Foundry sector sees revival in demand
With the revival in demand from engineering and automobile sectors, foundry
units across the country have increased their production capacities to 55 - 60
per cent from around 40 per cent in December last year.
They are, however, way below the earlier industry average of 70 per cent seen
earlier which may take 4-5 months to achieve, according to industry sources. Till
Lehmen Brothers' collapse in September last year, the industry was operating at an
average capacity of 70 per cent or more, which fell below 50 per cent in December
'08 due to the falling demand from the automobile sector and from Europe and
America.
Although, the demand from the export sectors are yet to pick up significantly, the
domestic demand, from engineering and automobile sectors is showing signs of
recovery. The engineering sector alone has witnessed a demand surge of over 50 per
cent since March this year and the trend is estimated to continue during the rest of
the year, said Bhavesh Patel, president, Rajkot Engineering Association.
Also, around 500 small and medium-sized units that were shut because of poor
consumer industries' offtake, are looking to revive their plants. But, they are waiting
for demand sustainability.
The economic crisis has led to the closure of 500-700 units. The average installed
capacity of foundry in India is less than 1,500 tonnes a month. According to an
estimate, about 70 per cent of the small and medium-sized units contribute about 30
per cent of foundry output, while 30 per cent of the large and medium, and
technologically-upgraded units make up 70 per cent of the output.
Units with a capacity of 200 tonnes a month have been categorised as tiny foundries.
Medium units are those with a capacity of over 3,000 tonnes a month. There are
about 150 units with an installed capacity of over 10,000 tonnes per annum, 300
units with installed capacity of 5,000 tonnes to 10,000 tonnes. The largest unit has
an installed capacity of 300,000 tonnes per annum.
There are approximately 50-60 units which can be termed world class. The industry
employs about 2 million workers directly and indirectly drawn from economically and
socially-weaker sections of society and is labour intensive.
Demand from commercial vehicles have also surged over 100 per cent with total
sales rising to about 9,700 units in May 2009 from the low of 4,000 units in
December last year although dismally low in absolute terms. The industry average
works out to 18,000 units while the total sales in May last year was around 17,000
units.
The foundry sector is expected to pick up from the 3rd/4th quarter of 2009 since the
government is mulling steps to give an impetus to the auto industry, manufacturing,
promoting exports and giving an additional thrust to various infrastructure projects,said A K Anand, director of The Institute of Indian Foundrymen.
Source: Business Standard
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