Rough times for Tuticorin salt units as exports fall

Power shortage and untimely rain in March affect salt production

After a few good years, the salt industry in Tuticorin is experiencing rough times. Industry representatives attribute this to the drop in exports, the state administration's action against salt pans and a fall in prices.

The industry, which largely comprises small and medium farmers, meets 70 per cent of the total salt requirement of Tamil Nadu and about 30 per cent of the country's demand for salt.

A R A S Dhanabalan, secretary, Tuticorin Small Scale Salt Manufacturers' Association, said exports declined 15 per cent in the first nine months (April-December) of 2012-13. According to the Tuticorin Port Trust data, however, salt exports through the port fell from 131,884 tonnes in April-February 2011-12 to 108,160 tonnes in April-February 2012-13 - an 18 per cent decline.

Indonesia, which used to be the biggest importer of salt from Tuticorin, imported 45,000 tonnes of salt in the first six months of 2012-13, compared to 82,175 tonnes in the year-ago period. Indonesia tops the list of importers of salt from Tuticorin, followed by Bangladesh with 38,750 tonnes and Malaysia with 27,998 tonnes in the same period of 2012-13.

Moreover, rain in March has affected production, to the extent of around 200,000 tonnes, said Dhanabalan. M S A Peter Jebaraj, managing partner of MSA Salt, a leading salt manufacturer in Tuticorin, said competition from Gujarat and from countries such as Australia, where prices are lower, also played a major role in the fall in exports.

Among India's states, Gujarat is the largest manufacturer of salt, accounting for 70 per cent of the country's output. In Gujarat, the cost of production is only Rs 150 per tonne, compared to Rs 450 per tonne in Tuticorin, Jebaraj said. The difference is mainly owing to power and labour costs. In Gujarat, sea water is stored in reservoirs naturally during high tide, but in Tuticorin, it has to be pumped up from bore wells, which requires power.

Tuticorin district is facing power shortage, leading to the use of gensets, which pushes up production costs. The second reason is the cost of labour. These two alone contribute Rs 400 a tonne, and 60 per cent of this is the labour cost.

Jebaraj said Tuticorin's salt was priced at around Rs 1,000 a tonne a year ago - a price that was remunerative. Now, owing to competition from Gujarat and other sources, prices have come down to Rs 800 a tonne, forcing companies into losses. His company is expected to report a loss of around Rs 6-7 lakh.

According to Dhanabalan, in 2012, the total salt production in Tuticorin district was around 2.1 million tonnes. This salt was produced across 25,000 acres from various parts of the district. Last year, production had increased 31 per cent over output in 2011, which was 1.5-1.6 million tonnes.

Despite hard times, including the closure of dyeing units in Tirupur following an order of the Madras High Court, the salt industry posted healthy growth in the last two years, thanks mainly to exports. Salt is one of the raw materials required by the Rs 12,500 crore garment industry in Tirupur. More than 500 tonnes of refined salt were being sent to Tirupur and neighbouring areas every day from Tuticorin.

Dhanabalan said he expected that "in 2013, the Tuticorin salt industry will at the most produce 1.7-1.8 million tonnes," a drop of around 14 per cent. The district administration had sent a notice asking farmers to stop salt production in 1,000 acres of land, which would lead to a drop in output of 80,000-100,000 tonnes, he said.