G&P units required in Tamil Nadu

For the present cotton production level in Tamil Nadu, the TMC prescribes about 30-35 standard-sized ginneries. Cluster centres, such as Avinashi, Tirupur, Theni and Rajapalayam, with 25-45 tiny units each can afford to have four-six ginneries of standard size. All such ginneries will receive plenty of cotton for processing and will carry out profitable ginning.

Low-cost modernisation for Tamil Nadu ginneries

Considering the backwardness of the Tamil Nadu ginning industry and its traditional mindset and apprehensions, the TMC will advise the ginneries to opt for low cost machinery and infrastructure that keeps investment within affordable limits. It is possible to restrict the level of sophistication of machines whereby the capital cost of a unit can be reduced without compromising on cotton quality.

One such model has been prepared by the TMC Cell whose economics work out to be attractive as shown in Tables 1, 2 and 3.

The low cost composite G&P unit will involve an investment of Rs 120 lakh, of which the TMC will reimburse Rs 27 lakh as subsidy. The net investment will be only Rs 93 lakh.

Labour cost (Table 1) will work out to Rs 44 per bale regardless of the quantity of cotton available for processing. The selection of machines with low degree of sophistication will not only reduce investment, but also involve low electricity consumption whereby the power cost can be limited to Rs 65 per bale compared to about Rs 100 required in ginneries going in for high-level modernisation. The total processing expenditure in a low-cost unit works out to Rs 239 per bale.

The capital cost (Table 2) comprising interest on investment at 13 per cent and depreciation at 12 per cent comes to Rs 23.3. This cost is unrelated to the number of bales processed in the factory.

The net returns likely from the low-cost G & P unit which depends on the number of bales actually processed is given in Table 3.

A factory that receives enough cotton to process 20,000 bales will earn a net profit close to Rs 38 lakh. With reduced business, the profit goes down. Even with 10,000 bales a profit of over Rs 7 lakh appears quite probable.

Additional benefits

The profitability worked out above applies to ginners undertaking job work. Those who also carry out their own cotton business are able to derive several additional benefits from modernisation. With machines taking the role of workers, the production rate in ginning is high, leading to increased earnings. Many factory owners are getting premiums ranging from Rs 150 to Rs 500 per bale for clean cotton processed in modernised units.

Some ginners are happy to earn reputation as suppliers of clean cotton whereby bales get sold as soon as they are made, speeding up the turnover and raising profits. Other ginners, with elite mills now in their clientele, regard assured payment as the best reward for modernisation.

With high storage capacities generated through the TMC support, some ginneries are able to work for more number of days in the season, making higher profits.

Looking ahead

From the above analysis it follows that modernisation of ginneries is, indeed, a viable proposition, and that ginners of Tamil Nadu should resolve to set up a few new units particularly in the cluster centres.

(The authors are respectively Adviser, Technology Mission on Cotton (MMs III & IV), Mumbai and Consultant, Technology Mission on Cotton, Mumbai.)

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