COIMBATORE: The federation of MSME spinning mills has announced that it has cut production by 50% unable to bear loss due to rising operating cost. According to sources, there are 1,500 spinning mills and 650 open-end mills in Tamil Nadu. They employ around 3 lakh labourers and produce 70 lakh kg of yarn per day. In all, they consume 1.50 crore units of electricity a day and pay around Rs 10.75 crore as charges per day.
Addressing a joint press conference in Coimbatore on Monday, office bearers of the federation, including South Indian Spinners Association (SISPA), Open End Spinning Mills Association (OSMA) and India Spinning Mill Owners Association (ISMA), said spinning mills are forced to sell yarn at throw away prices as demanded by dealers.
“Spinning mills are at risk of being paralysed as they are not able to get suitable price for yarn. Since there is a demand and supply mismatch, we have to sell yarn at a lower price. The volume of yarn and fabric imported from Bangladesh, Vietnam and China has increased abnormally, which is the reason why we are not getting fair price for yarn produced in by domestic mills,” said G Subramaniam, president of ISMA.
S Jagadesh Chandran, secretary of SISPA, said, “The present interest against loan has been increased to 7.75% to 10.75% and increase of electricity tariff and demand charge has worsened the condition of the mills. Due to increase in interest rate, cost of yarn production has increased to `5 per kg and `6 per kg due to increase of electricity tariff.”
G Arulmozhi, president of OSMA, “Mills are facing a tough situation and lakhs of workers may lose jobs. Earlier a minimum of 60, 000 containers of yarn used to exported per month, but it has dropped to 1,000 containers now. If the situation continues, mills may come to a complete halt soon.”
G Soundhararajan, former president of SISPA said the cost of production increased due to huge inflation of machinery, spares, electrical items, migration of labour and other indirect costs. The federation has urged the centre to reduce the interest rate to 7.75% against loan and demanded one-year holiday against repayment and interest payment.