Yarn realisation: Key to competitive edge in India’s spinning industry

Sanjay Arora and Minmayee Mohanty suggests, in a landscape defined by rising input costs and intensifying global competition, improved realisation will help spinners to translate into tangible savings, not just operational fine-tuning.

As the global textile industry undergoes structural shifts, the pressure on spinners to improve margins has intensified. While attention often directs to cotton prices & trade dynamics, one metric has proven to be a powerful yet often overlooked factor for enhancing profitability. This article delves into the pivotal role of yarn realisation in optimising raw material usage, mitigating cost pressures, and enhancing competitiveness. It identifies levers for improvement and quantifies the potential financial impact of even marginal gains. For example, a 2 per cent increase in yarn realisation can generate annual savings of nearly Rs 50 million for a medium-sized mill with 50,000 spindles. Notably, these improvements don’t require large capital investments. Instead, they can be achieved by aligning process, raw material management, and best practices, yarn realisation becomes a strategic imperative for long-term sustainability in the spinning sector.

Forces reshaping the textile landscape

The global textile industry is currently experiencing significant disruption, driven by rising raw material costs, geopolitical tensions, supply chain uncertainties, and increasing competition in international markets. Spinning mills, which lie at the core of the textile value chain, are witnessing mounting margin pressures.

India’s spinning sector is at the forefront of such challenges. Cotton, the primary raw material, has experienced considerable price volatility due to both domestic and global factors. Additionally, Indian spinning mills face supply chain constraints and intensified competition from countries such as Vietnam, Indonesia, Pakistan, Bangladesh, and China. To remain competitive, Indian mills must move beyond reactive cost-cutting measures and adopt a proactive approach to efficiency, emphasising how effectively raw materials are converted into value. Yarn realisation, a key metric measuring the yield of yarn from fibre, emerges as a vital lever in this context.

Raw material cost: In recent years, Indian spinning mills have been grappling with sustained margin pressure, driven by a sharp rise in cotton prices. Triggered by both domestic supply challenges and global market volatility, this price surge has significantly narrowed the spread between yarn and fibre, compressing gross margins and leaving mills with limited room to protect profitability. As illustrated in Figure 1, this pressure has persisted since 2022, intensifying competition across both domestic and export markets.

Raw material acts as the critical cost driver in yarn manufacturing, accounting for a substantial 60% to 70% of the total production expense. With a substantial share, even minor fluctuations in fibre prices have a direct and immediate impact on yarn pricing and overall financial performance.

Source: Emerging textiles & Wazir Analysis

The recovery in India’s cotton yarn exports in Fiscal Year (FY) 24 offers a hopeful outlook for the industry. However, sustaining this momentum will require efforts in cost optimisation, diversification into new markets, and a stronger focus on value-added products. Despite a peak in FY22, export performance over the FY15–FY24 period has remained largely stagnant with a CAGR of -0.5 per cent, lacking a consistent growth trajectory, as illustrated in Figure 2. The sector continues to face headwinds from volatile global demand, price sensitivity, and shifting trade policies – factors that demand a more resilient and forward-looking approach from Indian spinners.

Figure 2: India’s Cotton Yarn Exports (FY15 – FY24)

Source: DGCIS & Wazir Analysis

Competitive landscape: India’s yarn manufacturing continues to hold a strong pricing advantage. However, countries like Vietnam, Bangladesh, Indonesia, and Pakistan are quickly narrowing this cost gap and, in some cases, surpassing India, primarily due to more affordable and stable access to raw materials.

This shift has reversed India’s traditional edge over peer economies. For decades, Indian cotton was among the cheapest globally. Today, however, international cotton often undercuts domestic prices, placing Indian exporters at a disadvantage in securing global orders. As a result, Indian cotton yarn is losing its edge in the international market, and the competitive landscape is becoming increasingly tight. To offset this, the focus must shift towards achieving higher yarn realisation as the key lever to control raw material cost.

Although India retains a cost advantage in labour and energy, this benefit is significantly offset by the rising and volatile prices of raw cotton. Indian mills sourcing domestic cotton often face a premium compared to their global competitors who procure from the international market.

Strategic imperative for profitability: Raw material pricing, especially cotton, has become a critical determinant of profitability in spinning operations. In recent years, Indian cotton prices have shown significant volatility and have consistently surpassed global benchmarks. In 2022, domestic cotton prices surged above those of major exporting countries like Brazil and the USA, diminishing India’s long-standing cost advantage.

Although prices have eased somewhat since 2023, stabilising between March and June 2024, the disparity remains a concern. As of April 2025, Indian cotton was still 9 and 22 per cent more expensive than cotton from Brazil and the USA, respectively, intensifying the cost pressures faced by Indian yarn exporters in the global marketplace.

USD/Kg

Figure 3: Global Cotton Prices (2020-2025)

Source: Emerging textiles & Wazir Analysis

Why should spinners focus on yarn realisation?

Volatile cotton price: High fluctuations in cotton prices leave spinners with limited control over raw material costs, making operational optimisation and strategic sourcing critical for maintaining profitability.

Competitive costs across geographies: Even marginal differences in raw material costs can offer a strategic advantage, underscoring the need for efficient resource utilisation and cost control.

Narrowing yarn-fibre cost spread reduces margins: The margin between fibre and yarn prices has consistently narrowed. This compresses profitability, requiring spinners to maximise yarn realisation.

