The lone spinning mill in Prakasam on verge of closure

Rising production costs, delay in the release of subsidies by the Central and State government have taken a toll on the financial health of the units in Prakasam district

Published - October 14, 2022 11:15 am IST - ONGOLE

Image for representational use only

Image for representational use only | Photo Credit: Siva Saravanan S.

There was a time when unskilled and semi-skilled migrant workers used to throng Prakasam district to work in the spinning mills set up in the southern black soil (SBS) area, thanks to the availability of abundant raw material in the region and preference for the yarn produced here by retailers globally.

But, this has become a thing of the past as only one spinning mill is now running in this cotton belt now. Many mills, having failed to achieve the break-even, have downed their shutters.

The lone spinning mill, Sai Global Yarn Tex India Private Limited at Vellampalli near Maddipadu is also on the verge of closure, pushing into uncertainty the future of its more than 350 workers including those who have migrated from Odisha. They have their fingers crossed as their livelihood is at stake.

Industry sources say that the odds against the mill are high in view of the volatile market conditions for cotton owing to the ''speculative'' futures trading done on multicommodity exchange on the one hand and unremunerative price of yarn for various reasons including a dip in the demand for exports.

They say the government policies have also put paid to the hopes of the mill owners and workers for a turnaround. Cotton prices have shot up by up to 10% in first week of October as the arrivals to the market have dipped following rains.

The Centre, which has launched the Technology Upgradation Fund (TUF) scheme to handhold the mill owners, is yet to clear the capital subsidy. The State government has also not released the power subsidy yet.

Additional charges collected for power consumed between 6 a.m. and 10 a.m., 6 p.m. and 10 p.m. are adding to the woes of the mills which run round the clock to maintain the economies of scale.

Cotton price per candy (356 kg) prevails at about ₹72,000, while the price realised for yarn per kg is only ₹260 now.

“Power subsidy of ₹7 crore is pending for more than six years and the Centre is yet to release ₹8 crore under the TUF. Our mill at Vellampalli is incurring a loss of ₹5 lakh per day. It is not possible to run the mill any longer. ”Dasu Kasi Viswanath MD of Sai Global Yarn Tex India Private Limited   

“Yarn price should be at least ₹340 per kg for the mills to run the show. How can we operate with this subdued demand? Cotton prices are unreasonably high because of speculative deals and it has become very difficult to cope up with the increasing production costs,” laments Dasu Kasi Viswanath, managing director of Sai Global Yarn Tex India Private Limited.

He says power subsidy of ₹7 crore is pending for more than six years and the Centre is yet to release ₹8 crore under the TUF. “The mill at Vellampalli equipped with 25,000 spindles is incurring a loss of ₹5 lakh per day. It is not possible to run the mill any longer,” says Mr. Kasi Viswanath.

Centre for Indian Trade Unions (CITU) Andhra Pradesh unit president Ch. Narasinga Rao wants the Union and State governments to take steps for the smooth running of the mills. “The Centre must release the pending capital subsidy without delay, while the State government should clear the power subsidy dues of ₹1,200 crore,” he says.

‘’It is time the Centre took out out cotton from the futures trade in MCX,” feels CPI(M) State Committee member Punati Anjaneyulu. The Cotton Corporation of India should also ensure supplies at reasonable prices to the mills that are struggling to cope with the market forces, he adds.

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