Government to control yarn exports - TEA

25 Mar '10

4 min read

The Tirupur Exporters' Association organized an Extraordinary General Meeting (EGM), on 23rd March 2010 at TEA Hall to consider the grave crisis due to the steep hike in prices and staggered supply of cotton yarn. About 110 exporters took part in the meeting.

Shri. A.Sakthivel, President welcomed the gathering and explained the need to call for EGM and said that the textile mills are frequently revising the yarn prices upwards and most importantly, there has been a sudden stoppage of cotton yarn supply and created the scarcity in the Tirupur market. Shri. Sakthivel categorically stated that the mills could have increased the cotton yarn prices in proportionate to the rise in cotton prices and a margin could have also been added for other factors like power cost, labour cost etc. but the concern is that the abnormal increase of yarn prices without any correlation between the rise in yarn inputs costs.The exporters are facing the alarming situation and also struggling to execute the committed.

In a press release issued, Shri.Sakthivel said the mills have increased the yarn prices abnormally in unexpected manner on frequent basis for the past four months. Moreover, they have stoped the supply of yarn for the past two weeks due to this, the exporters are not able to export in time. Shri.Sakthivel added that, due to increase in prices, the exporters could not proportiontly increase and get new orders. Already the orders are less. For the past six months, the dyeing charges has been increased by Rs.15/- to Rs.20/- per Kg., rupee is getting appreciated and the yarn prices has been continuously increasing.

If the cotton rate is compared, in the month of July 2009, it was Rs.23,200/- per candy – Spot (355.55 Killos) and now in March it is Rs.27,800/- per candy the incease is only 20%.

But if the yarn prices is analysed for the 40s count, it was Rs.139/- per Kg. in the month of July 2009 and Rs.172/- per Kg. in 20th March 2010, an increase of 25% and more over, the mills are planning to increase the yarn prices further.

As the cost of raw material constitutes only 60% of yarn selling price, the hike in cotton prices shoud be only 12%, whereas the increase in yarn prices are 25%. Even after taking into account of the increase in power cost and other costs, the increae should be only 15%.

It is too high and mills can have a desire but not too greedy.

The following three resolutions were unanimously passed in the EGM.
Resolved to condemn the Textile Associations SIMA & TASMA for abnormal increase in the cotton yarn prices and suggested to have a contract with garment exporters for a period of three months so as to maintain the same yarn prices. The yarn prices should not be increased in the middle of the month and ensure continuous supply of yarn without any stoppage of yarn supply. In future, there should not be any increase in yarn prices since the mills have already increased the yarn prices abnormally.

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