5 levers of yarn realisation

There are 5 key levers of yarn realisation as illustrated below:

• Right quality of raw material
• Compliance with SOPs
• Optimising process parameters
• Machinery upkeep
• Mitigating invisible loss

Right quality raw material: High-performing spinning mills prioritise fibre suitability for the desired yarn count before accepting orders, aligning raw material with quality requirements. In contrast, capacity-driven mills often prioritise volume over fibre compatibility, leading to over or under-spinning, increased waste, and higher costs.

This reactive approach results in inconsistent quality and lower profitability. Strict adherence to fibre standards enables mills to optimise productivity and cost. Transitioning to a structured, quality-first model can significantly enhance operational and financial performance. According to industry SFCn[1] standards, the ideal cotton SFCn should be below 25 per cent. Exceeding this threshold reduces yarn realisation by 2-5 per cent.

Waste generation and managing soft waste in mixing: Effective management of soft waste is vital in maintaining consistent yarn quality. During spinning, soft waste is inevitably generated, but improper re-use especially exceeding standard limits can degrade yarn quality. It is essential to follow SOPs when reintroducing soft waste in bale form during laydown to ensure uniform blending and performance. For example, up to 1.5 per cent soft waste is introduced for fine counts (60s and above) while up to 3 per cent soft waste is introduced for medium counts as industry norms which needs to be followed by the spinning mills.

Compliance with standard operating procedures: Every department has defined SOPs critical for maintaining yarn realisation, productivity, and quality. Non-compliance leads to inefficiencies, higher costs, and quality issues. Strict adherence to these SOPs is essential for optimised performance and consistent output. Below are some key examples of department-wise Standard Operating Procedures (SOPs) that needs to be followed in spinning mills-

• Mixing department: Optimise bale laydown and ensure the addition of soft waste remains within the defined limits.
• Blowroom and carding: Conduct regular cleaning and maintenance; monitor waste generation and track key indicators such as trash content in card sliver and nep removal efficiency.
• Drawframe: Perform top roller cleaning and rotation every two hours; ensure automatic removal of fan waste.
• Ringframe: Monitor yarn breakages per 100 spindle hours and ensure timely intervention to minimise downtime.

Optimising process parameters: Standardising and maintaining optimal process parameters across departments is essential for achieving KPIs. Each department and machine have specific, measurable KPIs that significantly impact yarn realisation and overall productivity. Regular monitoring and maintenance of these KPIs are crucial for ensuring consistent performance and identifying areas for improvement. For example, as nep removal and cleaning efficiency are critical to yarn quality. High removal rates in carding (above 75 per cent) and combing (above 90 per cent) along with optimised comber noil levels by count help maintain yarn quality while balancing waste and productivity.

Machinery upkeep (minimising waste and maximising productivity): Neglecting timely replacement of consumables and extending maintenance schedules to reduce labour costs can compromise yarn quality and increase waste generation. Such practices ultimately increase invisible losses and reduce overall productivity. Investing in regular maintenance and adhering to recommended replacement schedules are crucial for sustaining high yarn realisation rates and minimising waste. These proactive measures ensure optimal machine performance, consistent yarn quality, and long-term cost savings. Delaying top comb changes by a year might save 1 paisa/kg in costs but can lead to a 0.25 – 1 per cent rise in noil percentage and diminished yarn quality. This will potentially result in losses of up to 150 paise/kg, 150 times the cost of inaction.

Mitigating the invisible loss: In standard mill practices, cotton bale moisture content is typically assessed only in the outer layers. However, a comprehensive evaluation including the outer, middle, and inner layer is essential for accurate moisture measurement and quality control.

• Regarding waste management, improper handling of soft waste can lead to excessive fly generation, adversely affecting both working conditions and yarn quality. Excessive and improper addition of the soft waste will deteriorate working conditions and contribute to invisible losses
• Key check points:soft waste auditioning & monitoring, fly generation and department upkeep, along with effective moisture management in raw material and finished yarn.

Yarn realisation for sustainable growth & cost efficiency

With dominant share of raw material cost in yarn manufacturing, even a small improvement in yarn realisation can have a major financial impact. A modest 2 per cent gain in yarn realisation can result in savings of nearly Rs 50 million per year for a 50,000-spindle mill. What makes this especially compelling is that such improvements stem from better processes such as controlling waste, fine-tuning parameters, and smarter raw material use rather than big investments. By minimising avoidable losses and improving fibre utilisation, mills not only save on raw material costs but also boost their overall productivity.

Conclusion                          

In a landscape defined by rising input costs and intensifying global competition, improved realisation will help spinners to translate into tangible savings, not just operational fine-tuning. Indian spinning mills must embed realisation-focused operational strategies and continuously align their practices, processes and maintenance standards. This holistic approach will enable mills to not only navigate current challenges but also establish long-term resilience and competitiveness in both domestic and export markets.

About the authors:

Sanjay Arora, Business Director, Wazir Advisors, is a seasoned textile professional with 29 years of experience in business consulting, operational excellence, government advisory, and project management. He has led numerous high-impact projects including capacity benchmarking, nationwide skill gap studies, and techno-economic viability assessments. He has played a key role in the development of multiple Integrated Textile Parks and has worked with premier textile and polyester manufacturing industry in India at various levels.

Minmayee Mohanty is an associate consultant at Wazir Advisors with 3 years of experience in market research and consulting. She has worked on multiple market research and consulting projects in the textile industry. She holds an M Tech from ICT Mumbai and a B Tech from OUTR Bhubaneswar and is a recipient of the MHRD (GATE) scholarship