Auto slump: Forging firms eyeing alternative markets

Hit by demand depression from the automobile segment, the country’s forging business is steadily reducing its dependency on the division by branching out into other sections.

Mr. M Babu Rao, Association of Indian Forging Industry (AIFI) president and managing director of GSB Forge stated that they are making attempts to broaden and reduce their dependency on the automotive business in order that they do not get affected by its (automobile division) review and repeated ups and downs.

The $2.8-billion trade is working in the direction of this objective, Rao stated, adding that the Indian auto business presently makes up 60% of the forging biz’s yield and the goal is to diminish this reliance to 50% or below even by the coming 2-3 year period.

Auto slump Forging firms eyeing alternative markets
Amidst the retardation in the automobile division, the order volume from the section reduced 20 to 25% during the last quarterly period as compared to the same quarterly period of the last fiscal.

The automobile industry body Society of Indian Automobile Manufacturers’ (SIAM) figures hint that the automobile division, which had originated 30% for the last three year period, is experiencing a deceleration, rising between 5-10% in different sections.

Energy, oil and gas and engineering are the other sections that contribute in business’s grosses.

“A few of the key players have already branched out their assortments to oil and gas and energy sections to perk up their bottomlines,” Rao added.

The country’s forging biz, which registered an 18% growth last financial with its overall output at 2.8 million tonne, could just manage 13% during the past quarterly period and “now waiting for a turnaround to happen,” Rao also said.

“But that will take place only when the administration sincerely deals troubles of the industry, comprising prices, duty and tax arrangement in addition to value-added tax,” Rao said.

The division is eyeing to attain 4 million tonne production per annum by the next 2 years period.

The gradually growing raw material rates, together with a big increase in fuel costs during the last few years and a 60% augmentation in power tariffs since the month of April have had a straight bearing on the business’s expansion with a few of the small and macro units opting out of the biz as they could not carry on the slumped bottomlines, Rao said.

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