Against the back drop of the favourable indutry output numbers of 9.5% growth in April versus projected 8.1%, the Indian textile sector seems to be no exception in its move to improve processes and trim its operational and interest costs.
The manufacturing sector could achieve the growth of 10.5% in the March 2006 quarter essentially on the grounds of effective cost cutting, downsizing, reducing cycle times and redeeming the high cost debt.
The textile sector saw a reduction of 11 per cent during the fourth quarter of 2005-06.
However, it must be noted that major textile companies, Aditya Birla Nuvo Ltd recorded an exceptional rise of 177 per cent in its interest cost in Q4, 2005-06, Rajasthan Spinning and weaving mills reported an increase of 36 per cent in the amount of interest paid, Shri Laxmi Cotsyn Ltd (12 per cent) in the last quarter of fiscal 2005-06, with an exception of Grasim and Indo Rama Textiles Ltd, which posted a decline of 33 per cent and 28 per cent respectively in the interest cost.
The main reason attributable to the rise in the interest cost is that, the sector has significant capital blocked as working capital, for which, short-term funds are required, which increases the overall cost of funds.
