Yarn shortage may dent Kerala handloom sector’s Onam earnings

As Onam approaches, the Kerala handloom sector is worried that it may miss the bus in making good gains in its premier sales season due to the closure of spinning mills in Coimbatore and the resultant yarn shortage. The emerging situation has threatened to throw a spanner in the works at a time when handloom units are hard up on working capital.

Many of the cooperative societies in the handloom sector source yarn mainly from Coimbatore to meet their production requirements. Dearth of yarn will hit the business prospects of the handloom sector during the festival season, industry sources pointed out. Onam festival sales are reported to be in the range of ₹35-40 crore.

AV Babu, State Secretary of Kerala State Handloom Societies Association, in Kannur, told businessline that the majority of the cooperatives are dependent on the yarn availability from the spinning units in Tamil Nadu and its insufficiency may hit the sector, which is readying for manufacturing shirts, cotton sarees, dhotis, furnishing items.

• Also read: Spinning mills in Coimbatore to stop production and sale of yarn from Saturday

Impact of yarn shortage

Besides the yarn shortage, he said cooperative societies are yet to receive the ₹30 crore arrears from the apex body Hantex which include rebate from the State government, wages from schools uniform production, etc. Currently, many cooperatives are facing a working capital shortage with the stoppage of Product Development Assistance, and marketing incentives by the government. Of the 760 cooperatives in the handloom sector, he said, the number has come down to 360 with a workforce of 25,000.

• Also read: Cotton yarn sales to increase 7% on better export demand

Ranjit Rajendran, Founder and CEO, Agronature, the Kochi-based Community Development Organisation which takes care of handloom cooperative clusters, said the shortage in the availability of quality yarns has impacted the business of many cooperatives manufacturing traditional genuine handloom products. These cooperatives are purchasing yarn through Yarn Banks through national and State government subsidy schemes across Kerala rather than making direct purchases from spinning mills to avoid MRP rates. The shortage is likely to hit the business as peak Onam sales will last for 5-6 days when the customers make maximum purchases, he said.

Alternative yarn source

However, Sabu Jacob, Managing Director, Kitex Garments said the emerging situation has not affected the business as his company is sourcing yarn mainly from Gujarat where the quality is far superior with a stable supply. The current crisis in spinning mills is because of the subdued demand in garment retail sales in the US and Europe due to recession which, in turn, affected the spinning mills in the country with declining orders.