Pune: Raw material price eating into profits, automobile SMEs cut down on work

For SMEs, the abnormal increase in the price of raw materials and the shortage of semiconductor chips had become a major challenge during the peak of Covid-19 even as their pipeline remained full. Even after recovery, a four-fold increase in the price of steel and iron has eaten into their profits with many of them preferring to cut work to lower this loss.

Belsare said that a slight glimmer of hope as of now is that steel prices have corrected slightly from Rs 80/kg to Rs 73/kg. In March and April, during festivals like Gudi Padwa and Akshay Tritiya, the brisk automobile sales were a boon for the SMEs linked to the sector. “However we are now keeping a close watch on the work orders for May onwards when there are no such occasions,” he said. The Pimpri-Chinchwad area has over 11,000 SMEs employing 4-5 lakh people.

The units, Belsare said, are now working at 75 per cent of their capacity. Though units associated with engineering goods are working at full capacity, those in the automobile sector are working around 75 per cent of their capacity, Belsare said. Across the globe, most automotive giants have complained of semiconductor shortages which have affected their productions. Also, the increase in raw material prices have forced many to appreciate their prices.

Units in the area, Belsare said, are now providing around 3-4 hours of overtime to their workers. Most automobile-related SMEs hope for an end to the semiconductor crisis which would help them to work in full capacity soon.