APPMA urges Government to intervene to control polymer prices

The Andhra Pradesh Plastics Manufacturers Association (APPMA), an apex body of the Plastic Manufacturers Association in Andhra Pradesh state has urged the Government to intervene and come to the rescue of the SME sector processors of the Plastic Industry by way of certain measures to regulate the prices and to assure the small and medium processors that the government takes care of their interests also. Mr. V. Anil Reddy, the association President in a press release urged that the current custom duty on the polymers must be brought down from 5% to 0%. He further said that the plastic raw material manufacturers are obliged to make certain mandatory exports. The Government should either waive this export obligation or impose a duty on those exports, so that sufficient material is available for domestic consumption. Further he urged that the price rise announcements by Polymers Producers should be made valid for whole month unlike present system rise as per their choice. The Association which met today in city strongly demanded Government to appoint a Regulatory and Development Authority to control the prices of Polymers in particular and the overall development of the industry in general. A majority of the Polymer processing industries are in the small and medium scale. In India there are over 50,000 plastics processing units in the SME sector employing over three million and a half people and contributing over Rs 80,000 million to the exchequer by ways of taxes and duties. The employees are mostly uneducated men & women, unskilled from the economically backward classes. The banks have large stake in thi sector and the entrepreneurs have all heir life saving invested in these units and any ill effects to the sector will have substantial backlash. The growth rate in most of the states in this sectors approximately is 20% and thanks to the efforts of organizations like the All India Plastics Manufacturers Association and the regional associations. There are several raw material manufacturers in the country such as Reliance Industries Limited, (RIL), GAIL (India) Limited and Haldia Petrochemicals Ltd. With the acquisition of state owned Indian Petrochemicals Corporation Limited (IPCL) and Mafatlal Group owned NOCIL, RIL produces approximately 75% of the total polymers produced in the country and thus enjoys virtual monopoly and calls all the shots. Gone are the days when the Polymer companies were announcing a pricing policy valid for six months, quarter and lastly one month. Now the polymer prices are revised on a weekly basis. May be that day is not far off when they emulate the bullion if proper control is not asserted. Due to the recent hike in the global crude prices and consequent price increase in the petroleum products in the country there has been a steep escalation in the polymer prices. For instance the LLDPE and HMHDPE prices were around Rs 68,000 and Rs 70,000 per ton at the beginning of the financial year. By the end of May the prices rose to Rs 80,600 and there was an upward revision of the prices on the 5th and 12th June and the prices today are Rs 85,600 for LLDPE and Rs 87,600 for HMHDPE. This shows an increase of over 25% in the prices of LLDPE and HMHDPE. These price increase information are not announced in the media nor are they given any publicity by the raw material manufacturers. But if there is any downward adjustment made in the prices they make it known even to the remotest village dweller by publicizing it in every media. Consequently the customer is only aware of the reduction in the raw material price but is blissfully ignorant of the weekly increase of the prices. These price escalations are affecting the sales to all customers in general and to rate contract customers in particular. Sometimes by the time customer is convinced about the necessity to buy at the increased in the raw material price to make it impossible to convince the customer once again for another price increase. In addition to the above there is an artificial shortage of the raw material although the production is marginally increased by these giants. This is essentially due to their catering to the large scale manufacturers who virtually hoard the material and the SME sector suffers.