State of the Economy 2019

Engineered for gains

Coimbatore, the MSME hub of South India, is banking on improving internal efficiencies for a better FY20

Photographs by RA Chandroo

With over 12,000 small and medium manufacturers, Coimbatore is definitely a hub for MSMEs in South India. Catering to various industries such as textiles, automobiles, engineering and pumps among others, the MSMEs provide employment to 1.4 million people. Entrepreneurship is the default choice in Coimbatore where people often choose to start their own business after a few years of work experience. But for the past couple of years, MSMEs have been battling one storm after the other. First it was demonetisation, then came GST. While both managed to dent overall business sentiment, MSMEs are now working on making their business models more resilient to external shocks. 

For instance, while spinning mills have been the mainstay of Coimbatore, a lot of the textile manufacturers are moving into technical textiles and apparels which give them an opportunity to improve on their margins. Given the excess capacity in spinning and rising costs of cotton and other input costs, many textile mills have gone out of business and the ones that are in business fight a daily battle to stay profitable. So entrepreneurs are now looking to break the cycle and move up the value chain. Take the case of SK Sundararaman, managing director, Shiva Texyarn, which not only does conventional textile spinning but also manufactures innovative technical textiles for consumers and the military. In fact, out of its overall revenue of Rs.4 billion, about 40% comes from technical textiles. The company which started to focus on technical textiles seven years ago makes quick-dry sheets for infants, and high-altitude gear and uniform apart from specialised military suits for chemical warfare. 

Make Do

Sundararaman expects this year to be lackluster for spinning mills in Coimbatore. “Globally, demand looks muted and there is excess capacity both in the international as well as domestic markets. Since it is an election year, cotton prices are on the rise as the minimum support price has been increased and we are not sure we will be able to pass on the i

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