The trend is so significant that it prompted Tata Motors chairman Ratan Tata to accept that there continue to be pressures on margins arising from rising prices of raw materials like steel, non-ferrous metals, rubber and engineering plastics. Among the 600-odd companies surveyed, raw material cost as a percentage of total costs shot up for 343 companies in 2006-07 compared with 2005-06, while it came down for 257 companies.
The companies that witnessed significant rise in raw material costs were Bhushan Steel (85.61% in FY06 to 91.14% in FY07), JK Tyre & Industries (70.88% to 76.74%), Asian Paints (67.53% to 71.38%) and Tata Motors (78.58% to 79.71%).
However, there were companies that managed their costs better. Jindal Saw (87.02% to 78.74%), Hindustan Unilever (46.79% to 45.74%), Cipla (65.30% to 61.62%) and SAIL (51.94% to 49.25%) were the prominent ones witnessing a fall in raw material cost as a percentage of total costs.
In aggregate terms, expenditure of the companies surveyed saw raw material expenses increase by 28.5% to Rs 7,25,030 crore during FY07 from Rs 5,64,352 crore during FY06.