The Cotton Advisory Board (CAB) at its first meeting for the current season 2007-08


Garment Exports worst affected by rupee appreciation.





Vidarbha Cotton Background Information

We are pleased to introduce ourselves as manufacturers of Full Pressed Cotton Bales (Rui Gathi) manufacturing in the name of M/s Vidarbha Cotton Processing Industries, situated at village Gondhanapur, Tq. Khamgaon. We have been in this line of business for the past 9 years. Also the sister concerns are engaged in the similar lie of trade and put together form a vertical merger. This provides the synergy and thus the efficiency to manage and mitigate the risks is covered.

Our mission statement is to produce best quality cotton bales with good management practices, use of advanced technology and by discovering new ideas and developments.

Our vision encompasses the goal to be the preferred suppliers of leading industries. Our proposed activity and the financial statements of the same are enclosed herewith.

The necessary infrastructure for the processing activity to be carried out is already in place. Thereby ensuring the smooth flow of activities. Though the current status is that of a partnership firm, with the long term goal in mind the partners have arrived at the consensus to convert the firm into a Private limited Company and the necessary steps has been initiated for the same as well. 

Promoters Background:

The promoters have been involved in this line of business for the past 25 years. They have rich business experience in the line of activity which is very closely related to this particular industry. As discussed earlier put together all the activities of the sister concerns together it forms an ideal platform for the vertical merger in the industry segment.

Subhash M. Jhunjhunwala is the main partner of the firm under whose able guidance the day to day production and financial activities are carried out. He has been in the business sector since he was just 22 years old. So, the time he has spent in the business till date has enriched him with 28 years of business experience which has enabled him to see all the up and down trends peculiar to any business.

The rest of the partners help the firm by looking after the office administration and thus form the support staff role which is critical to the efficiency of the firm. The promoters also have the experience of successfully running an Oil industry and the trading business of Iron Hoops and Hessian Cloth also for the past 20 years and in current operations also.

Mr. Subhash M. Jhunjhunwala also has good business relations across the industry and is politically well connected. In the past he has been the president of various business associations which include the Khamgaon Oil Millers Association, and the Khamgaon Ginning and Pressing Association. He has been the instrumental figure in obtaining a Government Regulation from the commerce department which has benefited the cotton industries in Maharashtra in a large manner.

Thus it can be safely concluded that the firm is under able guidance and holds good promise for the future also.

Project Background:

The cotton trading activity has been the dominant business activity in the state of Maharashtra especially Khamgaon zone. There was a time when this place was referred to as the “Manchester” of India. Such was the volume of trade associated with the place. Then over a period of time the government policy changed and the trade was monopolized for the government alone. This provided for the job work facility to the owners of the industry. The demand and the production was huge and thus the existing production facilities were unable to meet the huge inflow of Raw Cotton. This called for a need to set up a production unit and thus the idea to set up the factory was born.

With the above in mind the factory installation was commissioned and completed in the year 1997. That time the sole aim was to facilitate the job work process as no private trade was allowed. But then in the year 2002-03 the government of Maharashtra took a positive step and deregularised the restrictions imposed and made the trade open for private traders also.

This brought about a huge surge in the volume of activity and hence the need for the capital infusion in the business. This also helped the business achieve commendable turnover and profits.

The factory is located at village Gondhanpur, Tq. Khamgaon and is at a distance of six kilometers from the city bus stand. It has over the years provided job to hundreds of workers of the nearby village and brought about significant employment.

All the supporting infrastructure required for the efficient maintenance of the factory such as electricity, water well and fencing etc. are well maintained and are in prime working conditions.

Process Cycle and Detailed production activity:
The raw material for this is Raw cotton which has to be purchased from the market in an auction. This is a cash crop hence the price has to be paid first and then the delivery is affected. After the raw cotton reaches the factory premises it is first cleaned and then heaped according to the quality of the material. After this the process of ginning is carried out and the cotton seed and the rui are separated. Cotton seed is sold as it is in the open market and the rui is further taken to the pressing plant for converting into full pressed cotton bales which are tradable in the market. Thus there are two products which are cotton seed and full pressed cotton bales.

This is a cash crop and the normal production cycle from the procurement to conversion in finished product and sale and desatch up to the receipt of payment is a long time, hence the need for the working capital arises. The normal cotton procurement season starts in the month of October and goes up to May. Thus the requirement can be bifurcated into season and off season funds. This picture will be clearer from the financial data enclosed.

The goods are sold in the market through reputed brokers and thus the risks associated with the recovery of payments are minimized. The market functions and the prices are also based upon the demand and supply condition and in the past years the demand for good quality of cotton has increased manifolds. Thus the future of the activity holds good promise for the future and is poised for a positive growth. Also the trade restrictions in the textile industry for the export have been relaxed by the government which has brought about a sudden growth in the export segment and hence the demand for the quality has risen.

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