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NSIC to help Tirupur knitwear units in yarn procurement

Sudha Swaminathan - Coimbatore

After successfully facilitating 300-odd SSI units in the engineering industry to source raw materials at competitive prices from the National Aluminium Company, the National Small Industries Corporation (NSIC) is now trying to extend a similar arrangement to knitwear units in Tirupur for procurement of yarn.

Under the single purchase arrangement for bulk supplies of raw materials, the NSIC will procure yarn from the mills on behalf of the knitwear units. By channeling the yarn procurement and avoiding brokers, NSIC will help the knitwear units to procure yarn at competitive rates. The units will come together to identify the supplying mills based on their quality specifications.

As it will be bulk purchase and cash and carry arrangement, the knitwear units can enjoy the benefit of bulk discount on sales as well as cash discount. For the supplying mills, there will be an assured market for its products. It will be a win-win situation for both the parties. “It is a need-based programme and we will only act as a facilitator,” said Mr P Ravikumar, branch manager, NSIC.

With the yarn prices highly volatile and the demand being seasonal, the offtake would be monthly. NSIC will have to negotiate the prices with the mills every time the order is placed. For units that cannot afford cash payment, NSIC will extend credit facility under the raw material assistance scheme. It will be a revolving credit at competitive interest rates. Even as the corporation had mooted the scheme three months back, it has not taken off due to the lukewarm response from the mills. “The first breakthrough would be to get the mills interested and hitting the price. Currently, the mills are too preoccupied as the demand for yarn is ruling high. It is a long term strategy and we should wait for sometime for the tide to come down. Once the prices and demand fall, mills may come forward,” he felt.

Once the programme takes off among the knitwear units, NSIC plans to extend the arrangement to the powerloom industries too. The single purchase arrangement of NSIC is similar to the consortium approach adopted by the Textiles Committee. “We are not duplicating the initiative of the Textiles Committee. We want to dovetail their initiative with our special financial assistance programmes,” he contends.