With domestic and global industry on a downslide many forging units are facing a closure. Many are working at less than 30% capacity utilization. Association of Indian Forging Industry (AIFI) an apex organization for forging manufacturer in India, maintains that it is because of the lack of orders (OEMs/ Tire I manufacturers ) due to an auto sector slowdown.

Forging Industry is asking for reduction in steel prices up to 30%, cut in interest rates to single digit. Besides this, it also want to increase in DEPB rates to make Indian product more competitive in the global market. Ranbir Singh, Chairman, Northern Region, Association of Indian Forging Industry (AIFI), who is also President and CEO of GNA Axles Limited, says, “About 70% of forging industry production goes to the auto sector at present. The Northern Region alone is largely dependent on automobile, tractors, hand tools and exports etc.”

As most of the plants in the organized sector are working only 2-3 days a week too at a capacity utilization of 30% to 40%, the actual productive hours work out to even lesser. This has led to a mass scale lay offs and mounting job losses as the forging industry mainly consist of SMEs and hand tools units. Infact the tiny sector the capacity to sustain in such crisis situations is minimal. Hence many have closed down the forging industry also outsources some process to the tiny sector, who employ to large numbers, their survival too is as stake.

To add to this, industry mavens opine that there is a pileup of raw material inventory (Steel) purchased at exorbitant prices to meet the schedules already taken up / committed to the customers (OEMs and Tier I manufacturers) to keep their units running.     

Published in Financial Express dt.13.12.2008