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TSMA demand check on cotton/yarn price rise; will meet Union industry and commerce minister today

17 May 2022 9:24 am
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Mumbai, 17 May (Commoditiescontrol): Representatives of the Tamilnadu Spinning Mills Association (TSMA) are scehduled to meet Union minister for industry and commerce Piyush Goyal today, to discuss the steps to be initiated to safeguard the interests of the garment units.

The industrialists have planned to urge the centre for immediate steps to reverse the situation. Some of the demands put forth by the associations include controlling the cotton and yarn prices, banning cotton export, supplying cotton to spinning mills through Cotton Corporation of India and cracking whip on hoarders.

The trade association has also demanded the removal of cotton from the list of Commodities traded at Commodity Exchanges and have demanded to make it available, only with the farmers and mills who are the only stakeholders.

While demanding increase in buying activity by Cotton Coproration of India, the association wants the government nodal agency to purchase the cotton from the farmers at the season and to sell it only to the mills, even at smaller quantities. Further, the CCI should be strictly advised not to sell the cotton to Traders and MultiNationals.

Interestingly, TSMA has requested the Ministry to advice the Cotton Advisory Board (CAB) to release a correct Balance Sheet by revisiting the figures. While showing a gross mistrust on CAB, the balances sheet for 2021-22 provided by the association has pegged total supply of 430.46 (in lakh bales of 170 KG each), consisting of opening stocks at 71.84, crop size 340.62 and imports 18.00. On demand side, the association expects mill consumption of 305.00, SSI unit consumption 24.00, non-mill consumption 16.00 and exports 40.00, adding to 385.00. Thus, the closing stock for the current marketing year is placed at 45.46.

Most importantly, the association wants this revisiting should be ensured to reflect the exact location of the opening stock, crop size and export data, most correctly and exactly, without any assumptions as was done on 22.03.2022.

Millers from the South India feel that the cotton prices are ruling high, to the extent of Rs 1,08,000 per candy as of now, buying the cotton at this price and selling the yarn with a matched price is mostly not possible, as most of the spinning mills have to incur 10 to 15 percentcash loss on the same and many mills are starting closing down their operations. Importantly, the quality of the cotton is not to the requirement and spinning mills have to provide higher waste percentage and therefore, the yarn realization is also coming down heavily. This also is one of the reasons to go for the increase in the cotton yarn prices."

The alarming increase in the cost of cotton, has forced many spinning mills to switch over to Blended Yarn like PC, PV, etc., as they are unable to manage their working capital requirements. Almost, 90 to 95 percent of the spinning mills, do not have cotton stock for more than 15 to 30 days, during this entire season, as they have been fearing that stock of cotton kept for more than their instant requirement for longer durations may result in to losses which they have experienced during the year 2010.

Even the fixed costs on the Spares, Maintenance, Packing and Forwarding Cost, Transportation Cost (Due to increased Fuel Cost) for both on the logistics of purchase of raw materials and selling of finished products and also at finally the labour cost, have all increased manifold. This results in to an increase of yarn price to the extent of Rs 8-10 per Kg.

Due to the increase in cotton prices, the working capitals of all mills have already been eroded completely and this has also resulted in to severe financial crunches to mills to buy and stock cotton anymore.

TSMA assumed that the current meeting is convened on the background of a particular group of mills located in Tamilnadu, having been announced an upward price revision of their yarn to the extent of Rs 40 / Kilogram in all counts, with effect from 01.05.2022. However, the upward price revision was not implemented by all other mills universally, either in Tamilnadu or in other States. Hence, this increase is not a universal price.

Textile production in Tamil Nadu came to a grinding halt on Monday as the production units in Tirupur and Karur began a two-day strike to demand that the centre bring down cotton and yarn prices. Cloth merchants in Erode joined the strike.

(By Commoditiescontrol Bureau: +91-22-40015505)

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