India:Textile sector woes likely to continue in Q4

Coimbatore, March 8 The poor operating performance of most textile enterprises during the third quarter 2007-08 is likely to continue through the fourth quarter, hitting profitability for the entire fiscal, textile entrepreneurs in the South fear.

“High-priced raw material and lower offtake of yarn have proved a double whammy for textile companies in the third and fourth quarter. Besides, the overheads for the mills would go up due to the erratic grid-power situation in the past three months, resulting in increase in power cost by at least 10 per cent,” said Mr J. Thulasidharan, Managing Director, The Rajaratna Mills Pvt Ltd.

Though Mr Thulasidharan was not certain which way raw cotton prices would head beyond April, when global cotton trend is poised to lose steam amidst declining consumption by textile major China, he felt that most mills currently held high-priced cotton making their raw material costlier by 20 per cent compared to last year.

According to Mr S. Dinakaran, Joint Managing Director of Salem-based Sambandam Spinning Mills Ltd, with power constituting about 17 per cent of the production cost, power priced at Rs 12 per unit of captive generation (as against Rs 4.25 of grid power) would badly hit the bottomline of mills in Tamil Nadu. More than the economics of captive generation, the dislocation and frequent tripping in grid supply in the absence of a declared power-cut had cost the mills more in the form of higher production wastage, estimated at 3-4 per cent per three shifts. The mills are struggling to balance their spinning and post-spinning operations, thereby losing man-hours, he felt.