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Most of the manufacturers of Gujarat feel Ukraine’s pain

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Shri Vaibhavi Logistics

AHMEDABAD : Russia’s invasion of Ukraine is fuelling the quickest global inflation breakout in decades, heaping tremendous pressure on trade and industry in Gujarat.

Even as supply chain issues brought on by Covid-19 crisis continue to hamper production, manufacturers and developers are feeling the weight of the economic impact of the conflict due to the increase in oil and gas prices which in turn has raised shipping and logistics costs. This, combined with the shooting prices of raw materials, is adversely affecting production costs. Many sectors are facing cancellation of orders or reduction in fresh order volumes, forcing units to cut down on production or put workers on standby.

Orders for dyes, chemicals take a hit

Gujarat is one of the major exporters of dyes, intermediates, organic and inorganic chemicals to Russia. Soon after the Russia Ukraine conflict escalated, not only did shipments get delayed but fresh orders also began taking a hit.

Bhupendra Patel, Chairman, Gujarat region, Chemexcil said, “Over the past 10 days, orders have stopped coming in, mimicking a recessionary trend. This will have a detrimental impact on the revenues. It will be a double whammy for industry players who are already reeling due to the surge in raw material prices. ”

Over the past week, the price of Indonesian coal has gone up as a fallout of the Russia-Ukraine war. This has added to cost pressures for dyes and chemical manufacturers as coal is widely used to operate the boilers. “The demand in the textile sector has also weakened due to the rise in cotton prices. Due to this, textile processing houses are out of work, and are not placing new orders for dyes and chemicals. ”

Rising production cost results in underutilized engg units

Rising prices of pig iron – an essential raw material for most engineering goods – is becoming a bane for most units, leaving manufacturing capacities underutilized. Pig iron cost went up from Rs 57,820 per tonne in February – up 25%, adding to production costs.
“At present, the production has declined 20% and if inflating prices are not tackled, units may face a shutdown in the coming days. With demand for Indian steel going up amid the Russia Ukraine crisis, prices have dramatically increased. The price of coal, a key raw material to make pig iron, has gone up. Industry players will have no choice but to cut days of operation,” said Brijesh Dudhagara, an engineering goods manufacturer from Rajkot.

Gold prices surge, jewellery units lose work

The price of gold dramatically shot up to an 18-month high to touch Rs 55,000-mark in Gujarat earlier this week. This has left jewellery shops deserted and investors in a frenzy. As a result, jewellery manufacturing units have been left without work, impacting employment.

“Gold price sharply increased from $1,850 (Rs 1. 4 lakh approximately) to $2,070 (Rs 1. 6 lakh approximately) per ounce in the international market. Tracing the rally, the price of the yellow metal in the domestic market went up. While this is preventing jewellers and stockists from investing in gold till the price stabilises, retail counters too are bereft of customers. “As a consequence, a number of jewellery making units are getting no orders. Due to the Holi festival and the lack of work, jewellery artisans have left for their home states and this is impacting revenues,” said Haresh Acharya, Director, India Bullion and Jewellers’ Association (IBJA).

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