TN spinning sector upbeat despite rising cotton yarn prices

Continuation of TUFS may trigger demand, investment.

Of the total investment that is expected to be made in the spinning sector, around 30 per cent is expected to be by way of replacement. —

L.N. Revathy
Coimbatore, Nov. 29
While the knitwear garment sector cries foul about the fate of the sector as a result of spiralling cotton yarn price, the spinning sector seems to be quite optimistic about the future.

“Around 45 lakh spindles would be added in the coming year. Orders have been booked,” according to the Secretary General of the South India Mills Association, Dr Selvaraju. Speaking on the sidelines of a meeting organised here to announce the commencement of TexFair 2010, he said that 33 lakh spindles were added in the last 12 months and the orders booked for the next year was significantly higher than the last year. “These spindles are to be supplied by three machinery manufacturers,” he added.

He expects the investment inflow in the spinning sector alone to be in the order of Rs 10,000 crore to Rs 11,000 crore in the coming years. “This investment is a must and has to happen,” said the SIMA Secretary-General.

While conceding that investment in Tamil Nadu would be less compared with Punjab, Gujarat, Rajasthan and Haryana, he said the continuation of the Textile Upgradation Fund Scheme would further trigger demand and investment.

Of the total investment that is expected to be made in the spinning sector, around 30 per cent is expected to be by way of replacement. “Seventy per cent of the remaining investment would be in green-field projects, most of which would come up outside Tamil Nadu,” he said.
Responding to a query on mill closure, Mr J. Thulasidharan, Chairman, SIMA, said the numbers had come down significantly post 2007-08. He further added that even if 7-8 million spindles were added in the next two years, India would be in an advantageous position.
On cotton yarn prices, he said ‘it is expected to stabilise from mid-December. Already, the price of the cotton yarn has been revised downward by Rs 5/kg and warp by Rs 10/kg.'

Arrivals
Cotton arrivals are expected to be more in the next month or two and exports may not touch the anticipated 55 lakh bales because of certain problems in the port. There is, therefore, no reason for anxiety,' he said
On availability of the raw cotton, he said, ‘reports of substantial damage to the cotton crop due to rains in Andhra and Gujarat is scary. We probably may not be able to achieve the Cotton Advisory Board's projection estimate of 325 lakh bales.

However, there is enormous scope for increasing cotton production. “We have not tapped the potential of Bt. The State Governments are doing an excellent job to sensitise farmers about Bt cotton technology. There is scope for doubling production and productivity,' he added.
Mr Thulasidharan further noted that at the present rate of growth of the spinning sector, cotton requirement by 2020 would be 428 lakh bales

Source: http://www.thehindubusinessline.com/2010/11/30/stories/2010113051841900.htm