Tamil Nadu - Coimbatore   

Textile mills focus on value addition

M. Soundariya Preetha

International buyers seek out finished fabric and garment

COIMBATORE: : Cotton yarn export was slow during the first few months of this year, and prices are said to be under pressure.

Yet, textiles is a "sunrise industry", which is confident and buoyant. At least six companies in this region are likely to go in for public issue within a year, and almost all leading mills have planned to expand capacity.

Indian cotton textile exports are poised to be driven by value-added products if the investment plans of some of the leading units here are any indication.

With many units in the United States and the European Union closing down, yarn exports may decline in the coming years, says Southern India Mills' Association chairman S.V. Arumugam.

During 2004-2005, cotton yarn exports from India came down to 408.84 million kg from 458.64 million kg in the previous year. However, this is not a negative indicator. International buyers look more for finished fabric and garment rather than yarn.

"The focus is on value-addition"; and hence, many leading companies in this region have started going in for vertical integration — setting up weaving and processing capacities. "It is not an option but more a compulsion," Mr. Arumugam says.

For instance, the Coimbatore-based Super Spinning Mills had focussed on yarn exports two years ago. With greater opportunities in the international market for value-added products, it is now paying attention to yarn and garments. So it plans to increase its spinning, weaving and garment capacities, says managing director Sumanth Ramamurthi.

The spinning base is also getting strengthened. Tamil Nadu has 15.7 million spindles, and the number is estimated to go up by two million spindles in a couple of years.

Garments and made-ups will drive the growth in this new scenario, and a surge in exports of these products will mean a higher demand for yarn in the domestic market. During the last six or seven months, domestic prices have been two-four per cent more than the export prices for some counts, say industry representatives.

And, the demand for finer count yarn (used to make high-end products) in the export market will continue to go up. Some of the mills planning expansion will concentrate on this, Mr. Arumugam says.

Cotton being the main raw material, higher cotton crop last year was an advantage to the industry; it helped to control production costs. Cotton production increased to 240 lakh bales during 2004-2005 (from 176 lakh bales in the previous year) and is estimated to go up to 270 lakh bales this year. Further, prices were stable for the last eight months.

Between 2001 and 2004, 15 lakh-17 lakh bales were imported annually. Last year, just six lakh bales, mainly the Extra Long Staple variety used to make finer counts of yarn, were imported.

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