Power tariff cut a shot in the arm for spinning mills

The Telangana Government’s decision to reduce the power tariff for spinning mills in the State has come as a big relief to the sector which has been passing through a crisis for a couple of years.

The measure is expected to have a soothing effect on the sector as power charges comprise 20 to 30 per cent of the production cost, based on the quality of the yarn produced.

Industry sources stated that the crisis started over two years ago and it was peaking now with China devaluing its currency by 30 per cent recently to reduce imports of yarn and increase fabric production with the help of cotton/yarn purchased from India and other countries and stocked for the last five years. As a result, China threatens to control textile market as it has sway over 80 per cent production.

Spinning mills industry in India is impacted with China’s decision as the neighbouring country would cut down imports of yarn drastically. However, poor production of cotton last year has increased the cotton candy (weighing 356 kg each) rates, which had gone up to about Rs.44,000 from Rs.33,000 in a matter of two months.

When contracted, general secretary of the Telangana State Textile & Spinning Mills Association M. Anantha Reddy said the increase in the price of candy cotton by Rs.40 to Rs.50 a kg had added to the problems of spinning mills. “However, there’s no increase in the yarn prices since China has reduced imports considerably, leading to an imbalance in the economical working for the mills”, he said.

Local spinning mills and yarn traders were not in a position to go for purchases required for a year due to high interest rates, whereas some multinational companies such as Cargill and Lewis were procuring cotton/yarn in huge quantities at minimum support price in the season and stocking it in India since they got working capital at cheap interest rates of 3 pc to 4 pc.

Mr. Anantha Reddy stated that the mills could survive only with the help of exports and for that they were required to work on three shifts a day. “We are left with no choice but to run the mills as the closure would mean higher losses,” he said thanking Chief Minister K. Chandrasekhar Rao for reducing the power tariff.

There are 33 spinning mills functioning in Telangana with spindles capacity ranging from 16,000 to 1 lakh. The mills employ about 350 to 400 persons for every 16,000 spindles.