Pithampur Industrial area (near Indore), Mandideep and Govindpura Industrial area (near Bhopal) may also see profitability down this year. Various industries associations have said Madhya Pradesh is logistically at disadvantage since it is equidistance from all ports. The state SMEs pay more haulage than those at other states.
"The worst suffers are textile units, which contributes more to Indian exports than other sector units. Only Pithampur industrial area has a combined export of more than Rs 800 crore of yarn, fabric, and readymade garments. The exporters have to route their consignments in factions from Pithampur to Ratlam and then to Mumbai or Gujarat ports.
The transporters have hiked haulage by 10-12 per cent from June 1," Gautam Kothari, president, Pithampur Audyogik Sangathan told Business Standard adding, "The local medium enterprises will feel the direct affect since they are mainly vendors to the large export oriented industries. Indian textile industry is already facing competition world over due to dollar-rupee war."
Mandideep Industrial area, which contributes Rs 2,000 crore to India's export basket, is also suffering for its engineering goods, textile, pharmaceuticals and tyre exports. Raw materials like rubber is now dearer by 16 per cent, copper rods are up by 10 per cent, aluminum by 12-15 per cent and labour cost is also up by 15 per cent.
"Labour issues, poor infrastructure, costly power have already put the SMEs in trouble, the rising price of petrol and diesel have put Mandideep industrial area under strain. Raw material cost like copper and aluminum are now variable and fluctuate like gold prices as a result all electric engineering goods manufacturers are at higher risks.
Today copper rods may be priced at Rs 400 per kg tomorrow they may be slipped at Rs 390 per kg or go as high as Rs 415 per kg, so it has become riskier for us to do business. Those who have recently ventured into business are more prone to closure," DK Jain, president, Mandideep Industrial Association, said adding, "Newly started industries namely Anant Spinning, Abhishek Industries, etc are feeling the heat."
Similarly, drug and engineering goods manufacturers have been slapped increased bills of raw material supply from their vendors even for previous orders.
"Our unit supplies engineering components to Indian Railways, we have yet to meet orders but our vendors have increased rates with effect from June 1. We will have to bear the cost if rates are 10 per cent or more," said CP Sharma, managing director, Daulat Ram Industries Govindura Industrial area. His unit manufactures dynamic break resistors to Indian Railways.
Similarly drug manufacturing SMEs are under tight squeeze. A large number of SMEs also export drugs and formulations to various countries. The hike in petrol prices has increased rates of raw materials and chemicals. Those who are upgrading their units in compliance with the new Central government orders to comply with WTO standards are facing a tight squeeze.
"We have just started trial production in our new unit but rates have been increased by 10-20 per cent. We receive most of the chemicals through courier and they also have increased charges by 7 per cent," a drug manufacturing unit in Govindpura Industrial area said adding, "this may affect on our calculations of repayment of loans also, we will have to be aggressive in market or else we will collapse."
At present there are 51 Textile units in Madhya Pradesh in the large sector. The textile export from MP is around Rs 1,200 Crore ($250 Million approx), Rs 800 crore of automobiles components and Rs 1,000 crore of engineering goods from private and public sector units and more than Rs 500 crore of drug manufacturing and exports. There are more than 3 lakh small and medium scale units in Madhya Pradesh.
