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R.Y. Narayanan

Coimbatore , Nov. 21

HEMMED in by a continuous rise in the raw material cost and a slackening demand because of good monsoon, the pump manufacturers in the Coimbatore region have started hiking the price of pumpsets.

The manufacturers are also sore that State Governments have slowed down the energisation of farm pumpsets in the past few years. This, they say, has affected the growth of the sector, since agriculture constitutes the single largest segment catered to by the pump industry in the country.

Speaking to Business Line here today, Mr G. Rajendran, President, Southern India Engineering Manufacturers' Association (SIEMA), Coimbatore, said sales of pumpsets during July to October were hit this year because of heavy rains in several States. The drop in sales was around 20 per cent to 30 per cent compared to the same period last year. With plentiful rainfall, the farmers had put-off their purchase of pumps leading to a substantial drop in demand.

He said the funds crunch faced by the farmers had also hit the industry hard. The financial institutions were not liberal in lending for purchase of pumpsets, as it was not classified as a farm instrument, and banks advanced mostly crop loans.

He expected the situation to improve once banks completed negotiations for bulk financing of tractors under a consortium approach and turn to the pump industry for a possible deal for farm pumpsets.

The SIEMA President also regretted that States were not liberal in giving new power connections to agricultural pumpsets. Earlier, the number of new farm power connections given annually was in the range of 15 lakh to 20 lakh across the country, but this has in the past few years dropped to just about a third of it. This has hit the industry hard since it has to depend to a large extent on the replacement market, rather than on fresh connections, to fuel its growth.

He said normally the period from Deepavali till January 15 was a peak period for the industry. This year, only now there are signs of a demand pick-up. However, he was not sure whether the momentum would be strong enough for the industry to recoup the loss in sales incurred during the July-October period.Mr Rajendran, who is also the Managing Director of CRI Pumps (P) Ltd, said all these developments have come at a time when the industry has been facing a severe crisis due to continuous rise in the raw material cost for the past few months. While the cost of pig iron has rocketed by more than 50 per cent, the price of stainless steel rods has jumped by 20 per cent and copper price has gone up by 30 per cent. Earlier, the industry had been apprehensive of increasing the price of the finished products since it was facing a drop in demand.

But considering the industry's survival is at stake, the SIEMA has recommended to its members to opt for a 5 per cent - 8 per cent increase in the product price to partially cushion the impact of the increase in raw material cost.

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