600+ Open End (OE) Spinning Mills in Tamil Nadu which have been facing huge financial loss for past 6 months will halt production from November 7th as the Mills are unable to withstand the rising raw material cost and decreasing yarn price.

President of Coimbatore-based Open End Spinning Mills Association (OSMA) G.Arulmozhi chaired a press conference on Saturday to announce this production-halt to the press and media and also brief the enormous challenges their Industry is facing. 

Arulmozhi said that OE Mills have been procuring cotton-waste from spinning Mills at a hiked price for the last 1 year.

"With the cotton-waste from Spinning Mills, we produce 25 lakh kg. of grey cotton yarn, and with the plastic PET bottle fibre and post-garment cutting wastes we produce 15 lakh kg. of colored cotton yarn per day. We send these to powerloom and handloom units in the state, and they manufacture products (like bed sheets, lungis, towels, doormat, bed spreads, pillow covers)," Arulmozhi said.

"We buy cotton waste from spinning mills, and for the past year we buy them at a higher cost. Spinning mills sell us a kilo of waste cotton at 60% the price of a kilo of cotton. If you calculate on that basis, a kg of cotton costs Rs. 165, and so a kg of waste cotton should be sold to us at Rs.97 per kg. But we are buying them for Rs.117 per kg. from Spinning Mills," he said.

 "Inspite of paying a huge price for the raw material, the manufactured yarns are not getting at a fair price in the markets today," he added.

Arulmozhi pointer out that the Electricity tariff hiked by the state government is also being a huge blow for them as OE Mills are continuously-operating establishments. Due to the hiked tariff including peak hour and fixed demand charges, the Mills are paying huge EB fee. He also underlined that the Government is also collecting surcharge for roof top solar installations.

On the other hand, the 11% tax charges levied on Cotton import by Indian Govt. and the Quality Control Order placed on Viscose-Polyster is making import of the same very hard. All of this is hurting Open Ended Spinning Mills to the core, Arulmozhi explained. 

On behalf of 600+ OE Mills, Arulmozhi appealed to the Indian government to announce a ban or enforce limitations for exporting waste cotton/ comber noil so that domestic market can get the raw material at a fair cost.

He wanted the govt to provide HSN code to OE Mills because only then the govt will know the volume of yarn they make and the raw material they need. He also wanted to drop the import tax on cotton.

Appealing to the state government, Arulmozhi wanted it to reverse the fixed demand charges to its older stage and full cancel the peak hour charges and surcharge collected for roof top solar installations.

He added that 600+ OE Mills will be observing production halt from Nov.7-Nov.30 stressing these demands.