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12. January 2015

IN - Floundering foundries

IN - Floundering foundries

The problem began about six years ago when the units in Coimbatore started facing long hours of power cuts

Coimbatore district, a major foundry cluster, had over 20 per cent of the installed casting production capacity in the country a decade ago.

The situation has changed now. The share of foundries here has come down to 14 per cent of the country’s installed capacity. And the units are struggling to remain competitive as buyers are going to other clusters.

The problem began about six years ago when industries here started facing long hours of power cuts. Buyers thought Coimbatore was not a reliable source and shifted orders to other centres such as Belgaum, Rajkot, Kolhapur and Jalandar.

Though the power situation is better now, high-tension industries continue to face 20 per cent power cut and power costs are going up. Since foundries are power-intensive, they cannot use generator sets to operate the furnace.

The average cost of grey iron casting at Rajkot, another major foundry hub in the country, is Rs. 48 to Rs. 54 a kg as against Rs. 58 to Rs. 64 in Tamil Nadu. In the last four or five years, the foundries here have lost six per cent to seven per cent market share to other States and the it is going down further, says Jayakumar Ramdass, chairman of the Coimbatore Chapter of the Institute of Indian Foundrymen.

Another major issue that these units face is the cost of compliance. Pollution control norms are stringent in the State, say industry sources. Foundries cannot dump the used sand in a quarry. Sand reclamation plants are expensive, they point out.

The government can support the foundries by setting up a sand reclamation plant or permit the units to dump the sand in an abandoned quarry. Sand availability is also a problem, say foundry owners. There are some large-scale foundries that are importing sand.

While about 100 foundries are for captive use, most of the others are tier-2 and tier-3 suppliers and hence face pressure on costs. If the power costs keep going up, foundries have no option but to relocate.

K. Ilango, chairman of Confederation of Indian Industry, Coimbatore, says the problems that the foundries started facing during the last few years have affected the efficiency. In the last four or five years, there are about 10 highly modernised foundries that were commissioned here at an investment of Rs. 20 crore to Rs. 40 crore each. Many of these are struggling now and are operating at just 50 per cent capacity.

“We do not expect incentives or sops. But there should be ease of doing business,” he says. And the foundries should also get into value-added products and niche areas, he emphasises.

Source: TheHindu.com

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