As more machines have been installed, production capacity has expanded by over 5 lakh kg per day, bringing total production in Tamil Nadu to 35 lakh kg per day for use in the fabrication of lungis, leggings, Bermuda shorts, bedsheets, and so on.
These investments were planned by the mills more than a year ago, when demand was robust and the market was healthy. They either purchased new machinery to increase capacity or updated their existing units. Almost all of the new equipment was purchased from China.
The old machinery produced 2.5 kilogramme of yarn each rotor, while the new machinery generates 4 kg per rotor. However, due to a workforce shortage, capacity utilization is currently just 60% to 70%, and will rise when migrant workers return to work, he claims.
The raw material for open end spinning mills, comber noil, is derived from normal textile mills. However, because of the poor demand for these machines, open end spinning mills are paying more for raw materials. Comber noil, which was selling for Rs 80 to Rs 100 per kg in April, is now selling for Rs 130 per kg, he says.
Raw ingredients, power, and labour costs have all climbed many times in the last year, but mills have not seen corresponding increases in yarn prices.
The cost of power and labour has increased production costs by 5 per kg a, and raw material prices have risen by at least 20 per kg. However, he claims that the price of yarn has only risen by Rs 10 to Rs 15 per kilogramme.
