Interview

India: Forging the future

| Author / Editor: Kruti Bharadva, Vogel Business Media India / Susanne Hertenberger

Vice President, Association of Indian Forging industry, Muralishanker Sambasivam
Vice President, Association of Indian Forging industry, Muralishanker Sambasivam (Bild: Vogel Business Media India Pvt Ltd)

Vice President, Association of Indian Forging Industry, Muralishanker Sambasivam speaks on the Indian forging industry and its growth path. Excerpts of the conversation follow.

Please shed some light on the current market scenario of the Indian forging industry. How has the industry progressed in the background of the government’s ‘Make in India’ initiative?

The Indian forging industry is one of the key players in the auto component manufacturing sector and a major contributor to the government’s ‘Make in India’ initiative. Currently, the industry caters to the automotive, solar, aerospace, railways and wind sectors as well as plays a key role in contributing to the forex by way of huge exports.

As per the survey conducted by the Association of Indian Forging Industry (AIFI) in 2016, the estimated turnover of the 384 forging units operating in FY 2014–15 was Rs 27,835 crore including Rs 6,100 crore contributed from exports. Overall production of forgings increased from 21.1 lakh MT to 22.5 lakh MT in 2014–15 and the production figure for the period 2015–18 is expected to grow at CAGR of 9.5 per cent.

With an installed capacity of around 37.6 lakh MT, the Indian forging industry has the capability to forge a variety of raw materials such as carbon steel, alloy steel, stainless steel, super alloy, titanium, copper, brass and aluminum. The overall capacity utilization of the industry has also improved in FY 2014–15, it stood at around 60 per cent against 55 per cent in FY 2013–14. The rise in capacity utilization is mainly supported by the increase in demand from the automotive and auto component industry while decline in infrastructure-related capex, sluggish Index of Industrial Production (IIP) number throughout FY 2014–15 witnessed a stagnant forging demand from the industrial sector. The commercial vehicles segment has grown appreciably in the last financial year.

The ‘Make in India’ initiative has definitely been a good move in the right direction to give the necessary boost to the overall manufacturing sector. It has created an all-round positive business environment and sentiment.

Which are the non-auto sectors that the industry is focusing on to increase its business opportunities?

In the non-auto space, the sunrise sectors for forgings in the near future are defense, aerospace and railway procurement. With various state governments planning to introduce metro rail in major cities, there will be a huge requirement for forging from that sector also. The Indian Government emphasis on defense and aerospace equipment as part of the ‘Make in India’ campaign to encourage manufacturing and attract foreign investments has led many companies to seek licenses to make defense and aerospace equipment locally. Most of the multi-national tier 1 and OEM’s have set up IPO (International Purchasing Offices) in India and have planned high targets for procurement of auto components and sub-assemblies.

What are the challenges faced by the Indian forging industry? And how can they be overcome?

Inadequate support from the government, lack of modern equipment among companies, shortage of skilled and un-skilled labour, inadequate supply of power and increasing power price are some of the challenges.

Another major challenge faced by the industry is non-competitive steel pricing. The global slowdown has roiled commodity markets and lowered steel prices to more-than-a-decade-low level in the last 18 months. Prices of major input materials such as steel scrap, coke, iron ore etc, have dropped by more than 30 per cent globally over a year. Internationally prices for plain carbon steel used for the forging industry has come down to as low as $390 – 450 per ton. Consequently, steel mills across the globe have adjusted their selling prices. It is not only China that is offering competitive prices but also Korea, Japan followed by others. While on the other hand, the Indian steel prices have not been reduced to that extent which is making manufacturing of forging and export to global destinations unviable for domestic companies.

There is a need for rationality and pricing stability in the market for domestic companies to compete fairly and generate profits.

We have raised our concerns to the government in order to take suitable measures to provide a more competitive and level playing ground to the domestic players. We are confident of the government’s vision and commitment to the country’s growth and are hopeful it will do what it takes to change the course of the nation for the better.

Thank you for the interview.

copyright

This article is protected by copyright. You want to use it for your own purpose? Infos can be found under www.mycontentfactory.de (ID: 44278251 / India)