Power crisis cripples Coimbatore industries

Written by Joseph Vackayil | Chennai | Updated: Nov 29 2008, 06:03am hrs
The Tamil Nadu governments decision to restrict power supply to the industry has literally pushed the manufacturing units in the Coimbatore region to the brink. The multi-industrial centre of Tamil Nadu, is now waging a battle for survival having very little electricity to run the factories. With grid-connected power available only for 20 hours per day (even that is not regular) and a 40% cut in permitted consumption, most of the industries in the large, medium, small and micro sectors operate only at around 40% of capacity utilisation leading to drastic cut in production and widespread lay-offs.

A large number of small and tiny units doing job works have already downed their shutters.

Coimbatore, the production centre of more than 50% of the countrys yarn, fabrics, knitwear, textile machinery, pumps, foundry products and various engineering goods, is facing a 50% to 70% power shortage. In most sectors production have halved hitting sales, exports and debt servicing. Over 10 million people have lost their livelihood either completely or partially, a senior industry association representative told FE from Coimbatore.

The industry bodies lament that none of their suggestions for easing the power crisis, including subsidising captive generation using diesel gensets, have been taken seriously by the government and the crisis continues with no end in sight. They put the blame squarely on the doors of the government saying that the myopic energy policy was the major reason for their current plight.

Spinning mills, the hub of industrial operations in the district, is operating at less than half their capacity. According to KV Srinivasan, chairman of Southern India Mills Association (SIMA), the Tamil Nadu textile industry, that employs about 10 million people directly and indirectly, consumes 110 lakh bales of cotton, accounting for 50% of the spinning capacity and 60% of yarn exports, is inching towards a complete closure.

Manikam Ramaswamy, head of the Tamil Nadu State Council of the Confederation of Indian Industry (CII) said the running of the mills at very low capacity would lead to multifarious problems including repayment of loans to the banks and other debt servicing.

R Kuppusamy, former president of the South India Small Spinners Association, representing over 650 mills, and employing over a lakh of workers, said owing to power cut production has come down to less than 40% of the capacity and workers were employed for four or five days a week.

The knitwear industry, mostly in the Tirupur region, is facing a twin problem power cut and global meltdown leading to the loss of export markets. It is feared that there would be more than 30% drop in exports.

Already more than 20,000 have lost employment. A Sakthivel, president of Tirupur Exporters Association foresee major problems if the power cut and the global meltdown continue.

The pump industry which had a combined sales of over Rs 1,500 crore in 2007-08 now estimates 10% to 15% drop in production and sales and over 10,000 job cuts. Factories have completely stopped work in one shift and fear further stoppages.

The foundry units which had about Rs 1,200 crore worth sales last year fear 25% to 30% production and sales loss. Tamil Nadus loss will be a gain for Noida, Ludhiana, Ahmedabad, Rajkot and other centres.

Jayakumar Ramdass, president of the Southern India Engineering Manufacturers Association (SIEMA), the representative body of engineering industries, mainly pumps and foundries in Tamil Nadu, especially in the Coimabtore region, said, we are facing an effective 50% power cut and numerous power interruptions. The furnaces, the nerve centre of foundry industry, cannot be run on genset power. Without the supply of grid connected quality power, the furnaces are run on less than 50% of their capacity.

We are losing prestigious orders and customers. Once lost they are lost for ever and it is difficult to win them back.

The engineering industries have completely shut down one shift and over 10,000 people are laid off so far.

If the situation continued, more people would have to be rendered jobless, he said.

He said the worst victims of the current power crisis was the more than 50,000 small and tiny units and lakhs of workers depending on them. The small and tiny units were depending on job work orders from other industries. With their production cut and reduction in capacity utilisation these units were not getting orders.

A statement by the Tamil Nadu Small and Tiny Industries Association (Tanstia) said that, added to the power cut , the credit squeeze by banks, increase in the interest rate, high input cost and huge increase in prices of raw materials have led the small and tiny sector to the brink. Tanstia said many industries have already abolished one shift of production and started laying off of workers due to the power cut. Exporters were unable to honour their commitments and many others face penal charges for defaulting on loans due to delay in production.

Tanstia claims that over six lakh micro, small and tiny units in Tamil Nadu organised under 105 associations were suffering for want of power to run their factories and were losing orders and customers.

State government officials, though not admitting the magnitude of the crisis facing the region are maintaining that they are leaving no stones unturned to find a solution for the power crisis. The government, according to them, is in the process of sourcing additional power from all available sources to tide over the crisis.