The Hindu Business Line : `Textile mills' operating profits rise due to drop in input costs'

THE South India Textile Research Association's (SITRA) study of textiles mills for the April-June 2005 showed that the raw material cost dropped 6.4 percentage points in relation to the yarn selling price compared to the previous six months.

This means a significant jump in operating profits, according to Mr Sarath Chandran, Chairman, Council of Administration, SITRA.

The various studies of SITRA had shown that besides achieving a high sales realisation and low raw material cost, mills should strive to maintain high labour and machine productivity as well as low energy costs to stay competitive in the long term, as raw material and yarn selling prices tend to fluctuate widely, Mr Sarath Chandran told the 30th technological conference of the SITRA inaugurated here today.

He said 2005 had brought dramatic changes for the textile sector and the seven per cent growth in economy had encouraged increased investment in textiles and brought opportunities and challenges.

Exports faced stiff competition even as imports mounted pressure on domestic markets.

For the industry, the cost-related threats primarily arose from large inter-unit differences in productivity, increase in the cost of raw material, high power costs, increased capital costs and infrastructural deficiencies.

The opportunities for the industry would include huge internal demand, large cotton resources and availability of skilled labour, Mr Sarath Chandran added.

Speaking on the occasion, the Southern India Mills Association (SIMA) Chairman, Mr S.V. Arumugham, voiced concern over the delay in undertaking labour reforms. The existing labour laws proved obstacles to the growth of manufacturing units and were biased. Product outsourcing had become the order of the day and survival of the textile industry depended on outsourcing.

It was in this background, the labour statutes such as contract labour, provident fund, ESI Acts must be amended so that they did not hinder the outsourcing activities of the management.

The SIMA Chairman called upon the SITRA to strengthen its R&D relating to the weaving and processing which would support the industry in product development, quality improvement. There was a case for SITRA to reorient its activities to meet the needs of the garment sector, he added.

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