Production in industries set to touch pre-Covid levels but spike in raw material prices hits profits

With increased vaccination and waning of the pandemic, most units have started reporting near-normal production and employment.

For the first time since the Covid-19 pandemic set in last year, industries in Pune have touched 90 per cent of their pre-Covid production level. The small and medium scale industries have, however, complained about extraordinary high prices of raw material and fuel that, they say, are eating into their profits.

Since the start of the pandemic in March 2020, the small and medium scale industries in the district have faced severe disruption, both in terms of operations and availability of man power. During the first lockdown last year, labour was a major problem with migrants moving back home in huge numbers. The sector had a relatively easier time during the second lockdown when it was allowed relaxations. And now with increased vaccination and waning of the pandemic, most units have started reporting near-normal production and employment.

Sandeep Belsare, president of the Pimpri-Chinchwad Small Scale Industries Association, said most of the 15,000 units in the area are now working double shifts, thanks to “good order book”. The units, which are dependent on the automobile industry, have been affected by the ongoing global shortage of semiconductor chips, he added. “But, overall the situation is much better than last year,” he said. Units involved in project management have fared better as compared to others with the festive season bringing in good business, he said.

Belare’s views find resonance with the 19th survey of industrial activities conducted by the Mahratta Chamber of Commerce, Industries and Agriculture (MCCIA) recently. Of the over 150 units surveyed, 43 per cent have reported pre-Covid levels of production. Only 5 per cent of the respondents talked about requiring more than six months to reaching pre-Covid level of business. The rest have estimated that their production would reach the pre-Covid level within 6 months. Overall, 91 per cent of labour force has returned to work, the survey revealed.

However, for the industries, increased work has not resulted in any windfall gains with escalation in raw material and fuel prices eating into their profits. Belsare said that in many cases, industries have asked for re-working of the contracts, given the increase in prices. “But in most cases, industries are reluctant to do the same,” he said.

Steel, one of the most important raw material, is now priced at Rs 80/kg as against the earlier Rs 30/kg. “If this condition goes on, it will become difficult to do business,” Belsare said.

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