A PRESENTATION A PRESENTATION ONON

INDIA’S SUPPLY AND DEMAND PROSPECTS

BYBY

VINAY KOTAKVINAY KOTAKDIRECTORDIRECTOR

KOTAK & CO. LTDKOTAK & CO. LTDKOTAK GINNING AND PRESSING INDUSTRIES LTD.KOTAK GINNING AND PRESSING INDUSTRIES LTD.

ICA ANNUAL TRADE DINNER EVENTICA ANNUAL TRADE DINNER EVENT --20082008

OCT 03, 2008

AREA IN MILLION HECTAREZONE 2005-06 2006-07 2007-08 2008-09

(Proj.)2009-10 (Proj.)

NORTH 1.61 1.49 1.50 1.20 1.19

CENTRAL 5.40 5.86 6.37 6.16 6.16

SOUTH 1.59 1.71 1.59 1.72 1.60

OTHERS 0.08 0.08 0.08 0.08 0.08

TOTAL 8.68 9.14 9.54 9.16 9.03

ZONAL S-1

AREAS-2

8.68 9.14 9.54 9.16 9.03

0

2

4

6

8

10

12

2005-06 2006-07 2007-08 2008-09 2009-10

AREA IN MN …

BT COTTON AREA IN 2008-09 IN MILLION HECTARE

ZONEZONE BT COTTONBT COTTON NONNON--BT BT COTTONCOTTON

TOTAL TOTAL

NORTHNORTH 0.970.97 0.230.23 1.201.20

CENTRALCENTRAL 4.744.74 1.421.42 6.166.16

SOUTHSOUTH 1.191.19 0.530.53 1.721.72

OTHERSOTHERS 0.000.00 0.080.08 0.080.08

TOTALTOTAL 6.906.90 2.262.26 9.169.16

ZONAL S-3

APPROX. 75 % OF TOTAL AREA IS UNDER BT SEED

PRODUCTIVITY

YEAR 2005-06 2006-07 2007-08 (ESTM.)

2008-09 (PROJ.)

2009-10 (PROJ.)

AREA (MN HECTARE)

8.68 9.14 9.54 9.16 9.03

CROP (IN MN BALES)

24.10 28.00 32.50 32.00 34.50

YIELD (KG/HEC)

472 521 579 594 650

S-4

PRODUCTIVITY S-5

472 521 579 594 650

0

200

400

600

800

2005-06 2006-07 2007-08 2008-09 2009-10

KG/ HECTARE

AREA -WISE PRODUCTION SHARE

Gujarat 26.40%

Maha. 33.48%

A.P. 11.50%

Other 28.61%

S-6

Gujarat 35.38%

Maha. 20.00%

A.P. 16.23%

Others 28.38%

AREA PRODUCTION

PRODUCTION IN MILLION BALESPRODUCTION IN MILLION BALES

ZONEZONE 20052005--0606 20062006--0707 20072007--08 08 ESTIMATEDESTIMATED

20082008--0909PROJECTEDPROJECTED

20092009--1010PROJECTEDPROJECTED

NORTHNORTH 4.104.10 5.005.00 4.404.40 4.004.00 4.504.50

CENTRALCENTRAL 14.3014.30 17.1017.10 20.1520.15 18.8018.80 20.0020.00

SOUTHSOUTH 4.404.40 4.604.60 6.556.55 7.807.80 8.608.60

OTHERSOTHERS 0.100.10 0.100.10 0.200.20 0.200.20 0.200.20

LOOSELOOSE 1.201.20 1.201.20 1.201.20 1.201.20 1.201.20

TOTALTOTAL 24.1024.10 28.0028.00 32.5032.50 32.0032.00 34.5034.50

Bales of Bales of 170 kg170 kgZONAL

S-7

PRODUCTION PRODUCTION

S-8

0.00

10.00

20.00

30.00

40.00

2005-06 2006-07 2007-08 (Estm)

2008-09 (Proj.)

2009-10 (Proj.)

