MP textile units may migrate

High power cost, the power cess, and the duties on captive power distribution have forced textile units (yarn manufacturers) to consider shifting from Madhya Pradesh. Industry sources say out of 51 textile units, many are in the process of expansion but none is interested in setting up new facilities.

Though the local heads of the companies are reluctant to come forth on the issue, they hinted if the state government did not come up with a concrete plan, fresh investments would move to other states.

Anant Spinning Mills (a unit of Mahavir Spinning Mills) is likely to come up with a new composite mill with an investment of Rs 300 crore. But the company is also exploring opportunities in states like Chhattisgarh or Himachal Pradesh. "Bhopal-based Bhaskar Group (a media company) is likely to set up a unit in Jammu & Kashmir, not Madhya Pradesh, despite the latter being upbeat in its Industrial Promotion Policy 2004.

It is not only costly power but exorbitant rates and contaminated cotton that can force companies to migrate.

The cost of power is 9""10 per cent of the input costs of any company with 50,000 spindles. "It would not be wise to set up a unit in an Indore special economic zone, where development charges are 5 per cent of the costs, and water shortages are acute in the Malwa region," a senior official of a textile mill said.

The Madhya Pradesh State Electricity Board (MPSEB) is charging yarn manufacturers a cess of 20 paise on captive power distribution and an electricity duty of 8 per cent. Power is available at Rs 4.75 (approximately) per unit against Rs 2.5 available in other states. To produce a kg of yarn, four to five units of power are needed.

"We have to pay 51 paise per unit for the inefficiency of the state electricity board. They are unable to supply power but still we have to pay for it. Now states like Chhattisgarh and Himachal Pradesh have done away with cess and duty, and power is cheaper there," S Pal, chief executive of Anant Spinning Mills, said.

However, he did not disclose the company's plan to set up new units. Anant Spinning Mill has a 100 per cent export-oriented unit with a 75,000-spindle capacity in Mandideep. It employs 1,200 people and exports to various countries.

Also, the state has to set up training facilities for farmers, so that they can handle cotton after cultivation. The state produces a very fine variety of cotton called H4, but by the time it reaches the millers, it is mostly contaminated. "Farmers mostly stock up cotton on dust surfaces, and we face difficulties manufacturing yarn.

Also, the ginning mills of the state have no training facilities," said an executive of a yarn manufacturer on conditions of anonymity. He was dissatisfied with the state textile committee. "Why do the committee members not go to villages and train farmers in cotton handling or ask agriculture universities of the state to include courses on cotton handling?" he asked.

The yarn manufacturers has brought this aspect to the notice of the previous and the present state governments, but their effort was unavailing.