Feeling the Heat

In the 35 years that he has been in business, Parikh, owner of Esjay Industries, a steel fabrication firm in Thane’s Wagle Industrial Estate which supplies to firms such as Larsen & Toubro for the defence segment, has never faced such a situation. The prices of basic raw materials— mild and stainless steel—have doubled in just two years. Mild steel, which cost Rs 40,000 a tonne two years ago, costs Rs 80,000 now. Prices of other consumables such as welding rods and industrial oxygen have gone up between 40 and 75 per cent. Parikh is in a fix because he cannot pass on the hikes to his customers. “Our customers take time to absorb the increase in our selling price. Even if we raise prices, it is marginal and not prorata, which means we lose money,” says Parikh, who is also president of the Chamber of Small Industry Associations (COSIA), an apex body of MSME organisations. Firms such as his then have to trim margins, or simply give up the business, which spoils relations with the client. He wants the government to reduce GST and provide tax sops to MSMEs.