Rising oil prices hit Kanpur soap makers
Rising crude oil prices in the international market have started adversely affecting detergent and soap manufacturers of Kanpur.
The prices of almost all brands of detergents manufactured in the city have soared in the past two months. The worst victims are the small and medium manufacturing units, more than 40 in number.
About 60 per cent of small units (which produce less than 5 kg of detergent everyday) have stopped production. The city has more than 50 detergent-manufacturing units, producing more than 1.5 tonnes of detergent powder and cakes every month. They supply their products to all parts of the country.
Dileep Bajaj, marketing manager of Sagar Detergents Private Ltd, told Business Standard the primary ingredients in detergent manufacturing had registered an increase of up to 60 per cent in the past four months. The raw material, which is brought from Gujarat and Rajasthan, has seen an increase in expenditure due to inflated cost of production and transportation.
The key detergent ingredients — soda ash and linear alkyl benzene (LAB) — have witnessed notable increase in production cost. Soda ash prices spiked sharply during the past one month due to the Gujjar agitation, which prevented a sufficient supply of dolomite and acid slurry. The prices have subsided since then, but are still about 40 per cent higher than the normal rate.
The manufacturers are consequently forced to increase prices or decrease production. “We have to reduce the packaging weight to recover the enhanced production costs because the customer is not ready to pay increased prices, especially when big firms are maintaining the prices at the previous rate,” says Bajaj.
Detergent manufacturer Ashutosh Pandey says the price of acid slurry, which was available at Rs 8 lakh per tanker, has shot up to Rs 14-19 lakh per tanker. An acid slurry supplier said the product was made of LAB, which is being exported by the government, resulting in inadequate supply in the domestic market.
LAB is in demand in the international market and fetches higher prices than in the domestic market. Hence the producers prefer to export the product rather than sell it in the country. The main manufacturers of slurry are Indian Oil Corporation, Reliance Industries, Nirma and TPL. Small retailers and distributors are desisting from taking new orders due to decrease in demand.