Plastic products and engineering parts manufacturers are finding it difficult to procure the raw materials required for production in the wake of a 30-35 per cent hike in prices.
Shiva Polyplast Private Ltd, a company which manufactures and sells household plastic products for both domestic and international markets, is experiencing a sudden drop in sales.
According to local traders and retailers, market demand has dropped by 20-25 per cent compared to around this time last year.
Company Director Satya Prakash Gupta says: "We have been forced to raise our product prices by 15-20 per cent due to sudden increase in raw material costs. Plastic was available at Rs 80 a kg but now it has crossed Rs 110."
Poly Propylene, used as raw material, was available at Rs 78 a kg two months ago, but now its price has crossed Rs 107 per kg.
The main reason for this rise has been the climb in crude oil prices in the international market. Due to the crude oil price reaching $139 a barrel, naphtha price rose to a record $1,087 a tonne last month. In the last Budget, the finance minister also imposed 5 per cent customs duty on naphtha, further raising costs.
Gupta says the naphtha used in plastic is obtained from crude oil and the main supplier company, Reliance Industries, has reduced the supply recently.
"Hundreds of small, domestic plastic processors are facing financial crisis because of the erratic supply of raw materials by primary producers and abnormal price increase -- either we will have to pass on the increase to customers or face closure," Gupta added.
Another plastic manufacturer, Rakesh Gupta, told Business Standard the appreciation of the dollar had a host of adverse consequences. "The depreciated rupee has made import costlier, and plastic manufacturers basically depend on import," he said.
A manufacturer of plastic engineering goods, Sunil Vaishya, said the high-grade plastic used for making engineering parts had become costlier by 25-30 per cent. Kanpur has more than 100 small and medium plastic-manufacturing units spread over industrial areas like Panki and Fazalganj.
