After slowdown, Indian forging industry hopes for revival

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  1. AVERAGE INDIAN

    AVERAGE INDIAN EXORCIST Senior Member

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    Indian forging industry is hoping for a revival in demand over the next two years after a prolonged slowdown in the market. The industry is expecting sales to increase by 8-10 per cent for FY15.

    Demand from exports and diversification into sectors such as oil & gas, defence and railways will drive sales said the Association of Indian Forging Industry’s (AIFI) annual report. Currently, the commercial vehicle segment is the highest contributor, (around 70 per cent) in terms of revenues for the Indian forging industry, followed by tractor and multipurpose vehicles.

    “After a prolonged slump in the market, we expect demand for forging sales to increase by 8-10 per cent this financial year 2015. After seeing the green shoots, the demand for forging has picked up and by and large have stabilised, especially in the important commercial vehicle segment, which was adversely hit last year”, said Asheet Pasricha, president, Association of Indian Forging Industry.

    The major forging clusters in India are Maharashtra, Punjab, Gujarat, Tamil Nadu, Haryana, Delhi, Karnataka, Jharkhand, West Bengal and Andhra Pradesh having 419 forging entities.

    The western region accounts for 40 per cent of the production with 159 units, followed by the North with 36 per cent production and 157 units. The Southern region has 81 units with 16 per cent production while the Eastern region has 22 units and accounts for eight per cent of the installed capacity.

    The AIFI, the umbrella organisation has more than 250 members with 500 forging units spread across India.

    “The estimated turnover of the Indian forging industry fell almost by 10 per cent at Rs 18,500 crore in financial year 2014 from Rs 20,200 crore in the previous year with an overall capacity utilisation of around 57 per cent. Automobile sector accounts for 70 per cent of the forgings sales in the country. But in future it will come down to 55 per cent. Also, the revival of the mining sector in Orissa, Goa, Karnataka, and Andra Pradesh would immensely benefit the forging industry,” Pasricha added.

    The sector is also trying to reduce its dependency on the auto sector. Pune based forging giant, Bharat Forge (BFL) is also investing significantly in creating new capacities for non-automotive sector across globe for new business development.

    To reduce the impact of cyclicality, the company is aiming business verticals such as passenger vehicles, commercial vehicles and industrial across North America, Europe and Asia.

    BFL’s presence across these segments will largely insulate it from the cyclicality in the automotive sector.

    According to Report, during the year 2012-13, the installed capacity of forging entities that participated in the survey was estimated to be around 3.7 million tonnes.

    The total production of the said entities during FY 2012-13 was about 2.1 million tonnes.

    These entities themselves provide direct and indirect employment to around 93,400 people in the country.

    The capacity utilization of these entities decreased from the earlier 65 per cent in FY 2011-12 to 57 per cent in FY 2012-13 due to the decline in demand from the automotive industry which accounts for 61 per cent of total production of 21.12 lakh tonnes.

    The major forging companies in India are Bharat Forge, Mahindra Forgings, Western India, MM Forgings, Amteck-Ahmednagar Forgings, GNA Axle and Echjay Industries.

    After slowdown, Indian forging industry hopes for revival | Business Standard
     
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