High steel prices hit Punjab bicycle makers

Bicycle manufacturers of Punjab have been hit hard by the revision in steel prices. In the past four months, the prices of the common man's bicycles were raised by Rs 200-250 and the current price revision will put more burden on the consumers.

There are about 2,000 cycle manufacturing units in Ludhiana. Around 280 of these are into the export business.

KK Seth of United Cycle Parts Manufacturing said: "Even though the finance minister in his Budget speech has proposed to reduce the excise duty from 16 per cent to 14 per cent, it has failed to address their woes of the bicycle industry, which was already grappling with mounting steel prices."

Steel prices of round steel, which was about Rs 35,000 per metric tonne (PMT) before the budget, has risen to more than Rs 42,000 PMT. Similarly, rates of hot rolled coils has increased from Rs 2,000 PMT to Rs 3,000 PMT after the budget. Also, the rates of sponge iron that was less than Rs 21,000 PMT before the budget have gone up to Rs 24,500 PMT.

With steel prices hitting roof top the bicycle industry is facing serious repercussions of the steel price hike.

With already two hikes made in prices of cycle in the month of Feburary and March, the prices of bicycle are again in for revision as most of the cycle manafacturing are mulling to raise the prices in few days from now.

The Managing Director of Hero Cycles, S K Rai said that since prices of steel have ben steadily increasing from past few months, the bicycle industry has been forced to hike the rates of bicycles that have gone up on an average by Rs 150-200 in last two months.

The spokesman of Avon bicycle, Rahul Parsricha echoed the sentiments and said that the price hike was inevitable due to increase in costs of steel.

The large players like Hero shut down its two units Rockman and Highway, those were making cycleparts for the Hero Cycles. The company is now focusing on the expansion of its autpmotive business as the bicycle business has become less lucrative.

The exporters of Ludhiana would also be effected as they were already facing stiff competition in the global market due to rupee appreciation and cheap Chinese bicycles. The rise in inputs (hot rolled coil) would render them more uncompetitive, said R D Sharma of Indian Bicycle Manufacturing Association.