents per pound.
Cotton Australia has unveiled a new initiative to help start-ups showcase their innovations for cotton production and supply as part of its 2018 Australian Cotton Conference.
The conference will include a “Startup Alley” dedicated to showcasing the industry’s investments in startups and the emerging technologies that are being developed specifically for cotton production and supply.
Cotton Research and Development Corporation executive director Bruce Finney said the initiative would enable businesses to see the latest innovations in Australian cotton.
“As an investor in innovation, digital and disruptive technologies and entrepreneurs, CRDC is constantly on the lookout for innovations that will further push the boundaries of Australian cotton.
“This is a great way to showcase the exciting ideas and innovations emerging from the startup space, and to connect cotton growers seeking solutions with businesses who may be able to help.
“We’re particularly looking for startups with near-to-market innovative products or services with great application to cotton production or the supply chain and strong customer validation.”
Twelve places will be available with selected applications being provided with a dedicated booth and the opportunity to pitch to conference delegates during a dedicated session at the event.
Textile processing industrialists while expressing grave concern over artificial price hike and shortage of Hydrogen Peroxide (HP) in local market have sought permission from Ministry of Commerce to import it on zero rated duty.
All Pakistan Textile Processing Mills Association (APTPMA) expresses with utter surprise and consternation that the local manufacturers of HP has abruptly reduced the supply of HP in the country which has created panic amongst our member units who are the one the major consumers of HP.
Saleem Parekh, Central Chairman APTPMA said that HP is used as a basic raw-material by the Textile Processing Units. “Shortage of HP would adversely affect the export of textile fabrics/ garments and deprive the country of valuable foreign exchange to the tune of billions of rupees, besides closure of hundreds of textile industrial units, and would throw thousands upon thousands of wage-earners out of jobs. In a recently meeting held in the office of Textile Commissioner Organization under the chairmanship of Ahmed Bakhsh Narejo, Textile Commissioner, Ministry of Textile & Industry, which was attended by the all stake holders except Sitara Peroxide.
The country’s total demand of Hydrogen Peroxide is 4500.M.Tons/Month, out of which 99% is consumed by Textile Industry. There are two plants of this chemical in the country, namely Sitara Peroxide having a production capacity of 2550 M.Ton/month & DESCON Oxychem, 2400 M.Ton/month respectively.
The demand of Hydrogen Peroxide for Textile Industry of Northern zone (Punjab+KPK) is about 2200 M.Ton/month where as it is about 2300 M.Ton/month in Southern zone (Sindh+Balochistan); total demand of the Country is about 4500 M.Ton/month.
It is learnt that, DESCON Oxychem is supplying 1175 M.Ton/month out of its total production of 2760 M.Ton/month to south zone which is 42% of its production, on the other hand M/s Sitara Peroxide having total capacity 2550 M.Ton/month is producing only 1780 M. Ton/month which is only 70% of its full capacity. Out of its current production of 1780 M.Ton/month, it is supplying only 200 M.Ton/month to south zone which is only 11%. Hence total supply to south zone is 1375 M.Ton/month i.e. a shortage of 925 M.Ton/month to the tune of about 60% being faced by South zone Textile Industry.
Due to this acute shortage, the price fluctuation is very high & the situation may compel the SME Sector for closure, whereas, the LSM are surviving by importing through DTRE, which impart Trade Bill. He emphasized that TCO should intervene & contact Sitara Peroxide & press Sitara Peroxide to bring its unit in full swing and ensure an un-interrupted supply of Hydrogen Peroxide to the South zone in the true sprits which were under take at the time of imposing duty & antidumping duty on Hydrogen Peroxide. He further said that matter should be resolved on war footing otherwise closure of Textile Industry will take place. The Director (Textile) informed that the M/s Sitara Peroxide has been approached several times but they have tended to response.
SURAT: The Federation of Surat Textile Traders’ Association (FOSTTA) has urged Prime Minister Narendra Modi to form a special task force to study the impact of GST on the textile sector.
In a letter to Modi, the FOSTTA office-bearers have stated that the production of man-made fabric has reduced from four crore meters per day to less than two crore meters, the sale of polyester fabric including saries and dress material has decreased by almost 40% and that the export of finished fabrics has reduced by almost 28% in the last 10 months post-GST implementation.
The FOSTTA stated that more than 60,000 embroidery machines have been shut and that over 90,000 powerloom machines have been sold in scrap in the last 10 months. Thousands of women employed doing hand embroidery work have been rendered jobless due to the closure of the embroidery machines.
FOSTTA secretary Champalal Bothra said, “Many weavers and embroidery owners were investing in modern machines pre-GST, but the rate of investment has almost come down to 70% in the last 10 months due to the implementation of GST. Post-GST, the fabrics imported from other countries including China has become cheap and that the Indian fabrics have become costlier. The benefits of duty drawback scheme to the exporters has been stopped completely.”
Bothra added, “We have urged the PM to re-consider the government’s decision on including textile sector in the GST. We want the government to remove the traders and weavers from the ambit of the GST, while the GST should be charged at the yarn stage only.”
The Central Board of Indirect Taxes and Customs has asked its field offices to levy goods and services tax on goods in customs warehouse only at the time of final clearance. The move is aimed at ensuring ease of doing business for importers, experts said.
