Spinning mills protest raw material price hike

Coimbatore: Representatives of the Open End Spinning Mills Association (OSMA) have decided to stop production for five days starting Wednesday, as they say the price of ‘comber’ – cotton waste – the primary raw material to produce grey yarn, has shot up, causing loss to the mills.
There are around 450 open end spinning mills in the state, which procure cotton waste from spinning mills, refine it and produce grey yarn. Grey yarn is used by more than 3 lakh powerloom firms in Palladam, Somanur and Erode to produce garments such as bedsheets, lungis, towels, pillow covers etc.
OSMA representatives said for the past 10 years, cotton waste was being sold at a price which was 40% to 50% of the cotton price. But over the past two months, the price of cotton waste has gone up to Rs 94 per kg from Rs 76 per kg. This amounted to 70% of the cotton price which stands at Rs 137 per kg.
Because of this, the production cost of 1kg of grey yarn has raised to Rs 150. “However the mills couldn’t increase the price more than Rs 145 as buyers could get grey yarn below that price from other states,” G Arulmozhi, general secretary of OSMA, said. As a result, around 175 open end spinning mills in the state which produce grey yarn have been facing losses, he said.
Besides, the bank note paper mills in the country use cotton waste as raw material. “They call for tenders of 30 lakh kilograms once in three months. During the tender, spinning mills increase the price of cotton waste, which affects us. We urge the bank note paper mills to call for tenders for smaller quantity once a month so that there would be no drastic increase in prices,” said Arulmozhi.
Also, there is a 1% market cess on cotton waste only in Tamil Nadu, which increases procurement cost by Rs 1 per kg, he said. In addition, spinning mills levy a packing charge of Rs 150 per bale of cotton waste, which amounts to Rs 1 per kg. “This increases the procurement price of cotton waste by Rs 2 per kg and we are not able to compete with other states,” he said.
OSMA representatives urged the state to remove marketing cess on cotton waste and the spinning mills to remove packing charges as well as not to increase the price of cotton waste drastically. They also sought from the Centre a export duty on cotton waste so that the raw material would be available for local mills.
Arulmozhi said the open end spinning mills in the state produced around 10 lakh kilogram of grey yarn a day and stopping production for five days meant the production of 50 lakh kilogram of grey yarn would be hit. With one kg of grey yarn costing Rs 145, this would mean Rs 72.5crore worth production would be hit. Representatives said if their demands are not met, they would extend the protest.