Tamil Nadu textile spinning mills producing blended yarn including polyester cotton by using synthetic material, have decided to stop production during the weekends with immediate effect as losses mounting following sharp decline in demand for synthetic yarn due to unknown reasons for the last few months.

A decision to this effect was taken at a meeting of managing directors of nearly 90 mills producing such yarns, under Indian Texpreneurs Federation (ITF), for taking corrective measures to control the crisis. The meeting also decided to create a scientific data base and marketing intelligence to provide the trend to the mills.

Naresh Devaraj, coordinator, Indian Texpreneurs' Federation (ITF), Synthetic Spinners' Group said that there has been a huge fall in yarn prices in the past few months due to poor demand. They are incurring losses of Rs 15-20 per kg (for yarn).

Their immediate aim is to reduce the losses, the stoppage of production during the weekends would result in a 25%-30% reduction in output, which mills hope would be able to reverse the continuing fall in prices.

Prices of 56's count polyester cotton yarn, which was ruling at Rs 190 per kg (ex-mill), is now quoting at around Rs 158 per kg. Mills in the state account for nearly 90% of the supply of fine count yarn to upcountry markets, ITF officials said. Spinning mills, which usually have 7-20 days production as stock, have seen it increase to 40-60 days following the poor off-take of yarn.

Though prices of crude oil has fallen drastically in the past few months, prices of the basic raw material, which is derived from crude and is used to produce blended yarn, have not seen a similar drop leaving the mills in a tight-spot, officials said.

Synthetic and blended textile spinning mills are spread across the state and provide direct and indirect employment to nearly 3 lakh persons. Workers in these mills will however perform maintenance work at the units during the weekends. The closure would result in a production loss of about 10,000 tonnes per month.

Out of the total installed capacity of 2 crore spindles in the state, about 40 lakh spindles produce blended items such as polyester cotton yarn – 40 percent of the National production used mainly by fabric markets in Ichalkaranji, Malegaon, Bhiwandi and Bhilwara. More than 200 spinning mills in the state produce about 40,000 tonnes of blended yarn per month, which accounts for about 20% of the total yarn output in TN.

There, is a glut in the market. Fabric production has come down due to the increase in imports. Fabric makers are importing yarn mainly from Indonesia and China. Imported yarn is at least 5% cheaper than domestic yarn but would not be able to fully meet the requirements of fabric makers, especially in finer counts, ITF officials said. Exports have come down as Indian synthetic and blended yarn has become uncompetitive.

D Prabhu, Secretary, Texpreneurs Forum said that a committee has been formed to analyze the sudden decline and also to review the impact of cut in production.