WITH THE lockdown due to Covid-19 keeping businesses in the country closed for almost two months, brass parts manufacturing industry in Jamnagar is facing a double whammy of raw material import sucking up liquidity in time of no demand in domestic market and China importing at ‘less attractive’ prices.
With approximately 5,000 units, Jamnagar is the largest brass parts manufacturing cluster in Asia and has annual turnover totalling to around Rs 2,000 crore. The industry imports scrap from countries like the US, Europe, Gulf region etc, melts it into brass and manufactures brass billets, bars and brass parts. The industry is known to manufacture hinges for spectacle frames to aircraft parts and employs about 1.5 lakh people directly and an equal number indirectly, says Lakhabhai Keshwala, president of Jamnagar Factory Owner’s Association (JFAO). The Jamnagar cluster has 95 per cent share in domestic market of brass parts and also exports to Europe, US, Gulf region and Africa.
“But the lockdown has disrupted the business wheel. Brass being a high-value metal, the industry requires liquidity. But due to lockdown, Delhi, Mumbai, Chennai and Kolkata, the biggest markets for our products shut down. On the other hand, around 800 containers of scrap landed at Mundra and Kandla ports. As factories were closed and there was no demand for finished products, factory-owners couldn’t take delivery of the containers. But ports and shipping companies have been charging as high demurrage as Rs18,000 per day per container. Factory owners are left with no option but to divert their cash credit and even borrow money from private moneylenders to take delivery of scrap containers, thus exhausting their liquidity pool in the process,” says Keshwala.
Manufacturers say China is the only market which is active these days. “We can’t afford to pay demurrage nor do we have storage capacity beyond a limit. Therefore, we have to take delivery of scrap, manufacture products out of them offload it into the market to minimise losses. But, presently, Bengaluru and Ambala are the only brass parts markets in India which are open. That effectively leaves China, which imports brass billets, as the only business avenue available. Therefore, though manufacturing brass rods is our main business, we are manufacturing brass billets these days and exporting them to China. That country is the only overseas market where there is some demand, maybe because of quota system in importing scraps there or because markets are reopening after Covid-19 outbreak,” said Jinesh Shah, director of Rajhans Metals Private Ltd.
Patel, who is also former president of JFOA, says that Jamnagar factories are shipping average 100 to 150 containers of billets to China every day for the past week or so. From billets, brass bars are extruded and further and then machined into brass parts products.
The factories manufacturing brass parts in Jamnagar fall in the category of micro, small and medium enterprises (MSMEs) and depend on import of scrap to meet 90 per cent of their raw-material requirements. Keshwala says that there are around 250 foundries which melt scrap into brass and manufacture brass billets roads.
The JFOA president said 60 per cent of brass parts products manufactured in Jamnagar goes to Delhi, another 25 per cent in other markets of the country while 15 per cent is exported. “We urge the central government to direct banks to give us additional loans as announced in economic package, else our industry will be facing an existential threat,” said Keshwala. As per Keshwala, China is the largest importer of scrap but its brass and brass parts are perceived to be of inferior quality, compared to their Indian rivals.
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