Following a hike in raw material costs in the last 3 months, more than 15% foundries casting units in Ahmedabad have shut down as per a survey by a trade body. This comes even as the Institute of Indian Foundrymen had called for ‘price indexing mechanism’ to help industry stay afloat amidst stiff competition from Chinese imports. Officials from the foundry sector have said that the losses were due to the closure of units in the last 3 months, which amounted to Rs 200 crore in Gujarat. There are 6000 odd foundries across India of which 1500 of them are in Gujarat largely in Ahmedabad and Rajkot.
Watch what else is making news:
The industry has been bearing the brunt of severe price rise in raw material cost including that of coal, coke and pig iron, lack of skilled manpower and rising threats from Chinese imports. The industry provides direct employment to 5 lakh people out of which a lakh are employed in Gujarat. Those employed in the foundry sector will face tough times ahead owing to these factors, even as India ranks third globally in the sector after China and the USA.
“In the last 3 months prices of raw materials like coke and pig iron have more than doubled, while steel/scrap prices went up by 15%. Due to this the industry has asked to raise casting prices to Rs 6-9 per kg, however there was reluctance on the part of foundries to do so as their base user industries like automobiles, machine tools, tractor manufacturers, textile machinaries, pumps and valves are also not faring well this year. Post deliberations, 600 odd foundries in Rajkot have agreed for a marginal price rise of Rs 3-4 per kg. Due to these cyclical fluctuations in prices of raw materials globally that affects our input costs- the Institute of Indian Foundrymen(IIF) is planning to come up with a uniform quarterly price indexing in next 6 months and are studying the impact of price hikes and other threats to the industry,” said Amish Panchal, VP of the Institute of Indian Foundrymen(IIF) that has 4000 members across India.
Gaurang C Shah- former chairman of Ahmedabad’s Institute of Indian Foundrymen(IIF) said, “We are seeing an abnormal price rise which unfortunately we will have to pass on to our customers. In a survey conducted last month by the Ahmedabad Engineering Manufacturers’ Association(AEMA), around 80 foundries (around 15%)in Ahmedabad had shut down owing to these factors and many have not even had a break-even. The situation is so dire in Rajkot that workers have been asked to return only after a month post Diwali. The industry has been reeling under a severe price rise every 2 years while we also have a marginal price rise every 2 quarters,” Shah said. After China and US, India is the third largest country globally for the sector and has a producing capacity of 10 million tonnes per annum.