Surge in raw material prices takes big toll on foundries

Hyderabad: With steep hike in raw material costs, foundries, which produce metal castings, are either forced to curtail or shut production, as they are unable to meet the rising cost pressures. Costlier raw materials and other input materials have pushed up production cost at foundries by at least 25 per cent over the past two months. With fading margins and shrinking working capital, foundries across India are forced to temporarily shut down production for at least a fortnight or more, according to the Institute of Indian Foundrymen (IIF), a pan India association for the foundry fraternity.

Devendra Jain, president, IIF, said: "Most raw materials are imported and therefore, cutting down the import duty will help bring down cost of production. The government should encourage manufacturing of ferro-alloys and various chemicals used in casting production in India through policy support."

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, says IIF.

Concerns over the increase in prices are not limited to India alone but is a global phenomenon. Foundry owners and allied industries from countries like China, Korea, Japan, Taiwan, Vietnam and Malaysia, among others, too expressed concerns over the unprecedented price rise during a detailed discourse at the recently concluded Asia Foundry Forum.