The Hindu : Front Page : Power cuts cripple TN spinning mills

Online edition of India's National Newspaper
Tuesday, Dec 18, 2007
ePaper

Front Page

Front Page

Power cuts cripple TN spinning mills

M. Gunasekaran

TIRUPUR: It is certainly not the best of times for spinning mills in the State. The worst-ever power cuts in recent times have pushed the spinning sector, which has already been struggling owing to spiralling cost of cotton and declining demand for yarn, into a corner.

The mills have been facing difficulty ever since the dollar plunge vis-À-vis the rupee, which led to the reduced demand for yarn. On the other hand, the cost of cotton is on the upswing owing to increasing exports to China, Bangladesh, Indonesia and Pakistan, industry sources say. Erratic power cuts for the last two months have only worsened the situation.

“We face power cuts for over six hours a day. As running the mills using generators is unviable, most of us stop production during power cuts,” says Tamil Nadu Spinning Mills Association (TNSMA) president A.P. Appukutty. The Association represents nearly 400 new generation mills, mostly in Dindigul, Coimbatore, Erode and Salem districts.

Power cuts have triggered production loss of over 30 per cent, besides damaging critical electrical and electronic components. Production cost goes up by 25 per cent for those who run the units on diesel.

“Chinese mills are getting cotton from Gujarat at a cheaper rate than that we get it for,” Sri Saravana Spinning Mills chief executive officer Jaikumar Krishnasamy said. “Transportation cost and the cental sales tax (CST) of three per cent work out to around Rs. 1,800 a candy (356 kg) from Gujarat to Tamil Nadu while for our Chinese counterparts the shipping costs work out to just Rs. 300 a candy,” Mr. Krishnasamy said. With cotton prices moving on a par with the international market, rupee appreciation has made yarn exports from India unattractive. Electricity charges are cheaper in Andhra Pradesh and mills there enjoy uninterrupted power supply, industry sources say.

Unable to withstand the pressure, many mills sell yarn at even below their production cost. Many fear that if the situation continues, a large number of mills will default on loan repayment and thousands of crores of investments will go down the drain.

Printer friendly page
Send this article to Friends by E-Mail

Front Page