IN MN …

AREA AREA –– YIELD YIELD -- PRODUCTION PRODUCTION S-9

0

200

400

600

800

2005-06

2006-07

2007-08

2008-09

2009-10

AREA PRODN

STATUS OF GINNING & PRESSING INDUSTRYSTATUS OF GINNING & PRESSING INDUSTRYS-10

ZONE STATES Ginning Pressing Composite TMC Total

North PUNJAB 46 1 108 26 181

HARYANA 46 1 88 8 143

RAJASTHAN 102 3 76 11 192

Central MAHARASHTRA 380 10 335 312 1037

MADHYA PRADESH 182 9 120 61 372

GUJARAT 108 4 543 523 1178

SouthANDHRA PRADESH 350 30 97 27 504

KARNATAKA 280 18 75 13 386

TAMIL NADU 299 12 20 3 334

East ORISSA & ASSAM 4 14 7 25

Glimpse ofTMC Approved Unit

Kotak Ginning & Pressing Inds Ltd

ORGANIC COTTON IN INDIA ORGANIC COTTON IN INDIA

�� WITH 25% OF WORLD SHARE, WITH 25% OF WORLD SHARE, INDIA IS SECOND LARGEST AFTER TURKEY IN ORGANIC COTTON PRODUCTION.

� IN 2007-08, ESTIMATED PRODUCTION OF INDIAN ORGANIC COTTON IS 44000 TONS, WHICH IS LESS THAN 1% OF CONVENTIONAL COTTON .

�� INDIA PRODUCES, INDIA PRODUCES, 20mm TO 32mm COTTON IN THE STATES OF GUJARAT, MAHARASHTRA, MADHYA PRADESH, ORISSA, ANDHRA PRADESH, KARNATAKA & TAMILNADU.

� BY REGULATING THE SUPPLY CHAIN UNDER THE NATIONAL PROGRAMME FOR ORGANIC PRODUCTION (NPOP), THE INDIAN ORGANIC INDUSTRY IS GETTING MORE ORGANIZED

S-11

BIRDBIRD’’S EYE VIEW OF INDIAN TEXTILE INDUSTRYS EYE VIEW OF INDIAN TEXTILE INDUSTRY(ORGANISED SECTOR)(ORGANISED SECTOR)

YEARYEAR 2007-08 (ESTM.)

SPINNING MILLS (Nos.)SPINNING MILLS (Nos.) 2816

COMPOSITE MILLS (Nos.)COMPOSITE MILLS (Nos.) 176

SPINDLES INSTALLED (SPINDLES INSTALLED ( MnMn)) 39.07

ROTOR INSTALLED (ROTOR INSTALLED ( ‘‘000)000) 621

SHUTTLE LOOMS (SHUTTLE LOOMS ( ‘‘000)000)56

TOTAL LOOMS (SHUTTLETOTAL LOOMS (SHUTTLE --LESS)LESS) 17839

D-1

SOURCE: CITI

A GLIMPSE OF INDIAN TEXTILE INDUSTRY A GLIMPSE OF INDIAN TEXTILE INDUSTRY

�� DIRECTLY EMPLOYS APPROX. 35 DIRECTLY EMPLOYS APPROX. 35 MnMn PEOPLE.PEOPLE.

�� 15% SHARE IN INDIA15% SHARE IN INDIA ’’S TOTAL EXPORTS EARNING.S TOTAL EXPORTS EARNING.

�� 14% SHARE IN NATIONAL INDUSTRIAL PRODUCTION.14% SHARE IN NATIONAL INDUSTRIAL PRODUCTION.

�� 5% CONTRIBUTION TO THE GDP.5% CONTRIBUTION TO THE GDP.

�� 4% SHARE IN THE GLOBAL TEXTILE TRADE.4% SHARE IN THE GLOBAL TEXTILE TRADE.

�� 3% SHARE IN THE GLOBAL APPAREL MARKET.3% SHARE IN THE GLOBAL APPAREL MARKET.

�� 28% SHARE IN THE WORLD TRADE OF COTTON YARN. 28% SHARE IN THE WORLD TRADE OF COTTON YARN.

D-2

CONSUMPTION OF FIBRESCONSUMPTION OF FIBRESIN ORGANISED SECTOR IN ORGANISED SECTOR (IN 000 TONS)(IN 000 TONS)

YEAR 2006-072007-08 (ESTM.)

