Nearly 15% SME foundries shut shop due to demand slump


About 80 per cent of India’s $12 bn foundry industry comprises SMEs, 15% are medium-sized players and only five per cent are large units

Several small and medium-sized foundries across the country have been forced to stop production, owing to a demand slump. Industry insiders say that most of these units cater to automotive manufacturers and ancillaries, and that 10-15 per cent of them have either closed down or stopped production temporarily.

About 80 per cent of India’s $12 billion foundry industrycomprises SMEs, 15 per cent are medium-sized players and only five per cent are large units. Reena Bhagwati, joint managing director of Bhagwati Autocast Ltd and president of the Institute of Indian Foundrymen (IIF), said that while average capacity utilisation in the overall foundry industry is around 70 per cent, for those supplying to automotive players, especially manufacturers of heavy commercial vehicles and passenger cars, average utilisation is down to 50-55 per cent.

The automotive segment consumes 32 per cent of the foundry industry’s output – much higher than power (five per cent), railways (six per cent), industrial machinery (seven per cent), and sanitary ware (nine per cent).

Pawan K Mishra, owner of Shree Ganpati Castings, a 300 tonne-per-month unit at Jaipur, said, “Our factory is running at less than 50 per cent capacity. We supply to passenger car makers like Tata Motors and Maruti Suzuki, and commercial vehicle players like Eicher.” With lower capacity utilisation the overall cost of production increases and profitability shrinks substantially, he said.

“Everyone is in the red,” said S K Jain, owner of Vallabh Auto Cast, which has a unit in Agra (one of about 150 in that belt) with a capacity of 150 tonnes per month. His unit, however, is less impacted, as his main clients are tractor makers. “Demand from the tractor segment is down by 10-15 per cent, and hence we are less affected. However, several small units in the area have shut shop, at least temporarily, in the face of sluggish demand from key industries,” he explained.

 

READ MORE…

 

SOURCE: http://www.business-standard.com/

Advertisements

Tagged as: , , , , , , , , , , , , , , , , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: