Cotton imports by a few spinning mills in Tamil Nadu are likely to result in trade discussions with the buyers yet to get delivery of consignments over the last few months. Some of the mills which had to receive these imported cargoes in March and April have not got any response from the sellers over the delay, according to the Tamil Nadu Spinning Mills Association (TASMA).
K Venkatachalam, Chief Advisor, TASMA, said, “Some of our members had signed contracts with suppliers and shippers for delivery of cotton in March and April this year and they have reported that the deals have not been honored. Though four months have lapsed in some cases, suppliers and shippers are not providing any satisfactory reply.” Spinning mills in Tamil Nadu have entered into deals worth a total of ₹400 crores. “Our members have paid ₹60 crores as a 15% advance has to be paid out of the total contract cost,” he added.
The TASMA advisor said currently contracts for imports were “one-sided, favoring suppliers and shippers”. Such deals are “devoid of any merits and expected ethics in business related transactions”, he said. There were no clauses in the contract to tackle inordinate delays, he said, urging ICA to forward the contract format that TASMA could vet “suitably” and make modifications to ensure a “winwin” situation for all.
Trade sources said some mills had resorted to panic purchases when domestic prices headed towards ₹1,00,000 a candy (356 kg). Currently, Shankar6 ginned cotton, the benchmark for exports, is quoted at ₹86,500 a candy. Quality cotton costs higher. In the terminal markets across the country, the net weighted average modal price of raw cotton (kapas) is ₹10,050 a quintal, down from the highs of ₹12,000 seen in May.