Lower production and higher costs this year are forcing several small plastics units to shut operations, according to the industry body representing plastic manufacturers in that state.
Factories are operating far below capacity in power deficient Andhra Pradesh. “Power shortages have plagued the state for a year now. Capacity utilization has hovered around 40-50 percent since March. The state is able to generate only 7,000 MW of electricity, when it should be generating 16,000 MW.
“The government is obligated to provide regular electricity supply to farm lands, for seven hours a day; continuous supply to state-run hospitals and defence-sector establishments. The balance is given to industries in the state,” said V.Anil Reddy, president, Andhra Pradesh Plastic Manufacturers Association (APPMA).
Of the 15,000 plastics units in the state, 1,200 have already shut operations, Reddy said. “Industries are bleeding in the state. In plastics manufacturing, raw material costs have risen 20 percent this fiscal year. Labour costs are up by 40 percent. We run factories for about 10-15 days a month, but have to pay salaries for the entire month,” Reddy said.
5,000 plastics units are part of the APPMA. Plastics is a Rs.1,500 crore industry in Andhra Pradesh, Reddy said.
Worst affected are the units that began operations in 2009-10 fiscal year, and later. “They may not be able to recover capital costs,” Reddy said.