Chandigarh, March 27
The cheer brought with the excise duty cut in the Budget was relatively short-lived. With spiraling prices of raw materials used in cars, air conditioners and refrigerators, consumers can now look forward to an increase in their prices by about 3-5 per cent.
Come April and prices of most cars, automobiles and white goods will now head skywards. The steep increase in prices of steel, aluminum and copper will be passed on to the consumer, who will now have to shell out more money to buy these goods. Though the excise duty cut announced in the Budget proposals (from 12 to 16 per cent) had led to the prices of these goods being marginally cut, this benefit has come to a naught because of hike in input costs.
Sources in the trade said since December 2007, prices of alloy (CRC) steel have gone up by 8 to 12
per cent to Rs 42,500 per ton, white aluminum price has shot up by 18 per cent to Rs 1,13,680 per ton and copper by 31 per cent to reach Rs 3,55,600 per ton. Automobile sector and consumer durables companies now say they will not be able to absorb the increase in key input costs for long, and will have to increase the prices.
H S Lheem, managing director, Hyundai Motors (India), said though they were absorbing the hike in input costs, it would eventually affect the price of their cars. “Since most automobile companies make long-term annual purchase orders for sheet metal, manufacturers have been so far been able to withstand the cut in their operating profits,” he added.
However, with fresh contracts for purchasing steel and aluminum coming up in the automotive sector, the industry is now beginning to feel the heat. Ashutosh Khosla, director (sales and marketing), Piaggio Vehicles, said the effect of the excise duty cut has been diluted with the sharp increase in prices of metals. “If the prices of steel, aluminum and copper continue to rise, as is being predicted, we will have to rise the prices,” he added.
R S Kalsi, chief general manager (sales), Maruti Suzuki, said though they have not yet taken a call on the price hike, but considering the high input costs, it is a probability. “Though the rising input costs are hurting us, we have yet to see how much the company can withstand by raising production efficiency,” he said.
Even the consumer durables industry is now thinking of increasing the price, beginning next month. Tamal Kanti Saha, vice-president (sales), Whirlpool (India), said a 4 per cent hike in prices of air conditioners, refrigerators and washing machines would be affected in
April.
