Against all odds

A worker sprays water on fabric kept in wet trollies in a dyeing unit at the SIPCOT Industrial Estate in Coimbatore. During power failures, the fabric has to be kept wet until the power supply resumes, to prevent colour variations.-K. ANANTHAN

FIVE months into the global financial crisis, the hardy spirit of the Coimbatore entrepreneur is asserting itself. If the Coimbatore District Small Industries Association (CODISSIA), an organisation with 4,500 members, organised Fabtec, an industrial fair, in January to present products and systems related to fabrication and welding, it hosted Build Intec in February to showcase the developments in the construction industry and unveil the opportunities available in the sector. The participants included architects, engineers, contractors, builders, interior designers, town and urban planners, government officials and the public.

The venue of both expositions was CODISSIAs own trade fair complex, spread over 40 acres (16 hectares). This is the second biggest trade fair complex in India after Pragati Maidan in New Delhi. The centrepiece of this complex is CODISSIA Intec Technology Centre, the worlds first pillar-free centre, spread over 13,500 square metres and built in just 155 days. The complex has several halls with heavy-duty flooring, to display industrial products including earthmovers and textile and printing machines.

CODISSIA is preparing to host INTEC 2009 from July 2 to 7, which promises to be Indias biggest international trade fair covering the engineering and automation sectors. Two concurrent events, Industrial Automation Expo and Toolex, will supplement INTEC 2009.

V. Sundarrajulu, chairperson, INTEC 2009, said: We are coming up with the 11th edition of INTEC. Like the past editions, this will focus on the latest developments and technological innovations in the engineering industry. We are aiming at 500 participants including those from abroad. The last edition attracted more than one lakh visitors. There was business to the tune of Rs.300 crore. The big advantage in INTEC 2009 is that there will be live demonstrations of machines, backed by 2,500 kilowatts of power.

But these activities cannot mask the reality of the multiple assaults that Coimbatore has come under for about a year now. If the mood in January 2008 was upbeat, today Coimbatore seems to have lost its swagger. Job cuts are happening in several sectors. A premier manufacturer of automobile dashboard instruments and controls and door-locking mechanisms has laid off 600 workers. An engineering company has cut wages by 25 per cent. Many foundries do not have orders beyond March. Banks are not willing to provide loans to industries and housing projects. Consequently, there is a financial tightness.

In the information technology sector, clients no longer make a beeline for high-profile software solution providers but prefer their less-expensive counterparts. The textile and engineering industries, the twin engines that drive Coimbatores economy, are sputtering to a halt. Besides the global economic downturn, what has hit them hard is the 40 per cent power cut imposed by the Tamil Nadu government on high-tension industries.

D. Balasundaram, chairperson, Coimbatore Capital Limited and CPC (P) Limited, manufacturers of cast iron industrial components, said the slide in the textile industry up to the stage of fabric making began a year ago, partly because of the mills overcapacity. It has now spread to home textiles such as curtains, towels and bedsheets. The main reason is the financial crisis, he said.

B.K. Krishnaraj Vanavarayar, former chairperson of the Indian Cotton Mills Federation (renamed Confederation of Indian Textile Industry), listed five reasons for the crisis: the power cut; non-availability of workers; high interest rates and electricity tariff; indiscriminate export of quality cotton in the name of free trade, which means that the best cotton grown in India reaches its competitors; and the recession in Europe and the United States.

According to businessmen in Coimbatore, an important reason for the crisis in the textile industry is the steep increase in the minimum support price for cotton, now at Rs.2,300 a quintal. Balasundaram said: It undercuts the competitive edge of our country. The increase in the exchange rate of the rupee against the U.S. dollar has not helped either.

According to K. Selvaraju, secretary-general of the South India Mills Association, there are 2,000 textile mills in Tamil Nadu. They consume 110 lakh bales of cotton a year and employ 50 lakh workers directly. Indias textile business stands at $52 billion and Tamil Nadu accounts for a third of it. Export of textiles from the State stood at Rs.40,000 crore in 2007-08. We pay Rs.3,500 crore as power charges to the TNEB [Tamil Nadu Electricity Board] a year and Rs.2,000 crore as VAT [value added tax] to the Tamil Nadu government. Yet, we are being ignored, he said.

The power cut has impacted the textile industry more adversely than other sectors. Electricity tariff constitutes 10 per cent of the cost of production from ginning to fabric-making. Besides, the fabric-making industry should work at 90 to 95 per cent capacity factor to break even. The power cut has brought down the capacity factor to 40 per cent. Consequently, the mills are incurring a big loss.

The Coimbatore Chamber of Commerce has been pressing the State government for a white paper on the electricity situation so that the industries can plan their purchase or their expansion. But the government is not forthcoming on this. It keeps giving misleading information that the Government of India will provide 400 MWe, that the first unit of the Kudankulam Nuclear Power Project will be commissioned soon, that when summer comes winds will set in and the windmills will generate power, and so on, Balasundaram remarked.

Another factor bedevilling the textile industry is the shortage of skilled workers. Earlier, workers migrated from spinning to garment manufacturing. Although they have returned to the mills, the latter are unable to employ them now because the machines are idle. Besides, the State government has fixed Rs.110 as the minimum basic wage for apprentices. This, with dearness allowance and other incentives, works out to Rs.230 a day. A worker in Andhra Pradesh is paid only a total of Rs.140.

A bleak situation exists in the engineering industry. The engineering units depend on foundries which make castings for them. Since the foundries depend heavily on electricity, their production is down by 50 per cent.

Real estate too has taken a beating. The boom in real estate during the last three years was more of a hype, for it was not based on fundamentals. Speculative buying then had pushed the cost of flats beyond the reach of the common man. Builders of flats have now reduced their price by 15 per cent to 20 per cent.

The only sectors that seemed to have escaped mauling are wet-grinders and electric motor pumps, in which Coimbatore is the pioneer.

B. Soundararajan, managing director, Suguna Poultry Farm Limited, explained that with the prices of rice, wheat, maize, cotton and pulses shooting up, agriculture was doing well. Farmers are getting good remuneration for their produce, so the sale of agricultural motor pumps is also doing well.

Despite the all-round gloom, K. Ilango, president, CODISSIA, is a confident man. He said: When the going is good, anything you make will sell. But a tough situation demands that you should look out for new products, new technology and better quality. That is why INTEC 2009 will be of great value. Ilango already has a couple of people from abroad approaching him for tie-ups so that they can set up manufacturing facilities in India in the engineering industry.