Lockdown-hit forging industry unlikely to utilise 50pc capacity in next 6 months: official

The domestic forging industry, which largely depends on auto and auto-ancillary sectors for business, is unlikely to utilise more than 50 per cent of the total capacity for the next six months owing to the coronavirus pandemic, an industry official said.

The Rs 34,000 crore industry employs three lakh people directly and another 3 lakh indirectly and as much as 50-60 per cent of the workforce consisting of migrants.

The vehicle production declined 14.71 per cent to 26,362,282 units in the last fiscal as compared to 30,914,874 vehicles in FY2019.

However, the forging industry witnessed an estimated 23 per cent fall in the capacity utilisation at 23.50 lakh metric tons as against 30 lakh metric tons in the year-ago period, according to S Muralishankar, President, Association of Indian Forging Industry (AIFI).

At the same time, total capacity stood at 47 lakh tons in 2019-20 as compared to 45 lakh tons in FY2019.

The combined annual revenue of the companies is also estimated to have shrunk almost by a quarter to Rs 34,000 crore as compared to Rs 45,000 crore clocked in the fiscal year ended March 2019.

"Last year (FY20), the industry on average went down by 20-25 per cent in terms of both production and revenue than the previous year. But some of the companies, which are primarily dependent on commercial vehicles, went down by 50 per cent.

"For the current year, most of the forging companies are expected to utilise only 50 per cent of the capacity for the next six months," Muralishankar told PTI.

He said that the industry was not very optimistic even before the commencement of the new fiscal as it was not sure whether ramp up in the wake of BSVI norms form April 1 will happen at a fast or slow pace, adding, "now because of the COVID-19, we will be doing 50 per cent of what we are doing last year."