CHENNAI: With the West Asia conflict entering into the third week, small and medium industrial units in Tamil Nadu are facing mounting disruption in the form of choked supplies of critical inputs and stalled exports.
At Aspick, a fabrication unit on the outskirts of Chennai, managing director Prabhakar is dealing with a growing pile-up of finished goods following the abruptly halt of shipments to Egypt and Iraq. The shop floor is stacked with stainless steel equipment, including large cyclones used in biofuel processing, meant for overseas clients.
“These are export orders from an Austrian company with an Indian subsidiary, but shipping lines are no longer accepting cargo to these destinations,” he said.
With despatches stalled, the firm has been forced to move the bulky units into storage to free up production space, adding, in turn, to costs. Each unit costs roughly Rs 30 lakh to manufacture, with payments linked to delivery.
“If we can’t clear this inventory, we can’t take on new orders,” Prabhakar said.
Tightening supply chains have triggered an acute shortage of industrial gas cylinders, used in CNC cutting and MIG welding, as well.
“We are close to running out of cylinders and do not want to rely on the black market,” Prabhakar said, adding that the company may outsource part of its workload to units with access to supplies. Gireesh Pandian, president of the Industrial Estate Manufacturers Association, said firms are struggling to meet financial year-end delivery schedules. Delays are increasing exposure to penalty clauses in contracts, he said.
Elsewhere, manufacturers are grappling with rising input costs and supply uncertainty. A Shanmugavelayudhan, who operates units in Guindy Industrial Estate, Kakkalur and Thirumudivakkam, said, “I had an order book of four to six months, but most contracts are under price revision clauses, and the Gulf crisis has come at a critical time”. “With shortage in gas and fuel supplies, execution costs have risen sharply.”
Shanmugavelayudhan also mentioned shortage in transformer oil due to feedstock constraints and refining disruptions, which “could delay” large transformer orders. The Gulf conflict prolonging could compress margins and eventually force job cuts, he added. The industry has sought deferment of GST payments, easier access to credit, and targeted power subsidies to help smaller units tide through the crisis.