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Left with no working capital, AP Spinning Mills announce 'Production Holiday'

The decision was taken at a meeting of AP Spinning Mills Association held in Guntur Thursday

Sunday July 21, 2019 7:54 PM, ummid.com News Network

Textile Industry News India

[Meanwhile, some of the textile units in Malegaon have decided to run powerlooms only for 04 days starting this week. (Photo: ummid.com)]

Guntur (Andhra Pradesh): Having left with no working capital needed to run routine business, around 120 Spinning Mills in Andhra Pradesh that are known for their 24x7 working culture have announced "Production Holiday" every Monday from July 22 onwards.

The decision was taken at a meeting of AP Spinning Mills Association held in Guntur Thursday.

"As the spinning industry is under crisis and the situation is moving from bad to worse, and spinners are making heavy losses, the association has decided that around 120 spinning mills in AP with a capacity of around 40 lakh spindles will be closed every Monday July 22 onwards", Sri Raghurami Reddy, Chairman of AP Spinning Mills Association said.

Reddy cited various reasons for the decision to shut down work including lower demand from both domestic and export markets, China-US trade war, higher cotton MSP, and hoarding of stocks by Cotton Corporation of India (CCI).

"Drastic reduction in exports to China, which has been a major importer of Indian cotton yarn, for the last two years due to “trade war” with the United States of America has worsened the situation, leading to accumulation of yarn stocks in spinning mills", Reddy said.

"While a few mills have partially stopped yarn production, the remaining mills are reducing the number of working days in order to reduce their financial burden", he added.

Also Read | Now, Co-Operative Spinning Mills to go on strike in Maharashtra

Reddy said the cotton Minimum Support Price (MSP) being above the prevailing global prices by 25% approximately for the last one year has made spinning mills to incur heavy losses of around one crore rupees per month by an average capacity of 20000 Spindles mill.

"Sale of cotton bales at 20-25% more than the prevailing international and domestic market prices and hoarding of stocks by Cotton Corporation of India (CCI) have created artificial demand, forcing the textile industry to incur heavy losses", he said.

Sri Raghurami Reddy also said that, due to the same reasons, textile mills located in Northern India and Tamil Nadu have already stopped production by reducing the number of working days and shifts to cut their yarn output.

"Due to heavy losses and non-release of incentives around Rs.1200 crores as on 31.3.2019 by the previous AP government, the working capital limits of all the spinning mills have been exhausted. Therefore, most of the Spinning mills are in the verge of becoming NPAs/closure", he added.

"Non-availability of local work force and shortage of labor has resulted in steep rise in wages", he said.

Textile is the second largest sector in India after agriculture, providing employment to over 45 million people directly and 60 million people indirectly.

Meanwhile, some of the textile units in Malegaon have decided to run powerlooms only for 04 days starting this week. The decision has been taken to cut production of Gray Fabrics because of the slowdown in the market and shortage of yarn.

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