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Monday, May 25, 1998

Pig iron price hike to hit foundries hard 

Baren Bhattacharya  
May 24: Following the footsteps of Indian Iron and Steel Company (Iisco), all major pig iron producers in the eastern region have increased their pig iron prices used by foundries to Rs 200 per tonne with effect from April 6, 1998.

Durgapur and Bokaro units of the Steel Authority of India were the sole exceptions.

Major pig iron manufacturers in this region are Tata Metalik, Kajaria Iron Castings Ltd, Durgapur, Kalinga Iron Works Ltd, Orissa.

In actual terms, this increase would stand at Rs 240 per tonne after calculating central excise duty at the rate of 15 per cent and sales tax in West Bengal at 3 per cent, said a foundry owner in Howrah requesting anonymity.

He further said Indian Iron and Steel Company or the other manufacturers have not yet explained any reason so far for this price hike which apparently is very nominal. This constitutes little below 4 per cent on the existing average rate of 7000 per tonne.

But what is worrying industry is that an extra burden of Rs 2.16 crore has to beborne by it, taking the total consumption of pig iron by the local industry to 9 lakh tonnes per annum, the foundry owner said. This amount can no way be passed over to the buyers of foundry products, the cast iron blanks, since the market is already reeling under recession in demand.

In the last general meeting of Indian Foundry Association held in February this year, it was stated that production of the foundries located in Howrah and Calcutta has gone down 50 per cent over the last 20 years due to a fall in demand coupled with closure of industrial units for environment pollution and power crisis.

Foundries were not very worried over Issco's price hike. Unlike other companies, Iisco has offered a rebate to the tune of Rs 150 per tonne on lifting of 4-5 rakes at a time. Though it is difficult to lift such a big quantity at a time by a single foundry unit, the units used to move through the Indian Foundry Association to procure the quantity fixed for rebate and then distribute among the members accordingto their financial capacity.

Further, Iisco's prices were also lower and depending on quality, varied between Rs 6,250 to Rs 6,550 per tonne excluding freight, excise duties, sales tax and rebate offered after the recent hike.

On the other hand, the prices charged by other pig manufacturers, after the recent hike, stood as follows: Kalinga Iron ranged between Rs 8000 to Rs 7750, Tata Metalik Rs 6800 to Rs 7500 per tonne and Kajaria Iron which produced single grade pig iron, stood at Rs 6350 per tonne, all excluding excise duty, sales tax and railway freight.

Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.


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