ITF Advises Mills To Curb Production For 30-60 Days

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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% for a period of 30 to 60 days.

Go-slow tactics

"Reduced 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," said Prabhu Dhamodharan, Secretary, Indian Texpreneurs Federation. By the Federation'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. "If we curtail yarn production for two months, yarn supply will drop," 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.

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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.

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Long-term formula

According to the ITF secretary, mills have to formulate a sustainable and long-term formula, instead of resorting to interventions every now and then.

"Changing times need new thinking and alteration in business models to sustain in business. Standalone spinning units can move up the value chain by making value-added products, instead of making only yarn. For the present though, it would be advisable to curtail yarn production and minimise the loss," he added.             

Also Read  India’s Cotton Production Declines By 1.37% In 2020-21 Season

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