The Hindu Business Line : Spinning sector in grip of liquidity crunch

Coimbatore April 1 Textile spinning units in Tamil Nadu have been hit by liquidity crunch in the face of slackened demand for the spun yarn for the past two months.

The demand crunch has led to the State's spinning mills being saddled with stock accumulation of 6 crore kg of yarn equivalent to 50 days of production, the South India Small Spinners Association (Sisspa) has said.

Severe power cuts

The yarn stock accumulation is due to the dislocation in the yarn procurement caused by the severe power cuts in the weaving centres in Maharashtra, which has affected cloth production in the past two months. This has, in turn, created severe financial crisis for the mills in the form of erosion in their working capital.

With difficulty in procuring raw materials in this adverse condition, the mills' productivity levels too have fallen below 70 per cent, the association said, adding that to enable spinners to overcome the crisis, banks should come forward to offer additional working capital.

Sisspa has also expressed concern over what it called the unscheduled power cuts widely experienced by the mills, which has affected their working, resulting in production loss to the extent of 5per cent of capacity. It also urged the State Power Minister to bring down the per unit cost of power from Rs 4.30 to Rs 3.50.

In order to save the spinning industry from rising raw material cost, Sisspa has called upon the Centre to exempt customs duty on raw cotton imports and expeditiously refunding the 5 per cent interest reimbursement due for spinners under loans availed under the Technology Upgradation Fund Scheme (TUFS).

More Stories on : Textiles | SSI | Tamil Nadu

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