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India - 'Raw material prices forcing foundries to shut operations'
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Reeling from extreme cost pressures with rise in prices of coal as well as pig iron – a key raw material for manufacturing metal castings, foundries are being forced to curtail or shut production. Estimates by Institute of Indian Foundrymen (IIF) – a pan India association for the foundries, suggest that most foundries in Gujarat are yet to resume production after Diwali, as they are facing acute working captial shortage.
Coal is a key input material for foundries to operate, whose prices have doubled. That apart, pig iron which is a basic raw material has become costlier by at least 45%. Since most foundry units are dependent on coal for manufacturing processes, the input costs have dramatically shot up by at least 25%. “Most foundries are micro small and medium enterprises, which do not have adequate working capital to buy costlier raw materials. At the same time, timely availability of raw material is another constraint,” said Subodh Panchal, past president, IIF.
Making matters worse, foundries are unable to cash-in on fresh order volumes due to supply-side bottlenecks triggered by uncertain supply and rising cost of raw material. This is making foundry operations unviable and lot of small units are on the verge of closure, according to IIF.
IIF estimates suggest that Gujarat is home to at least 2,500 foundries which are mainly concentrated in Ahmedabad, Vadodara and Rajkot and have a cumulative installed capacity of some 5-lakh tonne per month.
Making matters worse, foundries are unable to cash-in on fresh order volumes due to supply-side bottlenecks triggered by uncertain supply and rising cost of raw material. This is making foundry operations unviable and lot of small units are on the verge of closure, according to IIF.
IIF estimates suggest that Gujarat is home to at least 2,500 foundries which are mainly concentrated in Ahmedabad, Vadodara and Rajkot and have a cumulative installed capacity of some 5-lakh tonne per month.
Source: timesofindia.indiatimes.com
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