Textile mills in Ahmedabad hit by rising price of lignite

Ahmedabad, Mar 3 (KNN) The Textile processing units in Ahmedabad are witnessing an increase in volumes, but the rising price of lignite, is affecting the profits of the units, according to a report in TOI.

Lignite accounts for about 28 per cent of the total cost of textile processing. The units use lignite as fuel for processing and largely source it from GMDC.

As per reports, the textile processors have not received lignite from the GMDC’s site in Bhavnagar since March 1. To meet up their demand, the units have to pay more to get lignite from GMDC’s Mata no Madh site.

Along with the rising price of lignite, the increasing electricity costs and higher labour charges are also affecting the business of the textile units.

Naresh Sharma, former vice-president of the Ahmedabad Textile Processors’ Association (ATPA) said, “There has been an improvement in orders in the last month. The overall capacity utilization has increased between 60 per cent to 80 per cent in different companies.”

“However, lignite has become costlier, and it is affecting production costs. Because of tough competition, processing units cannot pass on the price increase to customers. Despite improvement in orders, profitability is down because of higher production cost,” he said.

GMDC managing director Roopwant Singh said, “Lignite mining at Tadkeshwar is temporarily closed, and the production at Bhavnagar mine is low as the works contract expires soon.”

“We have lowered the prices of Mata no Madh lignite for buyers for the current fortnight to ensure they do not face higher prices. Bhavnagar lignite availability will be normal as soon as possible,” he added.  (KNN Bureau)