The increasing tension in West Asia has increased the concerns of companies. Due to rising prices of crude oil and other raw materials, costs are increasing and companies are considering increasing prices. Due to this, the prices of everyday items like bottled water, salt, oil, consumer durables like AC, fridge and non-surgical medical items can increase. The reason is that this war has broken the backbone of the plastic industry. In the last 30 days, the prices of raw materials have increased by 50-70%. The price of LDPE, the most commonly used plastic granule, has reached Rs 110/kg to Rs 180. Other polymers and raw materials have also increased by Rs 30 thousand to Rs 70 thousand per ton. In such a situation, plastic prices may increase by 50-60% in April. There is a possibility of increase in the prices of plastic tanks and containers by 30-40%. Sunil Shah, President of All India Plastic Manufacturing Association, says that 5 lakh people are associated with the plastic industry. If the crisis increases, two-three lakh people may become unemployed. Our demand is to reduce the 18% GST on plastic products to 5% until the situation becomes normal. Increase bank working capital limit by 20%. This will solve the cash flow problem. Lockdown on 20 thousand small industries due to LPG crisis has affected 50 thousand plastic factories. Most of the units facing shortage of commercial LPG have stopped or reduced production. It is estimated that about 20 thousand factories will be closed. An EPE manufacturer from Hyderabad said, ‘We cannot produce without gas. Leave aside Rs 80/kg, it is not available even for Rs 150. More than 40 plants have been closed in Rajkot, Gujarat. Many plants are also closed in Madhya Pradesh, Raipur and Hyderabad. Plastic packaging manufacturers are not able to withstand margin pressure for long. Many units have canceled old orders. Due to the return of domestic workers in big cities, the demand for ‘ready to eat’ products has increased manifold. Due to the shortage of LPG cylinders and the return of migrant domestic workers, the way of cooking in urban homes is changing. The demand for ready-to-eat foods on quick commerce platforms is increasing rapidly. Urban families are now leaning towards less labor-intensive food options. BigBasket Chief Merchandising Officer Sheshu Kumar Tirumala said that the sales of ready-to-eat category are 10% more than the normal level. In the last five days, the sales of induction cooktop have been 10 times the normal. Anupam Boke, co-founder of Freshcon India, a maker of ready-to-eat products, said consumers and food businesses are now moving towards efficient cooking solutions. Products which reduce cooking time by 80% and save 60% gas are witnessing huge interest from distributors and exporters. At the same time, according to an Amazon India spokesperson, there has been a ‘significant increase’ in demand for instant noodles, juices, nuts and protein-based snacks. A dedicated ‘ready to eat store’ has also been created for this. Cement prices were increased, then the increase was withdrawn. Due to this crisis, the prices of petcoke, coal and packaging materials have increased suddenly. This has affected the cement industry. According to Ashutosh Murarka, equity research analyst at Choice Institutional Equities, this geopolitical crisis could lead to an increase of production cost by Rs 150 to Rs 200 per tonne, which will directly hurt the profits of companies. The polypropylene used for cement bags is directly linked to crude oil. To compensate for this loss, companies will have to increase prices by 4-5%, but the current market situation does not seem in favor of accepting this. In the fourth quarter, companies increased the prices by Rs 15-20 per bag, but had to withdraw the increase due to excess supply. However, the increase in the north remains at Rs 10-15/bag. What experts say… The current initial trends do not indicate any emergency buying. But by the fourth week of the Middle East conflict, a significant gap in demand could be seen as restaurant operations continue to struggle. Some migrants from the city are returning to their hometowns. Satish Mehana, Founder, Datum Intelligence Prices will increase by 7-10 per cent across categories depending on the raw material. We intend to run our factories at full capacity by May, but the challenge is what impact these increased prices will have on demand. Kamal Nandi, Appliances Business Head, Godrej Enterprises Group
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The heat of war will reach homes, milk, grocery and treatment will all be expensive: Preparation to increase the prices of everyday goods; Thousands of plastic units closed due to shortage of commercial LPG
