Last month there were reports in dailies that spinning mills in Coimbatore were considering shifting of their operations to Maharashtra and Gujarat. The reports stated:
“Textile mills in Tamil Nadu, hit by extended power cuts, are thinking of moving to Maharashtra and Gujarat, both of which have been wooing them with incentives and subsidies.
“We have witnessed power problems since 2008 but it has just become worse with 10- to 14-hour power cuts a day, which has not only resulted in production losses but also cost escalation to run diesel gensets,” said K. Selvaraju, secretary general, Southern India Mills Association (Sima).
Tamil Nadu accounted for 47% of the total yarn production of the country in 2010-11. The textile units there are largely dependent on states such as Gujarat, Andhra Pradesh and Karnataka for 95% of the 10 million bales of raw cotton that they need.
Maharashtra and Gujarat have unveiled new textile policies and plan to attract Rs.40,000 crore and Rs.20,000 crore of investment, respectively, in the next five years.
There has been no addition of spindles in the last two years, said S. Dinakaran, chairman of SIMA and also joint managing director of Salem-based Sambandam Spinning Mills. He doesn’t see any new investments in capacity expansion in the state. Tamil Nadu has 23 million spindles and used to add 7,00,000 to 8,00,000 spindles a year. The power situation in Tamil Nadu is a matter of concern, said Amol Kotwal, associate director, energy and power systems practice, Frost and Sullivan.
Power shortage was 18-19% in September. Currently, most parts of the state are going without electricity for up to 16 hours a day, Kotwal said.
Wind energy had helped tide over the power crisis in the state in May-September when generation from the source was the highest.
Two weeks ago the Maharashtra principal secretary for textiles visited Coimbatore and offered incentives to Tamil Nadu-based textile units to set up operations, said T. Rajkumar, managing director of Sri Mahasakthi Mills.
At least 20 of 350 Sima members in Tamil Nadu have showed interest in shifting their base to Gujarat and Maharashtra, Selvaraju said.
Once Gujarat elections are over later this year and the new government is in place, more Sima members will decide, he said. Some Sima members find the incentives compelling but are waiting to see if the situation in Tamil Nadu will improve, Dinakaran said.
The two states offer interest subsidies, single window clearance but it is Gujarat that offers refund on value added tax on spinning mills for new and additional capacity, power tariff concession and support for energy and water conservation, Rajkumar said.
Although the Tamil Nadu government has been promising an improvement in the power situation in 2013, the ground reality is different as the new power generation projects are small and will not be sufficient to meet the growing demand, said J. Thulasidharan, managing director of Palani-based Rajaratna Mills, which is planning to take up the Maharashtra offer.
“We plan to shift 65% of the 70,000 spindles and machinery from the mill in Palani to Maharashtra,” said Thulasidharan. “We are in the process of scouting land in the state to set up base.”
As spinning mills operate with thin margins, they can’t afford to bear the additional costs involved in coping with the power situation. Close to 10% of the Rs.120 crore revenue goes into the cost of running diesel gensets and production losses from the power cuts.
Kotwal also said any improvement in the power situation was long way away, given the “deficit scenario”. He said a combination of measures were needed, including raising power generation capacity, reducing transmission and distribution losses (currently about 18%) and tariff hikes.”
Coimbatore, during the last 150 years, had emerged as the hub of textile spinning and weaving mills and known as ‘Manchester of South India’. The growing knitwear exports from nearby town Tirupur and home textiles exports from Karur and handlooms from Erode have contributed to tremendous growth and demand for spinning and weaving mills in and around Coimbatore. Yarns are supplied to local market as well as exported to other countries. Coimbatore yarns are famous for yarn quality and pricing. Over the years many textile mills had upgraded their textile machinery and increased the capacity to growing needs of the textile market.
The meeting of South India Mills Association, in which officials of the states of Maharashtra and Gujarat attended and wooed the spinning mills to their states, was held with the full knowledge of the district and state administration. But what can the higher officials of the State government do when their Chief Minister Jayalalitha is so unconcerned as if it is the problem of some neighboring state or country?
K.Selvaraj, Secretary General of SIMA, told fibre2fashion, “Many representatives from Maharashtra and Gujarat have approached SIMA to start new textile mills in their states. Maharashtra state government principal secretary had an interaction with SIMA members. Some investment promotion agencies from Gujarat had also made a presentation about the investment policies of the state.”
Talking about the textile industry situation in Tamil Nadu, Selvaraj says, “One third of the textile business in the country is in Tamil Nadu. Buyers worldwide prefer to purchase yarn, fibre and other textile goods from Tamil Nadu because our spinning sector is very appreciable and cost effective, especially in terms of quality.”
Continuing further, he says, “But in the long run, the state may not remain an attractive destination if the acute power shortage continues. At present, we are getting only 5-6 hours of power a day and there is no immediate solution for this problem.”
Moreover, Tamil Nadu has got many skilled laborers, but the textile units in other states depend on unskilled migrant workers. “So, we have to consider this aspect also prior to deciding on relocating our textile mills to other states,” Selvaraj avers.
