As the industry rushes to divert oxygen to hospitals to save lives, several firms are turning into a moribund state for the want of it.
Though the diversion of oxygen has not impacted the large industries much, it is hurting small firms that are dependent on it for several processes. However, steel companies that produce it are operating at sub-par levels.
The disruption in the supply of oxygen for industrial has hit the revenues of small and mid-sized companies that are into metal fabrication, automotive components, shipbreaking, paper, and engineering. These (SMEs) typically do not have captive oxygen plants and source their requirement through merchant suppliers for operations such as welding, cutting, cleaning, and chemical processes.
Particularly affected are auto component manufacturers, which has led to a shortage of inputs for the auto industry. This, along with slowing demand, has forced several auto companies to advance maintenance shutdown..
Specialty chemicals firms, especially companies producing pharmaceutical intermediaries and products are also facing production issues due to oxygen shortage.
The Indian Drug Manufacturers Association had alerted the government regarding the reduced output of many pharmaceutical raw materials and intermediates, citing a shortage of oxygen availability.
It’s not just oxygen, supply constraints, shortages of key raw materials and other issues have plagued the industry badly.
While demand remains upbeat despite the Covid wave, some companies are struggling to bring supplies on par with demand.
Shortage of finished components and raw material, restricted manpower and lockdowns have disrupted the supply chain network.
Palm oil, used for home and personal care products, has been in short supply for months leading to a 30-40 per cent jump in its prices. This has led to a huge jump in edible oil prices.
The semiconductor shortage, which started in the last quarter, is hitting car production and increasing waiting periods, up to a year in some cases. Prices of television panels have jumped 120 per cent while laptop assembly operations have been hit badly by the semiconductor shortage.
Both mobility and non-mobility sectors of the Indian economy were reflecting the impact of the second wave of Covid-19 and the ensuing lockdowns as business activity continued to plunge further in May.
The Nomura India Business Resumption Index (NIBRI) fell to 60 for the week ended May 23, down from 63 a week earlier.
This reflected a severe drop in the index, which tracks high-frequency economic indicators such as mobility, power demand and unemployment, to levels seen in June last year after a full recovery in February.
While Google’s workplace and retail and recreation mobility indices fell by about 6 percentage points (pp) over the week, the Apple driving index bottomed and rose by 3.4 percentage points. Labour participation rate dropped 39.4% from 40.5% a week ago.
India’s unemployment rate was nearing its one-year high as it climbed to 14.7% from 14.4% in the previous week, the note said.
Put on sale
At least 1,200 owners have listed their business for sale on an online deal marketplace unable to sustain losses due to the lockdown, according to a report.
The biggest impact has been on small tour operators, gyms, restaurants/bars, event management firms, salons, playschools and cloud kitchens.