Companies

Forging cos hope to end fiscal on high note

Our Bureau Mumbai | Updated on January 24, 2011 Published on January 24, 2011

The forging industry hopes to close its production this fiscal at 2.3 million tonnes, up by nearly 28 per cent over last year's figure of 1.8 million tonnes. In 2008-09, the overall production was 1.05 million tonnes.

A major dampener to the growth could be the hike in forging steel cost, Mr Asheet Pasricha, Joint Managing Director, Trinity Engineers, told Business Line. He is also the Chairman of the finance and administrative committee of the Association of Indian Forging Industry that consists of 150 members, including majors such as Bharat Forge.

Mr Pasricha said steelmaker Rashtriya Ispat Nigam had on January 1, 2011, raised forging quality steel prices from Rs 2,500 a tonne to Rs 4,000.

Impact

Though the hike would not affect the companies as it was 100 per cent passed on to the customers, it was bound to impact the industry's growth in terms of lowering demand, creating inflationary pressure, and reducing international orders, he said.

The overall size of the forging industry is about Rs 13,200 crore. Seventy per cent production caters to the auto segment and the balance constitutes the non-auto segment comprising oil exploration, hand-tools, decorative forgings and heavy forgings.

Exports

On exports, he said the 12 per cent price difference in the domestic to international forging steel price was making Indian companies' products expensive. Further, the Chinese companies had a distinct advantage as they were eligible for about 17 per cent Government incentive. With steel alone comprising 60 per cent of the ex- factory value, the variation in the price front left them uncompetitive. Exports account for about 30 per cent of the overall industry size, or about Rs 3,900 crore.

On domestic front, too, there was intense competition from the Chinese, in aggregates such as steering and driving shafts and the like. Indian companies had lost a lot of ground to the Chinese in the non-auto segment, too, due to the lower prices they were able to offer, he said.

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Published on January 24, 2011
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