Pimpri Chinchwad rubber manufacturers brace for slowdown

PIMPRI CHINCHWAD: Things are not looking too great for the rubber manufacturers in the Pimpri Chinchwad belt as they are grappling with the effects of the economic slowdown, its resultant uncertainty and increasing costs of raw materials and other inputs.
The biggest worry of all has been the decline in production by major automobile giants in the Chakan area, leading to reduced sales and revenue for more than 100 rubber product makers located in PCMC belt. The rubber industry predominantly (around 50 to 60 percent) supplies to the automotive sector in the Pune, though many also have a variety of customers in the textile industry, manufacturing, electronic industry, etc.
The companies are expecting this financial year to continue to be a difficult one, and many are bracing themselves to deal with a revenue dip of 15 and 30 percent. "With the major automobile companies such as Tata Motors, Maruti and others cutting down on production, the companies supplying exclusively to them are facing the heat," said Vinod Patkotwar, CEO of Crown Rubber Products.
"There are no schedules for supply of material, and since tyres and other rubber-related parts are customised as per the requirement of a company, rubber manufacturers are unable to take a decision on production without pre-booked orders," he added. The commercial and passenger vehicles are among the largest consumers for the rubber industry, especially tyres and the segment's growth impacts the industry.
"Sale of passenger cars as well as trucks used for goods transportation has reduced in sales. A majority of players are supplying to this segment. Trucks are in fact the largest consumer of the rubber (tyre) industry. This is a chain reaction, and by now it has trickled down," said Raju Jethmalani, chairman of the All IndiaRubber Industries Association, Pune Chapter.
"Companies like Maruti have stopped producing petrol cars, and this move has been initiated by others as well at various levels. The sale of diesel cars is currently bringing in the profits for automobile sector and sustaining the rubber industry to as well," he added. "The prices of raw material, labour as well as power and other infrastructural cost are at the highest today," said director of the Rubber Industries Pvt Ltd, Milind Joshi, who adds that his company supplies 50 percent products to textile companies, has been also been hit.
"The natural as well as synthetic rubber prices are up, and with the current slowdown, we are unable to do a price revision, by increasing the selling cost as people don't have the budgets to pay the higher rate. The original equipment manufacturers (OEMs) too are not passing on higher input cost to the consumer, and this is putting a pressure on the industry on the whole," he said.
Similarly the global crisis, especially centered in the European countries, and the continual devaluation of the rupee has also added pressure on the rubber industry, which has a stake in both imports of raw material as well as exports to USA and European countries. "The devaluation of rupee against the dollars has hit us badly as a number of parts are imported. The cost of the synthetic rubber has risen by 40 percent in last three years, and there is no means to control this," added Joshi. DT Keswani, president of Auto Steel and Rubber Industries Pvt Ltd, said the European crisis and the slowdown in the US has impacted exports.