COTTON 3580 3710

VISCOSE STAPLE FIBRE 237 251

POLYESTER STAPLE FIBRE 676 756

ACRYLIC STAPLE FIBRE 107 95

OTHER MISC. FIBRE 3 3

TOTAL 4603 4815

D-3

SOURCE: CITI

CONSUMPTIONCONSUMPTION(IN MILLION BALES)(IN MILLION BALES)

YEAR 2005-06 2006-072007-08ESTIMATED 2008-09

PROJECTED

2009-10PROJECTED

CONSUMPTION 21.7 23.20 24.10 24.00 26.00

D- 4

CONSUMPTION D- 5

21.7023.20

24.10 24.00 26.00

18.00

20.00

22.00

24.00

26.00

28.00

2005-06 2006-07 2007-08 2008-09 2009-10

CONSUMPTION …

OVERVIEW OF TEXTILE PERFORMANCE� NEGATIVE GROWTH IN MANUFACTURING OF COTTON TEXTILES

AND TEXTILE PRODUCTS DURING 2007-08.

� THE OUTLOOK OF TEXTILE INDUSTRY IS GLOOMY ON ACCOUNT OF PRICE ESCALATION OF POWER, FUELS, FIBRES & OTHER INPUTS AND VOLATILE EXCHANGE.

� SSI SECTOR CONTRIBUTES ABOUT 5% OF TOTAL SPUN YARN PRODUCTION.

� LOOMAGE CAPACITY HAS DECLINED FROM 86000 TO 56000 IN DECEMBER 2007.

� PRODUCTION OF MAN-MADE FIBRE HAS GONE UP FROM 2.58 MILLION TONNES IN 2006-07 TO 2.80 MILLION TONNES IN 2007-08 I.E. 8.66% INCREASE.

D-6

EXPORTSEXPORTS-- IMPORTSIMPORTS(IN MILLION BALES)(IN MILLION BALES)

YEAR 2005-06 2006-072007-08ESTIMATED 2008-09

PROJECTED

2009-10PROJECTED

EXPORT 4.70 5.50 9.50 7.50 8.50

IMPORT 0.50 0.55 0.10 1.20 1.20

E/I-1

EXPORTS-IMPORTS E/I-2

0200400600800

10001200140016001800

2005-06 2006-07 2007-08 2008-09 2009-10

EXPORTS ('000 MT) IMPORTS ('000 MT)

BALANCE SHEET OF BALANCE SHEET OF -- INDIAN ELS COTTONINDIAN ELS COTTONIN IN ‘‘000 TONS)000 TONS)

2006-07 2007-08ESTMD.

2008-09PROJ.

OPENING STOCK 19.00 20.00 23.00PRODUCTION 69.00 78.00 85.00IMPORTS 80.00 85.00 60.00TOTAL SUPPLY 168.00 183.00 168.00CONSUMPTION 148.00 160.00 145.00EXPORTS 0.00 0.00 0.00TOTAL DEMAND 148.00 160.00 145.00CLOSING STOCK 20.00 23.00 23.00STOCK TO USE RATIO 13.50% 13.50% 15.86%

E/I-3

IMPORTS OF ELS COTTONIMPORTS OF ELS COTTON(IN (IN ‘‘000 INDIAN BALES OF 170 KG)000 INDIAN BALES OF 170 KG)

2007-08ESTMD.

2008-09PROJ.

EGYPT 275.00 200.00

U.S.A. 185.00 110.00

OTHERS 50.00 50.00

TOTAL IMPORTS 510.00 360.00

E/I-4

EXPORTSEXPORTS(IN MILLION BALES)(IN MILLION BALES)

2007-08ESTMD.

2008-09PROJ.

CHINA 5.00 4.00

PAKISTAN 2.00 1.50

BANGLADESH 1.20 1.00

INDONESIA 0.60 0.50

TURKEY 0.20 0.20

OTHER FAR EAST COUNTRIES 0.50 0.30

TOTAL EXPORTS 9.50 7.50

E/I-5

BALANCE SHEET OF INDIAN COTTONBALANCE SHEET OF INDIAN COTTON(IN MILLION BALES)(IN MILLION BALES)

2005-06 2006-07 2007-08ESTMD.

