Friday, Apr 29, 2005
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M. Soundariya Preetha
COIMBATORE: Having emerged from a recession that set in in 1996, spinning mills here are upbeat as orders flow in, the Government dismantles cumber some procedures and interest rates decline.
The turnaround started a couple of years ago and investment plans of the units are a harbinger to the rapid revival.
A Coimbatore-based mill proposes to raise Rs. 100 crores from the capital market for its expansion project. A leading garment manufacturer in Tirupur who went in for backward linkage in 2004-05 with a 16,000-spindle mill is to expand it to 25,000 this year.
Further, the Southern India Mills' Association (SIMA) will provide its members an opportunity to interact directly with fund managers representing overseas investors at a meeting here next month. "Everything is happening - expansion of production capacities, modernisation, backward linkages and green field projects," says the SIMA Chairman, Vijay Venkataswamy.
With nearly one-third of the total number of spindles in the State, Coimbatore district sees small-scale units mushrooming and organised sector mills going in for modern processing and garmenting facilities.
Mr. Venkataswamy points out that more spinning facilities will come up as the country has only 28 million working spindles and the domestic market is huge. Yet, yarn exports could decline, as finished fabric, garments and made-ups will drive growth.
That is a reason for spinning units moving up the value-chain and a number of stand-alone mills with old machinery shutting down, he explains. Similarly, knitters and weavers, who go in for backward linkages, mostly set up mills of 6,000-10,000 spindles each as these are for captive use.
The past chairman of the Indian Cotton Mills' Federation, B.K. Krishnaraj Vanavarayar, points out that sickness in the past was mainly because of high cost borrowings and erosion of working capital due to volatile trade conditions.
Mills have since learnt to cut down costs, improve productivity, prioritise market intelligence, produce world-class quality goods and adopt effective financial management.
Even as the mills here are back on the rails, there is a need to revive the sick but potentially viable units, emphasises Mr. Vanavarayar.
As the per capita cloth consumption in the country goes up with an increase in purchasing capacity, the country requires a huge capacity to meet the demand. The cost to create this will be massive and hence, the sick but potentially viable units "should be nurtured back to health," he says.
Mr. Venkataswamy adds that mills that already have manufacturing excellence and which have now graduated to marketing excellence "are the ones which have gained and will gain further." Now the focus of the buyers is not only on quality but also on consistent service. "Hence, those who care for customers and tailor their production capacity to meet their needs will thrive."
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