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Sunday, January 17, 2021

Pune: Steep rise in raw material prices hinders industrial recovery

The monthly survey of industrial activities carried out by the Mahratta Chamber of Commerce Industries and Agriculture (MCCIA) also talked about the sudden flattening of the curve for December.

Written by Parthasarathi Biswas | Pune | Updated: January 4, 2021 12:46:00 pm
The survey, that was released on Saturday, showed industries have reported just 1 per cent increase in their production from November.

A steep rise in prices of raw materials, especially that of cement and steel, has seen Pune’s industrial activities plateauing after recording month-on-month recovery since the past few months. With many units deciding to put brakes on their operations in view of losses, this unexpected brakes has stumped many with little respite in sight.

The monthly survey of industrial activities carried out by the Mahratta Chamber of Commerce Industries and Agriculture (MCCIA) also talked about the sudden flattening of the curve for December. The survey, that was released on Saturday, showed industries have reported just 1 per cent increase in their production from November. “On an average, the surveyed companies said that their current level of production has only marginally increased from 78% in November to 79% in December 2020,” the survey said. The survey had reported almost doubling of industrial activities since the central and state government has allowed the reopening of the sector.

One of the main reasons for this flat growth rate, industry experts said was mainly the exceptionally high cost of steel, which is the basic raw material of most of the MSME units operational in the area. Price of steel has appreciated by over 55 per cent which has drawn attention of the union minister Nitin Gadkari. Gadkari, had in December, written to the Prime Minister to take steps to prevent such steep rise in raw material prices.

Industry insiders said, in view of the steep rise in raw material prices, many of the smaller units have decided to suspend their operations. “If the profit margin of the unit is just 5-10 per cent this, rise in raw material prices do not warrant operations. While order books are relatively good, the cost of operations has become too high,” they pointed out. Units in Pune require around 20,000 tonnes of steel on a monthly basis.

Sudhir Mehta, President, MCCIA said, “While there is the month-on-month progress, we hear that MSMEs facing some acute challenges. One of the key challenges faced in recent past is that of escalating raw material prices, especially that of metals like iron, steel and aluminium and even plastic. This is making operations of many unviable. We appeal to the government to take note of this and intervene appropriately.”

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