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| Karnataka's small textile mills kept in the dark |
| Mahesh Kulkarni / Bangalore Dec 01, 2009, 00:41 IST |
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The sector faces long and unscheduled cuts of up to 12 hours a day.
Karnataka’s ailing spinning mills, already facing a shortage of good quality cotton and working capital as well as high transportation costs, are now in more trouble. They are being forced into long and frequent shutdowns due to unscheduled power cuts of up to 12 hours a day by the state power utility.
The mills, which require uninterrupted power, are resorting to long breaks from production in the state’s rural areas, following a recent order of the state government which stipulates that power will be supplied for only 12 hours in the rural areas.
About 80 per cent of Karnataka’s mills are in the rural areas and long power cuts can result in huge losses to the industry, said C Valliappa, chairman of the Karnataka Textile Mills’ Association (KTMA).
But spinning mills in the state have to pay higher power tariffs than those in Andhra Pradesh and Tamil Nadu.
“Spinning mills require a minimum 90-95 per cent capacity utilisation to break even. They cannot afford DG power, which costs more than Rs 12 per unit. This industry is highly power-intensive. Load shedding of 12 hours a day will be the death-knell of the industry and lead to unemployment and loss of revenue to the state,” Valliappa said.
The power tariff in Karnataka is the highest among the southern states. Mills in the state pay Rs 4.85 per unit, compared to Rs 3.80 per unit in Andhra Pradesh. Apart from the lower power tariff for textile mills, the Andhra government has also provided a separate feeder line for power supply to them.
Andhra has also announced an incentive of 75 paisa per unit for five years, for all new mills coming up in the state, prompting mills to migrate there, he said.
Thyagu Valliappa, convenor of the South Indian Mills Association (SIMA), Karnataka Region, said no new mill had been set up in Karnataka in the last 10 years. “We need a level playing field. It’s high time Karnataka takes up initiatives like Andhra Pradesh, so that new investments are made in the state, which will create new jobs,” he said.
Power typically accounts for 18 per cent of total costs for textile mills, cotton for 55 per cent and labour for 6-8 per cent. The mills function on a thin margin of 3-4 per cent.
Historically, Karnataka has been well known for the textile trade. More than a hundred years ago, famous mills like Davanagere Cotton Mills, Binny Mills and Minerva Mills thrived in the state.
However, the state government’s unfriendly policies have forced many mills to shut down. For example, Vishal Cotspin — which shared a common boundary with Karnataka’s first thermal power plant in Raichur — had to close due to non-availability of quality power a few years ago.
The state, which had 62 textile mills with 1.2 million spindles until 1998, is now left with 24 mills with just 425,000 spindles.
“If the state’s apathy continues, mills in Karnataka will be forced to move to Andhra Pradesh, which is promising funding and other incentives for power and land,” Thyagu Valliappa said.
Karnataka also suffers from a shortage of extra-long cotton, which is used for knitwear. The mills therefore source it from northern states like Punjab, paying Rs 60,000 per lorry load to bring it to the state.
“The state government should take initiatives to improve the quality of DCH-32 variety of cotton by incorporating Bt genes, so that the yield will increase and fetch remunerative prices for farmers. This will also help reduce imports of Egyptian cotton,” Thyagu Valliappa said.
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