‘Steel slowing forgings output’

20 November 2017

The forging Industry, a major source of supplies to the country’s automobile sector, is at a crossroads due to a shortage of steel and an anticipated increase in the commodity’s prices, said a top executive.

“In the short term, we are facing problems on these two fronts,” said S. Muralishankar, president, Association of Indian Forging Industry (AIFI).

Annually, the forging industry needs about three million tonnes of steel. India manufactures about 2.8 million tonnes. “So the net deficit is two lakh tonnes,” said Vidyashankar Krishnan, MD, MM Forgings and former AIFI president. “Till recently, one million tonnes of non-forging steel were imported. This has been stopped, adding to the demand pressure.”

“[For] the last three quarters, the forging industry has been showing a growth trend. However, the steel requirement of the forging industry is not being met by steel manufacturers. Reasons that can be attributed to the demand supply gap include major players reeling under high debt, low coal production by Coal India and a significant rise in prices of graphite electrodes,” said Mr. Muralishankar.

As of 2016-17, there were 378 forging units in the country with an installed capacity of 38.5 lakh tonnes, accounting for an annual turnover of Rs. 31,389 crore.

“It was growing at the rate of 10% per annum. This year, it would be about 7%-8%,” Mr. Muralishankar said.

The AIFI has sought the Centre’s help by way of interest subvention and through the Technology Upgradation Fund, Mr. Muralishankar said.

‘Job cuts imminent’

“Steel is now sold at Rs. 43,000 per tonne and steel manufacturers are expected to increase it by Rs. 3,000 per tonne,” Mr. Krishnan said. “We are requesting them to maintain the price in parity with the rest of the world at Rs. 43,000 a tonne, otherwise it will be difficult to survive. This will lead to job cuts and closure of units,” he added.

Given that AIFI catered to 60% of India’s automobile firms, Mr. Muralishankar said the introduction of electric vehicles — ‘a disruptive innovation’ — would be a big blow to the sector.

“Currently, we have some time, but not much. For the next five years, we have to wait and watch. We have to see what the carmakers are going to do. We are asking the Centre to be assertive and provide a level-playing field to Indian manufacturers to become competitive globally,” he said.

“The Centre should increase the turnover limit for a company to be considered an MSME, from Rs. 5 crore to Rs. 20 crore,” said K. Vinoth Kumar, chairman-Southern region, AIFI.

Source: The Hindu