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Cotton Corporation of India, which carries out market intervention activities to support cotton growers, plans forward integration by setting up its first ginning and pressing factory with capacity of 60,000 bales at Adoni in Andhra Pradesh.
The State-owned company will take 7.17 hectares of land on lease in one of the sick units of the National Textile Corporation in the newly-formed State to set up the ginning unit on a pilot basis.
The Corporation is also open to setting up similar units in Telangana, which is among the largest cotton growing regions in the South, if the newly-formed State Government offers land free of cost.
BK Mishra, Chairman and Managing Director, Cotton Corporation of India, said a memorandum of understanding has been signed with the National Textile Corporation which is in the process of seeking the approval of the Board for Industrial and Financial Reconstruction for leasing out the requisite land.
“We plan to invest ₹10-20 crore and will also consider investment in a warehouse in the cotton growing areas if the State Government supports us,” he said.
With cotton prices ruling above the minimum support price for the last few years, the Government is also planning to engage the Corporation, which has over 300 procurement centres, in ensuring the MSP for other commodities, including jute.
Besides market intervention activities to ensure MSP in major cotton-growing regions of Maharashtra, Andhra Pradesh and Gujarat, the Corporation is focusing on commercial operations.
Arbitration to recover ₹180 cr In the first 10 months of the cotton year (ending this September), CCI procured 4.5 lakh bales of cotton worth ₹900 crore. Of this, only 40,000 bales were bought at MSP, he said.
In 2012-13, CCI bought 22.5 lakh bales and sold 20 lakh bales worth ₹5,100 crore. Since cotton prices fell below the MSP, CCI procured 20 lakh bales amounting to ₹4,500 crore to support farmers.
In the cotton year (starting October 2014), CCI intends to procure 10 lakh bales. NTC and cooperative mills have annual procurement contracts with the Corporation and enjoy longer credit periods compared to other commercial deals.
CCI has gone in for arbitration against 89 mills to recover ₹180 crore. In 2011-12, these mills refused to take delivery after placing orders as cotton prices dropped below the contracted price.
“We have already recovered ₹25 crore from 43 small mills while the negotiation with larger mills are in process,” Mishra said.
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