COIMBATORE & CHANDIGARH: With prices at a 15-year high, are looking to buy the in smaller quantities instead of the usual bulk purchases they do in the first six months of the new season. The mills are also planning to hold stocks for two months instead of six months.
And the companies fear that the prices will only increase with exporters on a buying spree to ensure shipments for November. The prices of Shankar 6, a much-sought-after variety, is ruling at Rs 38,500 per candy when compared to Rs 22,500 per candy during the same period last year. While cotton prices have increased by 70% in the past one year, yarn prices have moved up by around 50%.
The 30s count yarn was selling at Rs 125 per kg during the last week of September 2009 but it is ruling at Rs 185 per kg now. The 40s count yarn prices have jumped to Rs 197 per kg from Rs 132 per kg last year. For textile mills, the October-March period is crucial during which they will buy cotton in bulk quantities and store it for the rest of the year.
The Ludhiana-based Nahar group, which consumes 10 lakh bales annually, is procuring cotton on a day-to-day basis. “We have a daily requirement of 3,500 bales (one bale weighs 170 kg) but are procuring 1,700 bale due to the spiralling rates,” said Nahar group’s raw material general manager Ashok Kapoor. The company is procuring Punjab’s J-34 variety for Rs 3,660-3,700 per maund (one maund equals 37.3 kg).
“We have to buy left, right and centre. But, instead of holding stock for longer period, we might opt for two months’ stock,” said Coimbatore-based Rs 803-crore KPR Mills managing director P Natraj. The vertically-integrated KPR group, which has a 2.12-lakh spindle capacity, sells 75% of the yarn it produces to Tirupur exporters while the rest is consumed internally.
Most garment manufacturers have even started getting orders for cotton blended with polyester to cut cost. Ludhiana-based Venus Garments (India), exporter of knitwear to international retailers like Wal-Mart, Old Navy and Tom Tailor, has since the past two months started manufacturing polyester-cotton blend knitted garments for a few clients.
“There is a cost-saving of over 10% with polyester filament prices at Rs 80-100 a kg,” said Venus Garments managing director Anil Jain.
For the Rs 208-crore Ambika Cotton Mills, which produces compact yarn used for shirting purpose, the dependency on local cotton is around 40% of its total requirement.
“We import long-staple cotton from abroad and we have no issues on that. But on the local front, we are struggling to get cotton despite being ready to pay international prices,” said Ambika Cotton CMD PV Chandran. He added that there were concerns of ginners blending long-staple cotton with short-staple varieties after January. Spinners are now mulling an increase in yarn prices. Confederation of Indian Textile Industry deputy chairman and Coimbatore-based Rs 355-crore Bannari Amman Spinning Mills managing director SV Arumugam said the association has to raise yarn cost to offset the increasing cotton prices. “We are meeting on October 1 to decide on yarn price increase,” he said.