IN - Foundries hit by low demand

For the foundry industry, multiple challenges have crippled volume growth this year and in value terms too, the growth is minimum.

Lesedauer: min

Nithyanandan Devaraaj, chairman of the Policy Advocy Committee of the Indian Foundry Association, said the average capacity utilisation in the foundries this year (2023) was expected to be 60% -70%. “Overall, the Indian foundry industry may not see growth in volume terms in 2023. In value terms, it is expected to be 2% to 3%. Next year can see about 4% growth in volume, though it will depend on the general election outcome.”

While capacity utilisation goes up to 80% in foundries that have backward integration, it is only 50% in the small and micro foundries. Foundries catering to the domestic market are doing relatively better than those that export.

For majority of the sectors, the quarterly demand contracted in the main global markets. The auto sector continued to be prime driver of demand for castings. However, due to over production and high stock levels at dealer points, demand contraction had affected capacity utilisation. Demand had either reduced or stabilised in sectors such as food, agriculture, mining, and material handling, he said.

In the case of small and micro foundries in Coimbatore region, one of the main hubs for foundries, fluctuation in raw material prices and low demand for pumps made in Coimbatore had impacted production.

According to the Coimbatore Tiny and Small Foundry Owners Association (Cosmafan) president Shiva Shanmughakumar, the pumps made in Gujarat are 10% - 15% cheaper than those made in Coimbatore. The small foundries in Coimbatore have cupola furnace and cater to the pump sector. The drop in demand for pumps made here has affected the foundries. “We need ₹50 lakh to set up a small foundry and about ₹3 crore to scale up to the next level. The small foundries do not have funds to scale up,” he said. Foundries do not want to take the risk and invest further.

Demand was especially low for the last one month, he said.