Export-oriented units feel the meltdown heat

The global meltdown has badly affected the Export-oriented units EOUs in Ankleshwar, Vapi, Vatva and Nandesari. The small industrial units export dyes, pigments and pharmaceuticals to Europe...

The global meltdown has badly affected the Export-oriented units EOUs in Ankleshwar, Vapi, Vatva and Nandesari. The small industrial units export dyes, pigments and pharmaceuticals to Europe, the Middle East and the US. However, in view of the prevailing financial crisis, most clients have either cancelled their orders or refused to take finished products at the available prices.

Raju Dhudat, owner of Chem Colour International, a small-scale dyes and chemicals unit based in Ankleshwar, said: 8220;While China hosted the Olympics, it stopped importing raw chemical products required to produce finished products of dyes and pigments as part of its policy. The orders were made much before the Olympics, so raw materials were purchased at costs available with the local producers and accordingly the rates were fixed.8221;

He added: 8220;However, the global scenario changed recently and China started dumping raw materials such as basic Benzene, Chlorine and Hydrochloric acid at cheaper rates, thereby forcing small-scale units to sell it at cheaper rates to other countries. Other companies abroad either cancelled the order or asked to lower down the rates.8221;

Atul Buch, Ankleshwar Industrial Unit President, said: 8220;Ankleshwar has around fifty small-scale units and more than 30 large-scale units export dyes and pigments. Generally, our clients in the US, Europe and the Middle East prefer to have inventory of two months, i.e. they maintain a stock and accordingly give the orders. However, due to recession, they have stopped the process, thereby incurring a loss of around Rs 5,000 crore in the last few months.8221;

There are multiple factors for this trend. Buch said that one reason is the sudden decrease in the price of raw materials with no takers for the fixed price due to the recession. Secondly, with Christmas approaching, these countries are avoiding investing in anything and are waiting for the right opportunity to shell out their money, he said.

Kirit Mehta, president of the Vapi Industrial Association VIA said: 8220;Areas dispatching intermediate compounds for the finished products have also been hit. There are around 600 small-scale units and 120 large-scale units running in Vapi alone.8221;