The recent devaluation of the rupee against US dollar has taken its toll on India’s largest brass parts market in Jamnagar. During June alone the industry has witnessed a 25-30% loss in new business as it is dependent on imported brass scrap. Moreover, production cost of the pending orders has also gone up which has added to the manufacturers’ woes.
“We are fully dependent on import of brass scrap and any movement in rupee value affects us directly. This time it is more than normal as booking for new orders have decreased by 25-30% in last one month. If rupee value will not recover against international currencies, the brass parts manufacturers may face more tough times in coming days,” said Bharat Dodhiya, secretary of Jamnagar Factory Owners Association (JFOA).
The Indian rupee has fallen to Rs 69 from RS 65 against the dollar in past few months. High import costs have increased landing cost of brass scrap by rs 15-20 per kg and this in turn has increased the costs of production. During June, brass scrap prices have gone up from Rs 335 to Rs 355 per kg.
In present scenario, it has become difficult for brass parts manufacturers to execute pending orders as prices of raw materials have risen. It is feared that this will translate into loss in profit or loss for manufacturers.
Lakhabhai Keshwal, president of JFOA said, “It is not easy for us to finish pending orders at this cost. In our industry, profit margins are just about 2-5%. On the other hand, we can not impose price hike on pending orders. If rupee does not stabilise against international currencies, it will become difficult for small units to survive.”
This is not first time that the industry is facing such difficult situation. JFOA had earlier too requested Union government for some safeguards against Indian currency devaluation.
Jamnagar is home to over 5,000 small and medium brass units and 90% of them are small units. The industry account for 80% of the brass produced in India. Annual turnover of the industry is about `4,000 crore and it is providing direct and indirect employment to nearly 2.5 lakh people. Jamnagar brass parts industry consumes over 1 lakh tonne of brass every year.