2008-09PROJ.

2009-10PROJ.

OPENING STOCK 7.20 5.20 4.75 4.65 6.35

PRODUCTION 24.10 28.00 32.50 32.00 34.50

IMPORTS 0.50 0.55 1.00 1.20 1.20

TOTAL SUPPLY 31.80 33.75 38.25 37.85 42.05

CONSUMPTION 21.90 23.50 24.10 24.00 26.00

EXPORTS 4.70 5.50 9.50 7.50 8.50

TOTAL DEMAND 26.60 29.00 33.60 31.00 34.50

CLOSING STOCK 5.20 4.75 4.65 6.35 7.55

STOCK TO USE RATIO 23.74% 20.21% 19.29% 26.46% 29.04%

B/S-1

INDIA AND WORLDINDIA AND WORLDYEAR 2007(ESTM.) 2008(PROJ.) 2009(PROJ.)

% OF WORLD SHARE

% OF WORLD SHARE

% OF WORLD SHARE

OPENING STOCK 6.51% 6.64% 10.13%

PRODUCTION 21.05% 22.00% 22.66%

CONSUMPTION 15.43% 15.54% 16.99%

IMPORTS 2.04% 2.37% 2.48%

EXPORTS 19.60% 14.83% 17.58%

END STOCK 6.64% 10.13% 12.17%

B/S-2

SOURCE: ICAC FOR WORLD DATA

ROLE & ACTIVITIES OF CCI ROLE & ACTIVITIES OF CCI

THE COTTON CORPORATION OF INDIA WAS SET UP IN JULY 1970THE COTTON CORPORATION OF INDIA WAS SET UP IN JULY 1970BY THE GOVERNMENT OF INDIA BY THE GOVERNMENT OF INDIA

1) OBLIGED TO PROCURE SEED COTTON FROM FARMERS WHEN MARKET PRICE TOUCHES MINIMUM SUPPORT PRICE (MSP) DECLARED BY GOVERNMENT, WITHOUT ANY QUANTITATIVE LIMIT.

2)2) ALSO UNDERTAKE COMMERCIAL OPERATIONS (ABOVE MSP) ALSO UNDERTAKE COMMERCIAL OPERATIONS (ABOVE MSP) LIKE OTHER GINNERS WITH FOLLOWING OBJECTIVES:LIKE OTHER GINNERS WITH FOLLOWING OBJECTIVES:

�� ENSURE REMUNERATIVE AND COMPETITIVE PRICES TO ENSURE REMUNERATIVE AND COMPETITIVE PRICES TO FARMERS.FARMERS.

�� SUPPLY QUALITY COTTON TO DOMESTIC TEXTILE INDUSTRY SUPPLY QUALITY COTTON TO DOMESTIC TEXTILE INDUSTRY (GOVERNMENT & PRIVATE SECTOR) AT REASONABLE PRICES(GOVERNMENT & PRIVATE SECTOR) AT REASONABLE PRICES& ALSO UNDERTAKE EXPORT& ALSO UNDERTAKE EXPORT

I-1

c.n.t.dc.n.t.d

3) OTHER EXTENSION ACTIVITIES:3) OTHER EXTENSION ACTIVITIES:� SUPPORT TO RESEARCH AND DEVELOPMENT PROJECT OF SUPPORT TO RESEARCH AND DEVELOPMENT PROJECT OF

AGRICULTURAL UNIVERSITIES AND OTHER RESEARCH AGRICULTURAL UNIVERSITIES AND OTHER RESEARCH INSTITUTIONS.INSTITUTIONS.

�� ASSIST DEVELOPMENT OF COTTON CULTIVATION IN NONASSIST DEVELOPMENT OF COTTON CULTIVATION IN NON --TRADITIONAL AREAS.TRADITIONAL AREAS.

