Textile mills in Tamil Nadu hope for sustained improvement in

Following almost two years of slump in demand and rising production costs, textile mills in Tamil Nadu are looking at gradual market improvement and better performance this financial year. Prabhu Dhamodharan, convenor of Indian Texpreneurs Federation, said the spinning industry went through a highly challenging phase during financial year 2023–24 due to weak demand for yarn and high inventory levels across the value chain. There was a steady improvement in yarn demand for the last nine months, driven by inventory exhaustion across the value chain and a 10% reduction in installed spindles across India, which helped restore supply-demand balance to some extent. The textile mills were able to sell their monthly production and there were no stocks. While the larger mills were currently operating 95% capacity, others were using 70% to 80%, he said. “However, margins remain under pressure due to the price gap between domestic and international cotton and rising conversion costs. We remain hopeful that sustained demand will gradually lead to margin improvement from this fiscal,” he said. Also, textile mills that had financial resources were investing in modernisation and automation to improve efficiency in the medium term. A sustained growth in demand would enable the mills to invest in modernisation, he said. According to S.K. Sundararaman, chairman of the Southern India Mills’ Association, of the 24 million spindles in Tamil Nadu nearly 19 million were in operation. Of these, one third that had 100% renewable energy sources for captive use were doing well. Another six million spindles should improve the production efficiency and competitiveness to survive in the long term. They should look at going in for synthetic yarn or value added yarns, he suggested. The opportunities were high for the textile industry as there were free trade agreements. The mills should focus on multiple factors such as value added yarns, modernisation, and fibres to get sustain, added industry sources.