The Hindu : Andhra Pradesh News : Strong rupee makes cotton mills weak

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Friday, Nov 23, 2007
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Andhra Pradesh

Andhra Pradesh

Strong rupee makes cotton mills weak

S. Harpal Singh

There are hardly any exports of either yarn or fabric or even garments from India in this season

Weigh up: Paulman Sheek, a cotton purchaser from China, at Sree Ashtalakshmi Spinning Mills Pvt. Ltd. at Adilabad

ADILABAD: While cotton has spun a success story for the second year in a row, a stronger rupee has rendered the spinning mills weak. Yarn producers like Sree Ashtalakshmi Spinning Mill in Adilabad find it harder to even reach the breakeven point for want of cotton at a workable and viable price.

Cotton bales are fetching a good price elsewhere because of which local processors prefer its export rather than sell it to the many spinning mills in South India, including the one at Adilabad. This 25,000-spindle, medium-sized mill that has a capacity to produce 7,000 kg of yarn per day loses about Rs. 3 to Rs. 4 on every kg of yarn. The situation is expected to improve in a couple of months.

Bad situation

“The situation is bad everywhere because of the weakened dollar. There are hardly any exports of either yarn or fabric or even garments from India this season. At over Rs. 19,000 per candy of cotton bales we can only make losses. A breakeven situation can be reached when the price of candy decreases to about Rs. 18,000 per candy,” explained Mahesh Khetan, Managing Director of Sree Ashtalakhsmi Spinning Mill.

According to reports, there are other mills in South India that are making worse losses this year. Unlike the Adilabad spinning mill they are not supported by self-owned cotton purchase and processing.

“For the condition of spinning mills to improve, the Government needs to announce incentives. Only such a move will make the yarn manufacturers be able to export,” hoped Mr. Khetan.

Good price

There is worldwide appreciation of cotton price this year because of lower yields in countries like China and Pakistan. Chinese and Pakistani cotton purchasers are coming to Adilabad in order to keep their spinning and textile mills going. Paulman Sheek from Shanghai in China was in Adilabad to purchase cotton for the Chinese spinning mill.

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