Industries facing financial crisis due to increase in prices raw material

Industrial associations want relaxation in bank lending rules

Aurangabad, Oct 21:

The closure of markets in the last one and a half years has hit industries hard and has adversely affected the balance sheet. Although the number of orders is satisfactory on the backdrop of the festive season, the rise in prices of raw materials has put many entrepreneurs in a difficult position.

Markets across the country were closed during the corona period. Orders received by the companies were greatly reduced. Thus the production of industries was reduced to 55-60 per cent. Some industries even opted to complete work in one shift. Anchor companies like Bajaj gave two days off and continued production for only five days a week. This affected the balance sheet of several companies. The government relaxed restrictions and opened markets across the country and the state on the backdrop of festive season. Thus the demand for manufactured goods increased. At present, the proportion of orders is 80 to 90 per cent in all companies.

However, mainly small and medium enterprises have been facing economic hardship due to rising raw material prices. These industries have no choice but to borrow from banks, but the banks want the balance sheet for the last three years. If the turnover and balance of these industries is good, then banks are willing to lend at low interest rates. However, entrepreneurs are worried as the balance sheet has collapsed for the last one and a half years due to covid.

Banks should relax the rules

The industries are operating at full capacity. But small and medium enterprises are facing difficulties due to sharp rise in raw material prices of all products. To support them, banks must relax lending rules, said CMIA president Shivprasad Jaju.

Plastic industry worried

Entrepreneur Bharat Rajput said that the price of plastic raw material has gone up by 20 to 45 per cent depending on the grade. The price of raw materials had gone up before, but were eventually reduced. Now the price hike has broken the backbone of the plastics industry. Rising sea freight rates, crude oil prices and rising international charges have left an impact.