The disparity between cotton and yarn prices has put the spinning sector in a tight spot, especially due to the steep decline in the price of yarn compared with the fibre cost.
The disparity between cotton and yarn prices has put the spinning sector in a tight spot, especially due to the steep decline in the price of yarn compared with the fibre cost. To tide over the situation, the Indian Texpreneurs Federation (ITF) has advised its members to cut yarn production by 35 per cent for a period of 30 to 60 days.
â€œReduced yarn supply will help match the demand. But if yarn supply needs to be curtailed, mills will have to go slow in consumption of cotton and this, in turn, will help bring down the cost of the fibre as well. This tactic will help the mill sector reduce loss, besides bringing about a balance in cotton and yarn prices,â€ said Prabhu Dhamodharan, Secretary, Indian Texpreneurs Federation. By the Federationâ€™s assessment, a number of standalone spinning units are cash-starved, considering that many varieties of yarn are now selling at levels well below the manufacturing cost.
â€œIf we curtail yarn production for two months, yarn supply will drop,â€ Dhamodharan said. The spinning sector has to do this as in the textile manufacturing chain, all others such as weaving, processing, apparels and home textiles optimise their utilisation levels based on demand, supply and order trends, he added.
Irrespective of market conditions, the spinning sector operates 24x7x365. It should, like the cement or steel industry, optimise its production levels based on market intelligence and minimise the impact on its financials during a period of demand downturn, Dhamodharan said.
When asked if such a decision would not impact the workforce, he said the mills could retain the workforce, redeploy them in maintenance work, and impart training on new methodologies to improve productivity.