Industry & Economy
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Textiles
Sisspa bullish on domestic market
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"High cost of funds borrowed from the banks is a dampener as the small spinners are denied of competitive interest rates."
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Coimbatore
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May 13
THE South India Small Spinners Association (Sisspa) is bullish on the domestic fabric market and higher pace of investment by the spinners on modernising their production line, thanks to the widening market arena in the post-quota regime.
"We expect the domestic market for yarn to improve further in the light of the demand perch seen of late because of the induction of large-scale auto-looms which in turn demand quality yarn for fabric conversion," said Mr K.R. Selvakumar, President of Sisspa.
There has been a spurt in number of spindles under the small-scale spinning industry. At least 10 lakh new spindles are estimated to have been added by the Tamil Nadu-based SSI spinning sector in one year, according to Mr Selvakumar. These new additions would have put in by the units in the 8000/12000 spindle category with the per spindle investment cost estimated at Rs 10,000.
"With new investment happening, we are now set at achieving stability in our operation but the continuous high cost of funds borrowed from the banks is a dampener as the small spinners are denied of competitive interest rates unlike the medium/larger spinning mills," says Mr S.V. Devarajan, Secretary of Sisspa.
Talking to presspersons here, the Sisspa officials said most SSI spinners had to meet interest liability ranging from 11per cent to 14 per cent on their term loans as compared to the6-8 per cent interest band enjoyed by the larger units. This forces a squeeze on their profitability, they said and asked the government to prevail upon the lending agencies to lower the rate for the SSI yarn producers.
On the marketing side, the Sisspa office-bearers felt the dithering on the part of the Tamil Nadu Government in implementing the VAT rate had proved an agony for the spinning industry which is faced with the prospects of losing the yarn market to the mills in the neighbouring Andhra Pradesh and Karnataka.
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