Cotton production may jump 5% next year

[Buy SEL Manufacturing Company Ltd at the CMP of Rs.74.55, for a target of over Rs.300 in the next 12---18 months time frame. The book value of the shares of the company is a whooping Rs.159.63. The EPS of the shares of SEL Manufacturing Ltd is Rs.31.39; P/E of only 2.37, and Price to book is absurd at 0.47. There cannot be a better company to invest in the textile sector, after the government's recent announcement of FTP.

The government has decided to continue with the DEPB Scheme upto December, 2010, which augurs well for the company. Moreover, income tax benefits under Section 10 (B) for 100% export oriented units for one additional year, till 31st March, 2011, enhanced insurance coverage and exposure for exports through ECGC Schemes till 31st March, 2010, allowing EOUs to sell their products manufactured by them in DTA, upto a limit of 90% instead of 75%, without changing the criterion of 'similar goods', within the overall entitlement of 50% for DTA sale, allowing EOUs, CENVAT Credit facility for the component of SAD and education cess on DTA sale augurs well for the company.

The company would also benefit from the continuation of interest subvention scheme. Moreover, under the present FTP (Foreign Trade Policy), Govt recognises exporters based on their export performance and they are called 'status holders'. For technological upgradation of the export sector, these 'status holders' will be permitted to import capital goods duty free (through duty Credit Scrips equivalent to 1% of their FOB value of exports in the previous year), of specified product groups. This will help companies like SEL Manfuacturing Company Ltd to upgrade their technology and reduce cost of production. For upgradation of the export sector infrastructure, 'Towns of Export Excellence' and units located therein would be granted additional focused support and incentives---all these are positive for SEL Manfuacturing Company Ltd.

THIS SCRIP IS ANOTHER VARUN INDUSTRIES OR REFEX REFRIGERANTS LTD OR ENTEGRA LTD IN THE MAKING.......].

While the acreage declined in the southern zone, there was an increase in the north zone.

Cotton production in the next cotton year (2009-10) is likely to go up by 5 per cent, according to estimates of the textiles ministry. According to the first estimates by the Cotton Advisory Board (CAB), the country is expected to see a crop size of 30.5 million bales (1 bale = 170 kg) in the period.

The Indian cotton year runs from October to September. In the current cotton year, country’s production is expected at 29 million bales. According to the ministry officials, deficient rain this year has failed to impact cotton cultivation as the crop requires relatively less rainfall than other cash crops. This has resulted in an increase of acreage under cotton.

As per the CAB statistics for 2009-10, the overall acreage has increased by 2.65 per cent to 9.65 million hectares against 9.40 million hectares in 2008-09. While most of the states have shown an increase in acreage, southern states have witnessed a fall in acreage with Andhra Pradesh, Karnataka and Tamil Nadu, have witnessed a decline of 24 per cent, 33 per cent and 82 per cent, respectively. Orissa too followed suit recording a fall of 7 per cent.

Some states, including Rajasthan, Punjab, Maharashtra and Gujarat, have seen a big jump in acreage which in the case of Rajasthan has been as high as 37 per cent. Area under the genetically altered version of the crop (BT Cotton) continued to rise. Out of the total land under cotton for 2009-10, around 80 per cent, or 7.63 million hectares, is under this hybrid variety.