The Hindu Business Line : ‘TN textile industry hit by rising input costs’

Coimbatore, April 2 The widening input cost differentials between the textile mills based in Tamil Nadu, which relied on raw material from far-off States, and those textile units located in cotton producing centres such as Andhra Pradesh, Maharashtra or Gujarat have threatened to turn the former unviable, according to Mr G.K. Sundaram, Chairman and Managing Director of city-based Lakshmi Mills Company Ltd.

Tamil Nadu-based textile units with a total spindleage of 16.43 million account for 40 per cent of the country’s cotton consumption.

However, these mills have to import 90 per cent of the cotton needed as raw material for their working from Gujarat, Maharashtra, Madhya Pradesh or Punjab as the availability of locally produced cotton in Tamil Nadu any year is only around five lakh bales.

Transportation costs

The cost of transporting cotton to Tamil Nadu works out to Rs 1,000-1,200 a candy if the cotton is brought from either Maharashtra or Gujarat and Rs 3,000 a candy if it is from Punjab or Haryana.

The mills in Gujarat and Maharashtra by virtue of their close proximity to cotton producing regions, however, do not have to incur such costs. This makes a huge difference in their raw material pricing, Mr Sundaram said.

Power tariff

As for power charges, Tamil Nadu mills are again on the losing side as the State’s power tariff at Rs 4.30 a unit is quite high compared to Andhra Pradesh which charges Rs 3.10 a unit.

This again pushes up the cost of manufacturing for the Tamil Nadu units, making them uncompetitive compared to the units in other States.

Of late, with the availability of power in Tamil Nadu becoming scarce, the mills here are put to further difficulty.

On the contrary, a major part of the products produced by the Tamil Nadu mills are marketed either in the northern or western regions.

This meant incurring additional cost as in textiles mostly the seller bears the additional costs incurred on the product, he noted.

With the export market for raw cotton booming, the mills feel the threat perception coming not only from the mills within the country but also from those from abroad. This is because of the continuous rise in cotton prices coupled with the threat that quality cotton would not be available for the domestic market in the months ahead.

More Stories on : Textiles | Tamil Nadu

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