Ahmedabad units totter as South India stops spinning

AHMEDABAD: Record high cotton prices have severely hit the textile industry and the situation is getting worse with the working capital challenge. The South India Spinners Association took a unanimous decision to stop production. That will directly impact Ahmedabad-based textile processing units.
The association held a meeting on May 21 and decided to stop production and cotton procurement. "Cotton production this year is very low and in the beginning of the season, large cotton traders and multinational companies bought huge quantities of cotton and stockpiled them," the association said in a statement. "In January, the cotton price was Rs 75,000 per candy (356kg) which has increased by 53% to Rs 1.15 lakh per candy in May. The yarn price was Rs 328 per kg and it has increased by 21% to Rs 399 per kg." The statement added: "Spinning mills are incurring a loss of Rs 50 per kg. Due to the shortage of working capital, our members are not able to purchase cotton, so mills have stopped production and procurement of cotton."
Ahmedabad-based processing houses are keeping an eye on the developments in the south Indian textile industry because about 80 lakh to 1 crore metres of fabrics arrive daily from south India. Narol Textile Infrastructure and Enviro Management (NTIEM) secretary Rajesh Bindal said: "Spinners and weavers are not able to absorb the steep price rise of cotton and the whole value chain is under pressure." Bindal added: "Grey fabric arrival has reduced drastically recently and the strike of spinning units will impact us. After a fortnight, we may have very little work." He went on to say: "More than 50% of the units are closed in Ahmedabad due to the pollution issue but despite that most of the processing houses run at 70% capacity. If the south India spinning strike is prolonged, we will have major problems."