MADURAI: The Southern India Engineering Manufacturers Association
(SIEMA) has given a national call from Coimbatore on December 19th 2020 explaining about the problems faced by farmers in Tamil Nadu, the slowdown faced by pumpset manufacturers as there has been a sharp increase in raw material costs, and the manufacturers were hit hard due to multiple factors.
SIEMA PRESIDENT K.V.KARTHIK SPEECH (VIDEO)
A joint meeting of three major associations of pump manufacturers of the country, Indian Pump Manufacturers Association (IPMA), Southern India Engineering Manufacturers Association (SIEMA) and Rajkot Engineering Association (REA) representing 99 per cent of pump manufacturers of the country was held recently to discuss the astronomical raw material price increase.
The prices of all the raw materials used in pumpset manufacturing have gone up like this: Copper has gone up from Rs 450/kg in March to 680/kg in December 57% increase. Stainless steel rods from Rs 68/kg in March to Rs 80/kg in December 47 % increase. EN 8 Steel Rods from Rs 49.5/kg in March to Rs 67/kg in December 35% increase. Electrical steel from Rs 54/kg in March to Rs 64.5/kg in December 20% increase. CRCA Steel 44 from Rs /kg in March to Rs 64/kg in December 45% increase.
Aluminium from Rs 145/kg in March to 166 / kg in December 15% increase.
Cast Iron from Rs 64/kg in March to Rs 72/kg in December 12.5% increase.
Craft Paper for packaging from Rs 23.7/kg in March to Rs 30.5 in December 28% increase.
PVC resin from Rs 60/kg in March to Rs 140/kg in December by 133%Packing boxes also increased 40%.
IMPACT ON PUMPSETS:
The impact on the overall costing of the pumpset is 15%. Pumpset manufacturers operate with thin margins and such an increase in cost cannot be absorbed by the manufacturer.
Pump and motor prices will have to be increased by 10% for sustenance.
The Indian farmer is totally dependent on pump for irrigation. The cost of installing a new pumpset with accessories like copper cable, pipes and fittings have gone up by more than 20%.
This price increase can lead to a slowdown of the industry and decrease in farm output as the farmers will put off their requirements.
The Indian Pump Industry is of Rs 16,000 crores and provides employment to around 20 lakh people directly and indirectly.
Indian market for motors and pumps that was in doldrums last year due to non-seasonal rainfall had revived and markets had improved after COVID 19 lockdown.
However, the industry is bracing for another slowdown due to the huge increase in raw material prices.
Moreover, in Tamil Nadu there are 18 lakh agricultural pumps, of which nearly 15% replaced annually besides more than this in other major agricultural cultivation districts like Kerala, Karnataka, Telangana, Andhra Pradesh, Gujarat, Punjab, Haryana and other States.
The share of Indian pumps and motors in the global market is around 2%. We had a hope that after COVID the share could increase as the world was looking towards India instead of China.
RAW MATERIAL COSTS:
There were good enquiries and exports business was up in the second quarter (July to Oct). The overseas customers have started accepting price increase of upto 10%. But further increase will make our pumps un-competitive in the international market.
Additionally, severe shortage of raw materials particularly Electrical Steels, PVC resin, Iron ore and steel scrap are providing an opportunity for the middle men to hoard material and drive up prices even further, says K.V.Karthik, President of Southern India Engineering Manufacturers Association (SIEMA).
The working capital requirement is shooting up 40% and more capital is now required. Emergency Working capital limit provided under ECGLS scheme is fully utilised by MSMEs for coping with this increase in raw material costs. If this trend continues many MSME units will close down very soon leading to job losses. Also booked export orders cannot be shipped for want of raw materials. This will create a negative image about Indian Pumps in the world market.
The Government of India and Various State Government had supported Industries during lock down.
According to K.V.Karthik, President, Southern India Engineering Manufacturers Association(SIEMA), their request to the Government at Centre and in States is to step in and to control the price rise and aid the survival of the Pump Industries. The meeting was chaired by Mr. K.V. Karthik, president, SIEMA.
