Unmanageable to run SMEs due to shortage of raw material
VAIBHAV PARWAT
Aurangabad, April 5:
The Russia and Ukraine war and fuel hike has had a major impact on the city’s industrial sector. Due to the sharp rise in raw material prices in the last one month, the small scale entrepreneurs here have so far suffered a loss of Rs 200 crore. The industry expressed fear that SMEs might close down business if the situation persists.
Due to the war, the price of various raw materials has jumped massively. There is a hike of 30 to 40 per cent in prices of raw metals and alloys. Hence it is becoming unmanageable for many SMEs and large industries to make profits. The vendors supplying parts to automobile and electrical industries are specially facing the heat as they are forced to purchase raw material at increased prices, while the companies are not ready to pay accordingly.
Aurangabad has more than 2000 small scale industries. These SMEs were slowly recovering as the restrictions eased. But the ongoing crisis has again pushed the industries into financial crisis. In this regard, Massia president Narayan Pawar said, the prices of raw materials have been rising for the last two months. The war has exacerbated the rates of raw metals and alloys. On the one hand, the profits do not increase. However, the manufacturing costs are rising every day. Even the cost of transportation is becoming unaffordable. The profit margins have reduced. Many SME industrialists are closing down the business and looking for new ventures.
Companies not ready to pay
Entrepreneur Pramod Rane, owner of an ancillary unit said, although the prices of imported raw materials have gone up by 30-40 per cent due to the war and fuel hike, the companies are not ready to pay accordingly. This is causing huge financial losses. Many SMEs are thinking of shutting down the business and waiting for the situation to get normalized.
What are the prices
Before the war, the price of iron was Rs 65 per kg, now it has gone to beyond Rs 85. Stainless steel has been hiked from Rs 200 to Rs 300 per kg, Aluminium from Rs 220 to Rs 320 and copper from Rs 750 to Rs 900.