Though orders were expected to revive after the festival season this year, the pumpset manufacturers here continue to face sluggish demand. Further, cost of the production has increased and hence, the units are losing their competitiveness.
Since April, most of the pumpset units in Coimbatore have seen nearly 30 per cent drop in business, say some of the manufacturers. There are several reasons for the drop in demand.
Power cut in the State for the last four years has resulted in higher production cost.
The basic raw material for the pumpset units is castings. The cost of grey iron castings in Coimbatore is Rs. 62 a kg.
However, foundries in Agra quote only Rs. 48 a kg. Pumpset manufacturers in Ahmedabad will be able to buy the castings from Agra and incur totally (including transport cost) just Rs. 52 a kg.
So, the units in Coimbatore are unable to offer competitive prices. During the recent months, a couple of large-scale pumpset manufacturers here have started sourcing end products from the north and selling it under their brand.
Pumpsets from Coimbatore used to constitute more than 60 per cent of the market earlier. Now, it is just about 50 per cent. “This is a disturbing trend and we need to arrest it,” the manufacturers say.
A recent Value Added Tax (VAT) amendment by the State Government has added to the problems of the units. From November, the VAT benefit has been nullified for units that source the components from the local dealers and sell the end products in other States. Thus, the cost of pumpsets will go up by three per cent.
This move will only result in lose of revenue for the State Government as, in the long-run, the manufacturers will buy the components directly from the supplying units in other States under the Central Sales Tax, the manufacturers say.
The units here are known for the quality of the products. The Bureau of Energy Efficiency introduced energy efficiency rating for pumpsets six years ago and the manufacturers here incur a huge cost for testing and getting the label.
Efforts should be taken to ensure that all the energy-efficient products meet the standards and have the BEE label, the manufacturers said.