The Hindu Business Line : Textile industry hit by rising cost of chemicals, dyes

At a glance
Consumption of dyes, chemicals high, availability is low.
Price rise in fluoro-carbons, petroleum-based chemicals.
Cost of finished goods like yarn not increasing.

Textile mills facing pressure.

Divya Trivedi

Ahmedabad, July 23 The rise in input costs of dyes and chemicals has hit the textile industry by approximately 30-35 per cent, said Mr Sanjeev Saran, Chairman, Synthetic and Rayon Textiles Export Promotion Council, speaking to Business Line.

The prices of dyes and chemicals have risen by around 10-15 per cent, said Mr Sunil Khandelwal, Chief Executive Officer, Alok Industries Ltd.

Temporary shortage

“There is a temporary shortage of production in China as small pollutant factories have been shut for a pollution-free environment prior to the Beijing Olympics. We import dyes from China and even procure locally. But a lot of Indian vendors source directly from China, hence, leading to a uniform price rise,” he said. Alok Industries has a processing unit at Vapi, Gujarat.

Mr Kamlesh Patel, Head of Operations (Denim Business), Arvind Ltd, said that the cost of basic chemicals such as caustic soda had risen by more than 100 per cent over the last three months.

“It is very difficult to cope with the rising prices, no way to circumvent it. You find one way to counter them today only to realise it is proving to be more expensive than the previous option,” he said.

Correction expected

But he expects some correction post the Olympics in October. He adds that the cotton price and crude oil stability need to happen before the textile industry can expect some relief.

“The textile industry is being hit as the consumption of dyes and chemicals is high and the availability is low, but it is not right to blame the entire mismatch to the Beijing Olympics. It is also largely due to the petro-chemical situation the world over and the shortage of fuel,” said Mr Saran.

He pointed out that the prices of mostly fluoro-carbons and petroleum-based chemicals had risen.

He added that while the input costs were rising, the costs of the finished goods such as yarn and fabrics was not increasing, subsequently, making a “huge dent in the profitability.”

Kewal Kiran Clothing Ltd, well known for its brands of jeanswear — Lawman and Killer — is only marginally affected, according to its Chief Financial Officer, Mr Vikrant Gandhi.

premium dyes

KKCL uses high-end premium dyes and also imports chemicals from Europe, minimising their loss in profitability, but the company might have to do without certain chemicals which are manufactured only in China.

“Normally, the difference in the cost and MRP would have been passed onto the consumers. But due to the inflation situation, we cannot do it entirely and will have to slightly bear the brunt ourselves,” he said.

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