In a circular to principal chief commissioners and chief commissioners, the GST policy wing of the CBIC said “transfer/sale of goods while being deposited in a customs-bonded warehouse” is a common trade practice whereby an importer files an ‘into-bond’ bill for entry and stores the goods in a customs-bonded warehouse.
The importer then supplies such goods to another person, who then files an ‘ex-bond’ bill of entry for clearing the said goods from the customs-bonded warehouse for home consumption.
The CBIC said the Customs Tariff Act has been amended with effect from March 31 to state that the valuation for the purpose of levy of integrated GST on warehoused imported goods at the time of clearance for home consumption would be either the transaction value or valuation done at the time of filing the ‘into-bond’ bill of entry, whichever is higher.
The circular said integrated tax shall be levied and collected at the time of final clearance of the warehoused goods for home consumption, which means at the time of filing the ‘ex-bond’ bill of entry.
However, the value addition accruing at each stage of supply would be accounted for, on which GST would be payable at the time of clearance of the warehoused goods.
The supply of goods before their clearance from the warehouse would not be subject to the levy of integrated tax and the same would be levied and collected only when the warehoused goods are cleared for home consumption from the customs-bonded warehouse.
Central Board of Indirect Taxes and Customs
This circular would be applicable for supply of warehoused goods, while being deposited in a customs-bonded warehouse, on or after April 1, it said.
AMRG & Associates Partner Rajat Mohan said the tax authorities has finally given in to the demands of importer lobby by rectifying a major anomaly on account of supply of warehoused goods, which was loaded with a double tax since July, 2017. “This course correction is a laudable effort and would go a long way in easing the liquidity crunch of importers,” Mohan said.
EY India Tax Partner Abhishek Jain said “this clarification brings a sigh of relief for various businesses. However, given its applicability from April 1, there still remains ambiguity on supplies made prior to April.”
“Sustained growth of Pakistan economy is possible only with export of higher value-added goods”, says a policy brief issued today by the Institute for Policy Reforms. To achieve this, Pakistan must increase its focus on science and technology. IPR’s Brief written by the renowned Dr. Attaur Rahman former federal minister and Chairman HEC, recommends that the country must commit in earnest to a Science and Technology strategy. This is critical for the country’s future or else “Pakistan risks being left behind permanently”.
Pakistan’s main export product is textiles. While textile constitutes 60% of Pakistan’s exports, it has a mere 6% share in world exports. Overall, manufactured goods are 67% of world trade. Resultantly, Pakistan’s role in world trade is limited because it does not have the value-added products to participate in bulk of the world market. That is the main reason that its exports do not increase.
Also, no economy grows on a long-term basis without a dynamic and continually modernizing manufacturing sector. The share of manufacturing in Pakistan’s GDP is under 14%, whereas it ranges between 37% to 43% of GDP in middle income East Asian economies. India and Bangladesh have a share of 30 and 28% of GDP respectively.
To boost manufacturing and economic growth, the S&T strategy must integrate into all aspects of the economy: industry, agriculture, SDGs as well as government.
For effective implementation, it must be led at the highest government level, by the Prime Minister. Support through S&T is the only way for the private sector to productively use the external and internal knowledge needed to manufacture and export value added goods.
The Union Government has assured the textile and clothing industry that it will identify Central and State embedded taxes and work out a reimbursement scheme soon.
HKL Magu, chairman of Apparel Export Promotion Council, has said in a press release that representatives from apparel, made up, and textile segments met the Union Finance and Textile Ministers and officials of the two ministries on Sunday.
In the two-hour meeting, the industry explained the issues of concern, pending GST refunds and slow disbursement of rebate of State levies (ROSL). The embedded and inverted taxes were not considered for refund and there was a delay in receiving the GST refunds, they said. Over 90 % of the textile and clothing industry was in the MSME sector and these delays had affected the financial capability of the units. The exporters were unable to book orders during the peak season.
The industry had seen reduction in drawback and ROSL by over 5 % of FOB since the pre-GST period. Further, Indian textile and clothing exporters did not have preferential access in countries markets such as the European Union which countries such as Bangladesh and Vietnam had. These had an impact on the exports.
Mr. Magu said the Finance Minister had instructed the officials to immediately identify the Central and State embedded taxes and work out a reimbursement mechanism. The Ministry would also expedite refund of GST and ROSL in a time-bound manner, the release said.
Though annual apparel exports are at 17 billion $ now, the industry is confident of 20 % growth this financial year if there a level-playing field.
Differently-abled women, who had successfully completed training in sewing machine operation, were handed over certificates at the Women Technology Park (WTP) at Sona College of Technology here.
The park is funded by the Department of Science and Technology’s Science for Equity, Empowerment and Development (SEED) Division for training of rural women in industrial technologies like solar food processing, pulse plating for silver anklet, sewing machine for differently-abled women, development of paver blocks and waste paper recycling. The trained women will be supported by the WTP to establish and manage their production units. The first batch of training in sewing machine was completed recently. D. Raja, co-investigator of the project, has designed a device to modify the sewing machine in such a way that persons devoid of lower limbs also can operate the powered sewing machine without the need for pedalling.
At the end of the training, C. Valliappa, Chairman of the college, distributed the certificates to those who had successfully completed the programme.
S.R.R. Senthil Kumar, Principal of the college, and Prakash, Professor, Anna University, felicitated the beneficiaries.
