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Cotton Corporation plans revamp to cut overheads

Archana Chaudhary

MUMBAI, June 23

COTTON Corporation of India Ltd (CCI) proposes to go in for an internal restructuring to meet high overhead costs.

To begin with, the corporation, which has 1,300 employees, plans to reduce the retirement age of its employees to 58 years from the prevailing 60 year-limit.

The CCI may also go in for a voluntary retirement scheme as another step towards cutting costs, Mr. Vishwa Nath, Chairman-cum-Managing Director told Business Line. The new retirement age limit will be adopted in two months' time.

``Our margins have been affected due to high overheads,'' said Mr. Nath. ``Recommendations of the Fifth Pay Commission, the Justice Mohan Commission and our Union's new charter have all lead to an increase in salary outgo,'' he said.

The CCI has been witnessing falling profit margins for the last three years. ``Exports have nosedived after the South-East Asian economic crisis. And though the situation improved slightly last year, we have also had to face a rise in imports to meet dom estic demand for cotton which had fallen because of bad crop,'' he said. The corporation was able to export only 20,560 bales last year, against 2.60 lakh bales in 1997-98.

The corporation has seen a consistent fall in turnover and profits for the last couple of years. This year, CCI expects a turnover of Rs. 600 crores compared to Rs. 778.02 crores for 1998-99 and Rs. 1053.27 crores for 1997-98. Profits are expected to sta nd at a meagre Rs. 5 crores against last year's Rs. 12.91 crores.

The main reasons for the drop in figures, according to Mr. Nath, are the dismal crop conditions coupled with an increase in imports and an overall depression in the textile industry. In 1998-99, CCI's sales to National Textile Corporation mills came down to 13.60 per cent from 16.62 per cent, mainly because financial constraints forced the mills to work below capacity.

``This year we had expected the production of 168 lakh bales of cotton. But with delayed sowing, market figures have reduced the estimate to 155 lakh bales,'' Mr. Nath said. Also, the drought situation in Gujarat and Rajasthan may force imports of cotton to go up to 15 to 16 lakh bales.

The corporation will have to go in for stringent cost cuts to keep up with competition from private traders and federations.

Also cotton imports would be available at competitive prices especially with cotton being included in the open general list in the near future, he added.