�� THE IMPLEMENTING AGENCY FOR MINI MISSIONS III AND IV OF THE IMPLEMENTING AGENCY FOR MINI MISSIONS III AND IV OF TMC. (I.E. IMPROVEMENT OF MARKET INFRASTRUCTURE AND TMC. (I.E. IMPROVEMENT OF MARKET INFRASTRUCTURE AND MODERNIZATION OF GINNING & PRESSING FACTORIES MODERNIZATION OF GINNING & PRESSING FACTORIES RESPECTIVELY).RESPECTIVELY).

�� ONE OF THE NODAL AGENCIES OF GOVERNMENT FOR ONE OF THE NODAL AGENCIES OF GOVERNMENT FOR IMPLEMENTING THE COMPONENT OF FRONT LINE IMPLEMENTING THE COMPONENT OF FRONT LINE DEMONSTRATIONS (FLDS)DEMONSTRATIONS (FLDS)

I-2

MINIMUM SUPPORT PRICE MINIMUM SUPPORT PRICE FOR SEED COTTON (in INR/FOR SEED COTTON (in INR/ QtlQtl ))

YEAR 2007-08 2008-09 % INCREASE

F- 414 / H-777 / J- 34 1900 2700 42.10%

SHANKAR- 6 / 10 2055 2850 38.69 %

MCU - 5 2300 3200 39.13%

I-3

NOTE: PREMIUM & DISCOUNT WILL BE APPLICABLE BEYONDDEFINED PARAMETERS

IMPACT OF RECENT MSP DECLARED BY GOVTIMPACT OF RECENT MSP DECLARED BY GOVT ..

•• THE FLOOR LEVELS OF SEED COTTON PRICES WOULD BE THE FLOOR LEVELS OF SEED COTTON PRICES WOULD BE LIFTED UP. HOWEVER, HIGH PRICES OF COTTON SEEDS LIFTED UP. HOWEVER, HIGH PRICES OF COTTON SEEDS MAY HELP TO OFFSET LINT PRICEMAY HELP TO OFFSET LINT PRICE -- INCREASE TO SOME INCREASE TO SOME EXTENT. EXTENT.

•• THE PROFITABILITY OF TEXTILE INDUSTRY CAN BE THE PROFITABILITY OF TEXTILE INDUSTRY CAN BE AFFECTED.AFFECTED.

• THIS WILL HELP TO RETAIN COTTON ACREAGE FOR THE NEXT FEW YEARS.

• THE SHARE OF PROCUREMENT BY CCI AND OTHER GOVERNMENT AGENCIES WILL BE INCREASED.

• HIGH EARNINGS OF FARMERS WILL INCREASE THE PURCHASING POWER OF THE RURAL POPULATION.

I-4

ROLE OF COTTON SEED ROLE OF COTTON SEED

GENERAL UTILISATION OF COTTON SEEDGENERAL UTILISATION OF COTTON SEED

SOWING PURPOSESOWING PURPOSE

CATTLE FEEDINGCATTLE FEEDING -- WHOLE SEEDWHOLE SEED

OIL EXTRACTIONOIL EXTRACTION & BY& BY --PRODUCTS LIKE PRODUCTS LIKE --LINTERS, HULLS AND OIL CAKELINTERS, HULLS AND OIL CAKE

CURRENT REQT. OF EDIBLE OIL IN INDIA:CURRENT REQT. OF EDIBLE OIL IN INDIA:

PRODUCTION IN INDIA : 8.480 MN TONPRODUCTION IN INDIA : 8.480 MN TONIMPORT : 5.374 MN TONIMPORT : 5.374 MN TONTOTAL : 13.854 MN TONTOTAL : 13.854 MN TON

I-5

c.n.t.dc.n.t.d

ESTIMATED AVAILABILITY OF COTTON SEED AND ESTIMATED AVAILABILITY OF COTTON SEED AND PROBABLE DISTRIBUTION IN 2007PROBABLE DISTRIBUTION IN 2007 --0808

I-6

COTTON SEED PRODN.(MN TONS) 10.492 MN TONS

RETAINED FOR SOWING AND DIRECT CONSUMPTION(MN TONS )

1.30 MN TONS

QTY. AVAILABLE FOR PROCESSING (MN TONS)

9.192 MN TONS

PRODUCTION OF WASHED COTTON SEED OIL

1.0 MN TONS

FORETELLING TRENDSFORETELLING TRENDS 2008 2008 -- 20122012

THE ACREAGE IS LIKELY TO BE MAINTAINED AROUND 9 THE ACREAGE IS LIKELY TO BE MAINTAINED AROUND 9 MILION HECTARES.MILION HECTARES.

