Rupee depreciation plagues Jamnagar brass industry
As rupee fell against US dollar, units belonging to the Jamnagar-based brass parts industry have taken a hit on their bottomline yet again. Moreover, rupee depreciation comes at a time when the brass industry is already facing shortage of orders due to global slowdown since last couple of months.
"Rupee depreciation against US dollar has increased our import costs of brass scrape and as result our profits have turned into losses. With this, we have to pay more in rupee terms to buy brass scrape. The rupee-dollar rate was different at the time of deal and at the time of payment the dollar value has changed," said Ramjibhai Patel, president of Jamnagar Factory Owners' Association.
The Indian rupee has surpassed its previous low against the dollar, creating a new low of 54.45 levels. It had went down to a low of Rs 54.30 levels in December 2011, on account of huge demand for dollar. In past one month rupee has declined by Rs 2.98 against US dollar from Rs 51.47.
"Due to slowdown, demand of brass parts across the world has declined. Indian market is also very weak since last 4-5 months. In this condition manufacturers have cut down the production by 50 currently. We are losing about by 10 per cent with each order as price of scrape has increased due to rupee depreciation. We cannot increase or pass on the hiked prices to our customers as orders have been booked at old prices," said Patel.
Jamnagar bras parts industry consumes 300-400 tonnes brass scrape in normal condition but due to lower order it use 200-250 tonnes per day at present.
Manufacturers of brass parts are now running their units for five or six hours a day, as against the average eight-to-nine hours earlier.
There are 5,000 brass-making units in Jamnagar, more than 80 per cent of which are in the small-scale category. The industry's total annual turnover is about Rs 2,500-2,700 crore, and it employs more than 250,000 persons.
The Jamnagar-based industry exports brass parts worth about Rs 300-400 crore to Europe, the US and the Gulf countries every year. But due to the global economic crisis this year, the industry expects exports to be 40-50 per cent lower.