TN spinners want debt restructuring & new bank loans

02 May '12
2 min read

Spinning mills in the southern Indian state of Tamil Nadu are seeking restructuring of debts and permission for availing new bank loans.

The Central and State governments should intervene and protect the spinning mills in Tamil Nadu that have been badly affected in the recent years due to power shortage and high taxes, the Madurai Spinners' Association said.

PS Sivaprasad, President of the association, said until a few years ago, Tamil Nadu was the leading state in the spinning sector. Even at present, Tamil Nadu accounts for about 45 percent of total installed 'spindlage' in the country.

The spinning mills in the state have been able to compensate high costs of transporting cotton from other states due to availability of skilled labour and technical know-how.

In recent years, however, the spinning mills in Tamil Nadu have lost their traditional advantage to mills in Maharashtra, Gujarat and Andhra Pradesh, which operate at efficiency rate of 98 percent.

In comparison, the efficiency of mills in Tamil Nadu has declined to 30 percent, mainly due to the power crisis. Some large mills have been able to boost their efficiency rate up to 50 percent through use of diesel-powered generators.

The problems faced by spinners are not restricted to power shortage and there are several other issues such as rise in cost of raw materials that are facing the sector, Mr. Sivaprasad said.

The spinning mills in the state pay nearly Rs. 23 per kg towards the Central Sales Tax (CST), freight charges and other costs, he added.

Moreover, the hike in cotton prices last year resulted in several spinning mills losing their working capital.

In view of such problems faced by Tamil Nadu spinning sector, the association urged the Central Government to allow restructuring of debts and sanctioning of new bank loans.

It further asked the state government to initiate steps to save the sector as thousands of workers will lose their jobs in the event of closing down of mills.

Fibre2fashion News Desk - India

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