Moreover, Coimbatore had also emerged as a hub of manufacturing pump sets, grinders and mixies, engineering goods and textile machinery. There are more than 30,000 medium and small industrial units engaged in these sectors. The 18 hour power cut has caused loss of production to the tune of Rs.5,000 crore in the last one year rendering about 1,45,000 workers unemployed in textile and other industries in Coimbatore district.
The combined district of Coimbatore, which includes Nilgiris, Tirupur and Erode districts, is synonymous which entrepreneurship. Youth of the district instead of seeking employment prepare starting their own industrial units depending upon their financial position. Hence it is not surprising that in Tirupur and Coimbatore districts alone there are about 30,000 micro industrial units which cannot thrive now due to 18 hours power cut. At most of the units are not functioning, over 50,000 workers have migrated after Diwali holidays. Now there is an exodus of micro industrial entrepreneurs towards Kerala. In the last two months alone over one thousand workshops have been shifted to Kerala. President of the Coimbatore, Tirupur Districts Micro Industrial Entrepreneurs Association (COTMA) Ravikumar and Coimbatore Pump Manufacturers Association (COPMA) President Maniraj said, “Walayar on the Tamil Nadu – Kerala border is only 25 kms from the city and there is only half-an-hour power cut there everyday. As 25 kms is not a long distance, entrepreneurs started taking their machineries to Kerala and started their units at Kanchikode, Palakkad, Pattambi, Walayar, Thrissur and Wayanad. The Kerala government is offering all infrastructure facilities including land, water and power and it is easier to run industry there. If this situation continues for another six months micro industries here will be totally eliminated.”
In the neighboring Tirupur district, hosiery industries had come to stand still losing crores of worth export orders, which will be very difficult to recover due to competition from China and Pakistan. About 30,000 workers who left for their native places during festival holidays had not reported back for work. The crisis in power loom sector has so deepened that they had to open gruel centres in areas and villages. The situation is grim in Erode district too.
Cuddalore district, which was limping back to normalcy after the damages caused by Thane cyclone in January last, power cut duration had reached 18 hours from 14 hours a day. The loss due to loss of production and increase in cost of production is estimated to be around Rs.1,300 crore. About one lakh workers including 10,000 technical workers working in small industries, 10,000 weavers, 6,000 workers of commercial establishments, 10,000 agricultural workers had lost employment.
In Villupuram district agriculture is totally lost due to over 16 hour power cut. Iron and steel lathe works and grill workshops have been closed.
In Salem, Namakkal, Dharmapuri and Krishnagiri districts weaving mills, power loom units, rice and paddy mills, tapioca units, oil mills, silver workshops, export garment units, bus and lorry body building workshops are severely affected. Four lakh workers had lost jobs incurring a monthly loss of Rs.600 crore.
Due to 18 hour power cut in Dharmapuri district, motor irrigation for sugarcane and paddy crops is affected and production has come down by 40 per cent. Production has also come down in sofa manufacturing, export garments, lorry body building, welding, offset printing etc rendering about 20,000 workers jobless. In Krishnagiri district trade of Rs.200 crore a day was affected and orders already obtained were also cancelled.
In Namakkal district, lorry body building workshops, power loom units in Kumarapalayam, Pallipalayam and Vennandhur areas’ tapioca manufacturing units are totally paralysed. There are over 50,000 power looms and about 200 lorry workshops are there. About one lakh workers have permanently lost their jobs.
In Karur district there are over 1,500 big and small units engaged in national and international trade in textile goods and due to continuous power cut about 15,000 workers have been rendered unemployed and around 7,000 in bus body making units. 452 dying units and over 300 mosquito net manufacturing units around Karur are on the verge of closure.
In Tirunelveli district, due to low tension rice mills could not function and diesel expenditure in lime kilns has increased by 35 percent. In Kanyakumari district, many youths have gone to Kerala in search of construction works. Girls who were working in net companies getting daily wage of Rs.300 have lost jobs.
There are around 15,000 small and micro industries involved in leather tanning, footwear manufacture, chemicals ancillary industrial units of BHEL, Ranipet, manufacturing matches etc., in Vellore district. There are also 20,000 power loom units. Due to power cut, 50,000 workers find it difficult to get permanent income due to production stoppages in these industries.
When the power position is so precarious, the ADMK regime had been sleeping over to critical and supercritical stages faced by thermal power stations in Tamil Nadu due to depleting coal stocks. The 450 MW Ennore TPS had stock for only three days as on Dec.2 while on the same day the 1440-MW Mettur TPS had stock for only six days, the 630-MW North Chennai TPS for two days and 1050-MW Tuticorin TPS for five days, threatening to cause additional power shortage of 3,500 MW.
If this is the overall position of dismay in industrial economy of the state, the least said the better of the agricultural scenario in Tamil Nadu with crops in Cauvery delta region withering and North East monsoon also playing truant. The State is on the verge of facing severe drought in the coming months.
Thus Jayalalitha’s inept and inefficient regime has caused irreparable damage to the economy of Tamil Nadu which will take several decades to re-equip and recover in this age of global competitive environment. Like legendary King Nero was playing fiddle when Rome was burning, Jayalalitha made an extravagant show of unnecessary event, the diamond jubilee of Tamil Nadu Assembly when the State and its people were reeling under darkness and uncertain future! r
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