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Textile units reel under a slew of problems

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M. Soundariya Preetha

Frequent and unscheduled tripping, power holidays, peak hour restrictions …

COIMBATORE: The bad days for the State’s textile sector started about a year ago.

In the beginning, frequent and unscheduled tripping of the power supply hit the sector. Then it was unscheduled load-shedding, power holidays. And now, the evening peak hour restrictions coupled with demand and energy cuts.

Machinery and equipment in several textile units remain idle for hours together, with jobs getting slashed, shift timings reworked and production brought down. The declining demand and increasing cotton prices and interest rates are taking a toll on the textile sector nationwide. In Tamil Nadu, the power shortage is so acute that the textile units are finding it difficult to fill the available orders, says D.K. Nair, secretary-general, Confederation of Indian Textiles Industry.

The sector, which has invested Rs.25,000 crore and generated nearly one million jobs between 2003 and 2007, has been pushed to the wall. Now the focus is on reducing power consumption, a senior executive of a Rs.615-crore textile group in Coimbatore says. Even though not viable, the mills have to rely on generator sets to fulfil their commitments.

Common connection

The units of the weaving and apparel parks have come up in the State as public-private partnerships, with the Central and State governments’ assistance. They are either small or medium-scale. Still they have gone in for a common high-tension (HT) connection and distribute the power to the industries. From November 1, these units, too, face 40 per cent cut. At the Netaji Apparel Park, near Tirupur, which houses 52 units, generator sets are used for eight hours a day. Some units have adjusted the shifts, says A. Sakthivel, chairman and managing director of the park.

The National Textile Corporation, which has eight mills in the State, plans to approach the Power Grid Corporation of India for separate allocation of power for its mills. “We are able to effectively use just 45 per cent of the capacity of the mills. We plan to seek a separate allocation for operating to full capacity,” says M. Chokalingam, Chief General Manager of the Corporation in-charge of Tamil Nadu and Puducherry.

K.V. Srinivasan, chairman of the Southern India Mills’ Association (SIMA) and who has been in the textile sector for more than two decades, says in the early 1980s, the State had even 100 per cent power cut for HT consumers. Yet, generator sets could be operated for long hours because the fuel prices were low. This resulted only in the negligible rise in production cost.

Even during 2000-2002, a number of the textile mills used captive power plants and surrendered their connections to the Tamil Nadu Electricity Board in view of the low oil prices. But now, it is not viable to operate these plants due to the high diesel prices.

Furthermore, Superior Kerosene Oil is not being permitted to be used, so most of the units keep diesel generator sets idle.

If the mill is not operated when there is no power, it still incurs Rs.35 more for one kg of yarn due to the fixed cost. If run on diesel generator, the cost is Rs.40 more. The units that have export commitments or wind mills operate the generator sets when there is a need, and some have gone in for open access, paying Rs.6.50-Rs.7.50 for a unit. “For how long can we afford to pay this kind of high prices,” Mr. Srinivasan wonders.

A few months ago, the SIMA mooted a cost-sharing formula to facilitate the use of diesel generators by high-tension consumers for captive consumption so that the burden on the TNEB would lessen.

As the per unit cost for producing power through diesel generator sets would be high, the industry wanted to share the difference in the additional cost of power production with the government. But the idea did not fructify. Still, Mr Srinivasan regards the proposal as viable and wants the government to bear the entire additional cost, which will work out to Rs.150 crore a month.

However, officials say the idea was not pursued because it would not, in the administration’s assessment, generate the much-needed relief, besides the practical constraints in its implementation.

As is done in the case of furnace oil, which has been exempted from the levy of Value Added Tax, the authorities should exempt diesel, supplied by the public sector oil companies, from VAT. At present, this concession is given only in the case of diesel sold by a private oil company, and the rate is higher than that of the diesel sold by the public sector companies. The State government has also stipulated that the cost of VAT-exempted diesel sold by the private company will not be less than the rate at which the public sector companies sell the fuel.

Relaxation of rule

The textile sector has another problem that requires a solution.

Many units, which have invested in windmills in the past five-six years, demand that the rule of consuming all the banked energy before the end of financial year be relaxed. The power cut and the quota fixed for energy consumption have made it difficult for the units to adhere to the rule.

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