Small-scale units face grim situation

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Scrapping through: Increasing prices of scrap metal, furnace oil and wages have forced this aluminium-based unit in Pudukottai to introduce single shift schedule.
Scrapping through: Increasing prices of scrap metal, furnace oil and wages have forced this aluminium-based unit in Pudukottai to introduce single shift schedule.

A number of units at the Small Industries Development Corporation (SIDCO) estate on the outskirts of the town have been facing a grim situation in the wake of rising inflation, hike in the prices of raw materials, heavy expenditure on transport following the steep rise in the prices of diesel and above all a serious rise in the wages of labourers.

Unable to meet the escalation in capital investment, several industries have introduced a single-shift system in the past few months, to balance the downturn in the trade.

A group of industrialists in aluminium-related units, for instance, point out that the rise in the cost of furnace oil, scrap metal, transportation charges for marketing the finished products have all left them in cross-roads.

A senior small-scale industrialist, N. Narayanan (64), running the Prince Aluminium Industry, who procures scrap-aluminium for preparing aluminium-circles, points out that the leap in the cost of furnace oil from Rs.4,800 to Rs.8,800 has come as a severe blow to his unit. He used to purchase 36 barrels for running the unit on two-shifts daily in the past. The per tonne price of scrap aluminium had shot up from Rs.70,000 to Rs.1,17,000. The monthly wages per labourer has registered a increase from Rs.5,000 to Rs.6,000.

“Wages apart, I prepare and provide lunch to all the eight labourers,” he says, indicating the rise in the prices of essential commodities.

Finding it too hard to invest on the capital, he had introduced single-shift schedule in his unit, against the double-shift system. “The profit margin has reduced from Rs.30,000 to Rs.10,000 now,” he says. The monthly productivity has registered a dip from the previous 16 tonnes to eight tonnes.

S. Sivagami, proprietor of Muthal Metal Works and Rama. Mahalingam from Alamelu Metal, who have been making aluminium utensils, point out that several skilled workers have migrated to Kerala in the wake of higher wages. Being a small-scale industry adopting conventional techniques, the units manufacturing aluminium utensils at the SIDCO estate, could not afford higher wages. “The daily wages for the labourers have doubled from the previous Rs.100 to Rs.200,” they said.

Ms. Sivagami says that the hike in the price of grease, an essential material for her unit, from Rs.60 to Rs.90 a kg had caused yet another financial burden for her. Her average net monthly profit has come down to about Rs.8,000 from the previous Rs.12,000.

“All these have gone to poor repayment of the loans taken by us,” says Mr. Mahalingam, who had stocked about 2.5 tonnes of aluminium utensils worth about Rs.Five lakh. “To run the industry, I had availed myself of the bank loan against the stock,” he says.

Another industrialist in tyre rethreading, A. Hemachandran, points out that sudden rise in the international prices of rubber affects his industry. Citing a specific instance, he explains that he incurred a huge loss of Rs.25,000 in a single day due to sudden spurt in the prices of rubber. Being a small industry, he could not invest on adequate stock of the raw material of rubber needed for him. Added to the woes was the power holiday for the estate on Thursdays. Reluctance on the part of labourers to turn up for duty on Sundays has been additional loss for the small scale industrial units.

Mr. Hemachandran feels that special concessions should be introduced for achieving industrial development in the district. The State Government should come out with a package of concessions for giving a fillip to industrial growth. Otherwise, the industries would be doomed in the present-day inflation.




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