Cotton & Industry. Cotton & Cotton Yarn. Steel. Pesticides. The Indian. Tractor. oal. nking Express Service. Banking

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2 CARE Research expects that India's cotton production is likely to improve on account a good monsoon, marginal improvement in acreage as well as yield coupled with an announced increase in the MSP. A good monsoon accelerates sowing which is conducive for the overall increase in cotton production as majority India's cotton area is rain fed. The introduction BT cotton seeds has also played a catalytic role in enhancing cotton production in India over the past few years. The minimum support purchase price (MSP) for cotton has increased which in turn has encouraged farmers to plant more cotton. Growth in domestic cotton production to be driven by multiple factors Surge in global inventory driven by China China is particular significance to the global cotton industry primarily because it is not only the largest producer but also the biggest consumer cotton. China has been the largest provider support to its cotton sector since Another reason for China's influence in the market is also to do so with government policies which have resulted into China holding over 50 per cent the world cotton stocks. The domestic cotton prices vary according to the domestic production, the level stock maintained coupled with demand-supply dynamics and are generally in line with the global prices. Cotton pricing in India is also influenced by minimum support price fixed by Government India. In the past few years, the MSP cotton has been raised gradually to ensure minimum returns to the farmers. The cotton prices in rupee terms have also been on an uptick due to the rupee's deprecation against the US dollar. Domestic cotton prices to be in line with global prices Cotton yarn production to observe healthy growth CARE Research expects that the growth in yarn production would be driven by robust exports coupled with healthy demand from domestic apparel and home textile industry. Furthermore the strong rise in cotton yarn production is expected due to the disparity between the international and Chinese cotton prices. Cotton prices in China have been in the range 18,000-19,000 Yuan per tonne whereas international prices are in the range 11,000-12,000 Yuan per tonne indicating a significant premium which has resulted in Chinese players importing cotton yarn. The key export destinations for India include China, Bangladesh, Hong Kong, Peru, Korea, Turkey and Europe. China imports a substantial amount cotton yarn from India, as the cost yarn production in that country is higher, owing to high cotton prices. Furthermore, a record depreciation in rupee against the dollar will continue to help exports gather steam. However withdrawal focus market scheme (FMS) and incremental export incentivisation scheme which was primarily focused to regions like Latin America and Africa will moderate the yarn exports to a certain extent as such yarn would not be competitive when compared to Bangladesh or Pakistan for these destinations. Direct yarn exports A booster shot for the industry

3 Outlook on Cotton Table Section- I CARE Research's Outlook Gap in global cotton production and consumption expected to reduce Multiple factors expected to contribute to the anticipated growth in domestic cotton production Good rainfall across the country in FY14 A much needed relief to the agriculture sector Domestic acreage and yield expected to witness marginal improvement Rising MSP supports cotton cultivation Increase in cotton consumption to be driven by the rise in cotton yarn demand Surge in global inventory fuelled by China Domestic prices to be in line with global prices supported by the enhanced domestic MSP Outlook on Cotton yarn production to observe healthy growth Robust direct cotton yarn exports coupled with stable domestic apparel demand to drive cotton yarn demand Direct yarn exports A booster shot for the industry Rupee depreciation to boost export competitiveness China - The preferred nation for yarn exporters, however, cotton policies could play spoilsport Domestic apparel industry to provide impetus to cotton yarn industry, whereas derived demand likely to remain subdued Domestic cotton yarn prices to remain in line with cotton prices pritability to be driven by export realization Section- II Section Overview overview Global scenario Constant government support puts Indian cotton industry on a growth trajectory Cotton Overview Introduction The Cotton Scenario Cotton Area under cultivation Bt Cotton Peaking out Cotton Production Cotton Yield Cotton Balance Sheet Cotton Imports Cotton Exports Cotton Prices Cotton textile continues to dominate industry wise deployment gross bank credit under textile sector Overview Brief on domestic cotton yarn industry manufacturing process Domestic cotton yarn production Demand Domestic demand recovers in Direct Yarn exports observes sharp rise in Key success factors for cotton spinning mills

4 State wise Scenario Regulations State wise area under cotton cultivation State wise cotton production State wise cotton yield Technology Mission on Cotton (TMC) Technology Fund Upgradation Scheme (TUFS) Duty Structure Hank Yarn Obligation National Fibre policy Focus Market Scheme Century Textiles RSWM Super Spinning Mills Vardhman Textile Domestic Data Global Data Outlook Cotton Trend and outlook on Global Production and Consumption (in million bales 480 lbs each) Country wise share in global cotton production Country wise share in total cotton harvested area Country wise share in global cotton consumption Trend and Outlook on Production Rainfall from 1st June nd September 2013 (in mm) Trend and outlook on acreage Trend and outlook on Yield State wise cotton yield (in kg/hectare) Trend in Minimum support prices for long staple cotton (per quintal) Example MSP operations (in bales) Trend and outlook on consumption Cotton yarn production (in million kgs) Trend in capacity additions in spindles and rotors Trend in TUFS disbursement Trend and outlook on inventories Trend in state cotton reserve China Trend in Chinese Cotton Prices and Indian Cotton Prices Trend in Cotlook A Index and Stock to use Ratio Trend and outlook on domestic cotton prices Table SECTION- III Player Prile SECTION- IV Annexures List Graphs & Tables Section- I CARE Research's Outlook

5 Table Outlook on Trend and Outlook on Production Trend and Outlook in installed spindles and capacity utilization Comparison key input cost across countries Trend and Outlook on Demand Domestic demand v/s Direct Yarn Exports Trend and Outlook on Direct Yarn Exports (in million kgs) Share top 4 countries in exports cotton yarn for and Trend in currency movement Financial Year wise, Variety wise Production Cloth (Qty in mn sq mtr) Trend and Outlook on Domestic Demand Trend and Outlook on Prices Outlook on margins Section- II Section Overview Seasonality cotton across counties Cotton Overview Cotton cultivation in three different zones Cotton Area under cultivation (in lakh hectares) Trend in Bt cotton and Total Cotton area Cotton Production (in lakh bales 170 kg each) Cotton Yield (in kg/hectare) Cotton balance sheet Cotton Imports Cotton Exports Monthly average price kapas (Rs / quintal) Trend in cotton textile deployment gross bank credit (In INR billion) Overview Value chain cotton yarn industry Yarn Type Share Yarn-wise share in total yarn production Manufacturing Process Production (in million kgs) Bifurcation Demand ( ) Domestic Consumption Direct Yarn Exports State Wise Scenario State wise area under cotton cultivation ( in lakh hectares) State wise cotton production (in lakh bales 170 kgs) Trend in Minimum support price for long staple cotton State wise cotton yield (in kg/hectare)

6 Table Regulations Trend in TUFS disbursement Duty Structure ( ) Trend in Minimum support price for long staple cotton Century Textiles Textile Portfolio Section- III Company Section RSWM Super Spinning Mills Vardhman Textiles Plant Locations

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