Foundries hit hard by slowdown, see closure

Power cuts, weakening demand and working capital shortage have led almost 20-25 per cent of India’s small foundries to contemplate closure, even as medium- and large-size factories have cut their output by up to 50 per cent.

In spite of this, the industry has not lost any trained manpower as it was already facing a shortage of skilled workers from early this year. However, if the current trend continues for the next 3-4 months, the sector would also begin lay-offs, said an industry official.

The crisis has led to the number of foundry units dwindling to just 3,000 with an average installed capacity of below 200 tonnes a month. According to an estimate, about 70 per cent of the small and medium-size units contribute about 30 per cent of the total foundry output, while 30 per cent of the large and technologically-upgraded units provide 70 per cent of the output.

Units with a capacity of 200 tonnes a month are categorised as tiny foundries. Large units are those with a capacity of over 3,000 tonnes a month. There are only 35-40 such large units in the country.

A majority of players have announced cut in working hours while others have extended voluntary leave to their employees with and without pay-cuts.

Leading the pack, one of the largest manufacturers and exporters of castings, Hinduja Foundries, has announced that its Hyderabad unit will work five days a week instead of six, to cope with falling demand and inventory pile-up. It has also announced that its Ennore and Sriperumbudur units will observe continuous production holidays for five days in addition to normal weekly holidays. These measures are expected to continue till demand for castings revives, company sources said.
 

DEEP WATER

* Power cuts, weakening demand and working capital shortage have led almost 20-25 per cent of India’s small foundries to contemplate closure

* The crisis has led to the number of foundry units dwindling down to just 3,000 with an average installed capacity of below 200 tonnes a month

“This is the scenario not only in Hinduja Foundries but many tiny and mid-size units in southern India are facing production cuts and closures,” said C Nagrajan, chairman of Indian Institution of Foundrymen (Southern Region).

The governments of Tamil Nadu, Karnataka and Andhra Pradesh proposed a power cut of 10 hours for industrial units on Wednesday. These governments have also advised foundry manufacturers to observe a week’s leave every month to save power. Therefore, clusters of tiny foundry units have been shut off, especially in southern India. Apparently, foundry units that manufacture auto components and supply to original equipment manufacturers (OEMs) have been hit badly.

For example, Ashok Leyland has announced a three-day week which has affected the auto component manufacturing foundries severely.