SPECIAL HYBRIDS AND B.T. SEEDS FOR SHORT STAPLE AND SPECIAL HYBRIDS AND B.T. SEEDS FOR SHORT STAPLE AND ELS COTTON SHOULD BE AVAILABLE ON A COMMERCIAL BASIS.ELS COTTON SHOULD BE AVAILABLE ON A COMMERCIAL BASIS.

IRRIGATION PERCENTAGE FOR COTTON FARMING IS IRRIGATION PERCENTAGE FOR COTTON FARMING IS EXPECTED TO CROSS 50%.EXPECTED TO CROSS 50%.

CORPORATE COMMERCIAL FARMING IS NOW PERMITTED AND CORPORATE COMMERCIAL FARMING IS NOW PERMITTED AND WILL BE PREVALENT.WILL BE PREVALENT.

PRODUCTIVITY I.E. YEILD CAN REACH 750 KG PER HECTAREPRODUCTIVITY I.E. YEILD CAN REACH 750 KG PER HECTAREEASILY.

F-1

c.n.t.dc.n.t.d..

PRODUCTION OF COTTON CAN EASILY REACH 40 MILLION PRODUCTION OF COTTON CAN EASILY REACH 40 MILLION BALES WITH POTENTIAL TO REACH TARGET OF 45 MILLION BALES WITH POTENTIAL TO REACH TARGET OF 45 MILLION BALES.BALES.

GINNING FACTORIES OF NORTHERN AND SOUTHERN ZONE GINNING FACTORIES OF NORTHERN AND SOUTHERN ZONE WILL FOLLOW PATH OF GUJARAT FOR MODERNISATION.WILL FOLLOW PATH OF GUJARAT FOR MODERNISATION.

COTTON SEED MAY ASSUME THE ROLE OF COCOTTON SEED MAY ASSUME THE ROLE OF CO --PRODUCT PRODUCT FROM MERELY BYFROM MERELY BY --PRODUCT.PRODUCT.

FORWARD DELIVERY CONTRACTS & COTTON FUTURE FORWARD DELIVERY CONTRACTS & COTTON FUTURE MARKET WOULD BE DEVELOPED INTO A FULL BLOOM.MARKET WOULD BE DEVELOPED INTO A FULL BLOOM.

F-2

c.n.t.dc.n.t.d..

DOMESTIC MARKET SCENARIO LIKELY TO ALTER FROM 70% DOMESTIC MARKET SCENARIO LIKELY TO ALTER FROM 70% CREDIT MARKETING TO 70% CASH MARKETING BY USE OF CREDIT MARKETING TO 70% CASH MARKETING BY USE OF INNOVATIVE FINANCIAL TOOLS.INNOVATIVE FINANCIAL TOOLS.

WAREHOUSE RECEIPT WOULD DEVELOP AS AN OPERATING WAREHOUSE RECEIPT WOULD DEVELOP AS AN OPERATING PRACTICE.PRACTICE.

CERTIFIED STOCK CONCEPT IS NOW ON THE WAY FOR CERTIFIED STOCK CONCEPT IS NOW ON THE WAY FOR DEVELOPMENT DUE TO CSITC.DEVELOPMENT DUE TO CSITC.

EXPANSION OF TEXTILE INDUSTRY WOULD BE MORE IN NEW EXPANSION OF TEXTILE INDUSTRY WOULD BE MORE IN NEW ‘‘ SPECIAL ECONOMIC ZONESSPECIAL ECONOMIC ZONES ’’ ..

CONSUMPTION CAN REACH ABOUT 30 MILLION BALES.CONSUMPTION CAN REACH ABOUT 30 MILLION BALES.

F-3

INDIA A POTENTIAL HUB

FOR COTTON TRADE IN ASIA.