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Power sector to boost forging industry: AIFI

MRINALINI PRASAD ,  Saturday, October 08, 2011, 11:52 Hrs  [IST]

Deven DoshiAssociation of Indian Forging Industry (AIFI) is expecting around 50 per cent of the business from the non-automotive industry such as power, oil and gas and railways by 2014. Among this, power sector is expected to play lead in business drivers for the forging industry.

AIFI organized a meet on Overall Scenario & Growth Prospects in the Indian Forging Industry in the Capital recently. During the meet, Deven Doshi, President, AIFI mentioned that the demand from the power sector is increasing. Larsen & Toubro is coming up with own forging facility. Similarly, certain other companies such as Suzlon is also investing in own forging facilities to cater to the growing demand from this sector. He mentioned that capacity utilization has been growing considerably and production is expected to reach about 4 million tonnes by 2014. Out of this, 27-28 per cent of the total business is expected to come from the power sector.

Though, there is impressive growth forecast by the association in forging, certain challenges has also been pointed out. The association president mentioned that the cost of energy such as the cost of power and cost of natural gas has increased tremendously. He added that it is not possible for the forging industry to absorb such a high increase in energy costs and the government should look at alternate subsidies or reduce taxes to bring down prices of industrial fuel products.

Untitled - 2Further, Doshi mentioned that the cost of steel has also gone up significantly, and that has been hampering the industry growth. He said that the rise in price of Indian steel is not in tune with the world steel prices. Internationally, and especially in China, the prices have not gone up by this level. The forging industry has been constantly plagued by margin shrinkage due to arbitrary, frequent and unilateral price increases by the steel industry. The 'out of sync' price escalations of fuel and forging quality steel could result in a drop in domestic demand as well as greatly reduced international orders.

The overall production of forgings increased to about 2.3 million tonnes in the current year from 1.8 million tonnes in 2009-10, registering a strong growth of about 35 per cent.
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