India Inc faces commodity rally challenge to manage costs

Both large and mid-sized companies are working to mitigate commodity price risks

The rally in commodity prices is about to complete two years and there are indications that prices will either consolidate or reach higher levels. However, the rising commodity prices have posed a challenge for companies, especially consumer firms, which have to manage raw material costs.

In the past two years, prices of most commodities are up between 30 and 100 per cent, and many companies are now working on active price management and hedging raw materials to protect both costs and margins. Companies are trying to pass on the price increase in raw materials to customers and/or hedging commodity prices, either