Soaring cotton prices would reduce the operating profit margins of spinning mills by 2.5% in 2011-12, according to Crisil Research. Cotton prices have increased by nearly 40% so far in 2011 and as a result procurement costs would go up by 30-35% for mills who would have bought 3/4th of their requirements in the current cotton season (October-September), the rating agency said.

In contrast, yarn prices would rise by only 20% in the fiscal as domestic fabric producers are likely to resist any s...
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