60,000 cos cut output, some face closure

60,000 cos cut output, some face closure

Coimbatore: At least 60,000 enterprises in and around Tamil Nadu’s Coimbatore district have been forced to cut production because of a serious power shortage in the state, industry lobbies claimed.

Curbs on drawing electricity for more than 9 hours a day would drag production by nearly 50% and force some 5,000 units to close by the end of the year, said K. Elango, president of the Coimbatore District Small Industries Association, or CDSIA.

“Given the fact that no new power project has been planned in the state in the immediate future, this situation is likely to continue for the next two years," he said.

Elango, who is also joint managing director of RSM Autokast that makes auto parts, said he employs 250 people and was compelled to cut staff by 10%.

At least 50,000 small and medium enterprises, or SMEs, and 10,000 textile and spinning units in the region together account for an annual turnover of Rs40,000 crore and employ at least 500,000 workers, according to CDSIA.

The industries have already laid off about 10% of their staff because of the power shortage, Elango claimed.

The SMEs in Coimbatore, the second largest city in Tamil Nadu, include foundries and factories that make products such as wet grinders and water pumps, as well as textile firms in neighbouring Tirupur.

Tamil Nadu’s textile factories account for about one-third of India’s textile industry and 50% of its spinning capacity, according to K.V. Srinivasan, chairman of the Southern India Mills’ Association.

The factories provide jobs to at least 10 million people directly or indirectly and fetch foreign exchange of some Rs30,000 crore a year, he said.

According to Srinivasan, there is a daily power shortage of about 2,000MW. As a result, the Tamil Nadu Electricity Board, or TNEB, has instructed industries outside state capital Chennai and its suburbs not to draw power for more than 5 hours during the day and again from 6pm to 10pm, he said. The state generates 6,900MW of power a day.

CDSIA and other organizations have called for a state-wide strike on 22 October to protest the power cuts.

Srinivasan attributed the power shortage to a spurt in industrial growth, increase in free domestic power consumption that the government subsidizes, and uninterrupted supply of power to large factories of multinational companies, as agreed to by the state government.

TNEB, which buys power from independent producers for up to Rs15 per unit to shore up supply, could also consider reimbursing the cost of using diesel generators for electricity, which costs about Rs11 per unit, he added.

Srinivasan also said capacity utilization of most textile mills in the state would drop below 60% if the power crunch continued. Textile mills should achieve at least 90% utilization to break-even and will turn sick if that figure falls below 85%, he said, quoting a study by the South India Textile Research Association.

K. Pandian, president of the Coimbatore Wet Grinders and Accessories Manufacturers’ Association, and K. Mani Raj, secretary of the Kovai Power Driven Pumps and Spares Manufacturers Association, also said their industries, which mostly operate out of small units, would be forced to close soon because of the poor power supply.