The Rajkot foundry industry, which once generated revenues worth Rs 700 crore per annum, saw its turnover plummet drastically in 2008-09, alomg with 50,000 layoffs. To add to their woes, the current financial year doesn't look to be the harbinger of change.
The unprecedented global economic crisis has caused a dent in the bottom line of small and mid-sized Rajkot foundry units.
The sector incurred considerable loss and witnessed around 50,000 layoffs in 2008-09.
Furthermore, to add to their woes, the current financial year is not likely to bring much change.
Foundry units face bad times
SME units clustered in and around Rajkot witnessed an erosion of their profit margins last financial year due to dwindling sales growth. The demand slump in the engineering goods and auto components sector also affected the city’s foundry industry.
This is largely due to the fact that the latter sector is largely dependent on the former for business, as most of the foundry and cast-iron products are utilised by these sectors.
The Rajkot foundry industry, which once generated revenues worth Rs 700 crore per annum, saw its turnover plummet drastically in 2008-09.
During this period, the total revenue from the sector dropped by 80%, to an estimated Rs 200 crore. In addition, it also saw a steep decline in its export earnings as international buyers in the US and Europe cancelled bulk orders.
Bhavesh Patel, President, Rajkot Engineering Association (REA), says, “The last financial year proved to be quite abysmal for the engineering and foundry industry in the city. The small and mid-sized players in these sectors have been affected the most by the ongoing recession.
While several small-scale cast-iron foundry units have shut down operations, some others are cutting down on their working hours due to fewer orders. Reduced production levels have compelled many units to lay off their workers”
Price fluctuation affecting units
Besides the contraction of export orders and plunge in domestic sales, the foundry industry also faced the adverse impact of price fluctuations during the last financial year.
“Sky rocketing prices of raw materials like coal, pig iron and iron ore further worsened the situation for the foundry industry during 2008-09. Steep hike in raw material prices led to increased cost of production for small units. Unable to cope with the high operational costs, many of them were compelled to cut down on their output levels to sustain their margins,” says Bharat Thaker, Proprietor of a Rajkot-based grey iron castings unit, Bajrang Foundry.
The industry forecast for the current financial year doesn’t seem very positive either. A rapid resurgence seems unlikely in the coming quarters and it may take a while for the market to gain momentum. Until then, small and mid-sized units need to take calculated decisions in order to avoid any further loss.
For more detail on B2b Portal In India [http://www.bizxchange.in/] log on to [http://www.bizxchange.in/]
The unprecedented global economic crisis has caused a dent in the bottom line of small and mid-sized Rajkot foundry units.
The sector incurred considerable loss and witnessed around 50,000 layoffs in 2008-09.
Furthermore, to add to their woes, the current financial year is not likely to bring much change.
Foundry units face bad times
SME units clustered in and around Rajkot witnessed an erosion of their profit margins last financial year due to dwindling sales growth. The demand slump in the engineering goods and auto components sector also affected the city’s foundry industry.
This is largely due to the fact that the latter sector is largely dependent on the former for business, as most of the foundry and cast-iron products are utilised by these sectors.
The Rajkot foundry industry, which once generated revenues worth Rs 700 crore per annum, saw its turnover plummet drastically in 2008-09.
During this period, the total revenue from the sector dropped by 80%, to an estimated Rs 200 crore. In addition, it also saw a steep decline in its export earnings as international buyers in the US and Europe cancelled bulk orders.
Bhavesh Patel, President, Rajkot Engineering Association (REA), says, “The last financial year proved to be quite abysmal for the engineering and foundry industry in the city. The small and mid-sized players in these sectors have been affected the most by the ongoing recession.
While several small-scale cast-iron foundry units have shut down operations, some others are cutting down on their working hours due to fewer orders. Reduced production levels have compelled many units to lay off their workers”
Price fluctuation affecting units
Besides the contraction of export orders and plunge in domestic sales, the foundry industry also faced the adverse impact of price fluctuations during the last financial year.
“Sky rocketing prices of raw materials like coal, pig iron and iron ore further worsened the situation for the foundry industry during 2008-09. Steep hike in raw material prices led to increased cost of production for small units. Unable to cope with the high operational costs, many of them were compelled to cut down on their output levels to sustain their margins,” says Bharat Thaker, Proprietor of a Rajkot-based grey iron castings unit, Bajrang Foundry.
The industry forecast for the current financial year doesn’t seem very positive either. A rapid resurgence seems unlikely in the coming quarters and it may take a while for the market to gain momentum. Until then, small and mid-sized units need to take calculated decisions in order to avoid any further loss.
For more detail on B2b Portal In India [http://www.bizxchange.in/] log on to [http://www.bizxchange.in/]
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