Foundry industry in Rajkot hits road block

Ban on mining in Bellary halts supplies of iron ore — a key input.

A ban on mining activities in Karnataka’s Bellary district is taking a toll of Rajkot-based foundry units, as the availability of iron ore, a key input for the industry, has become a major concern in recent days.

Rajkot, an engineering and automobile ancillary industry cluster, has about 450-500 foundry units with a total turnover of about Rs 1,500 crore per annum.

Bellary is the main source of iron ore for Rajkot’s foundry industry. More than 80 per cent of its iron ore requirement is sourced from Karnataka. But soon after the Supreme Court ordered the suspension of mining and transportation of iron ore from Bellary, the supply of iron ore has come to a standstill.

Iron ore and pig iron are the two main raw materials for the foundry industry. Moreover, the price of pig iron has increased by about 20 per cent, from Rs 30 to Rs 36 per kg in recent weeks.

Industry insiders feel that after a number of large automobile players announced their plans to set up manufacturing facilities in Gujarat, the future seemed promising for the foundry industry. But the shortage of iron ore and rising input prices of chemicals and kerosene have started hurting these units.

“The foundry industry of Rajkot is not in good shape in the wake of issues relating to raw materials and prices,” said Brijesh Dudhagara, director of the Rajkot Engineering Association (REA).

“Almost 30 per cent of the operations have been down since August. Most of the foundry units have reduced their working hours,” added Dudhagara, who is also the former president of the Rajkot chapter of the Institute of Indian Foundrymen (IIF).

Meanwhile, a slowdown in the automobile sector is also affecting the industry. “Not only is raw material availability a problem, but a slowdown in the auto sector in the past few months is also affecting the foundry industry. Orders have declined by 20-25 per cent during this time,” said Maganbhai Antala, managing director of Parag Casting Company.

Unstable raw material prices are also hurting the foundry industry’s profit margins.

“The price of raw materials rises but our buyers are not ready to pay higher prices. Most of the on-going orders are at the older price. At present, we are doing business with no profit and no loss,” said Dudhagara.

The industry is now looking for alternate sources of iron ore.

“NMDC is an option with us but it might be difficult to get the required material from them as well, because NMDC may prefer to serve their existing clients first. Meanwhile, the other option is Orissa, but it will be costlier to source iron ore from there due to the high transportation cost, which small players cannot afford,” said Antala.

With Tata Motors having set up its Nano car plant in Gujarat and companies such as Maruti Suzuki, Ford and Peugeot also having announced their plants for Gujarat, Rajkot’s auto components industry is growing rapidly and the foundry industry too has benefited.

According to industry sources, in the past two years, about 100 new foundry units have started operations in Rajkot and existing players have started expanding. But now the situation has changed, as iron ore supplies have almost halted.