High raw material rates mould plastic businesses into bankruptcy

LUDHIANA: The plastic raw material traders and product manufacturers of the city are passing through the worst phase of their lives with about 70% of them close to shutting shops and factories and facing bankruptcy.
Huge rise in the rates of raw materials during the past one year and a fall in demand are to be blamed for the situation. This was revealed by the Plastic Manufacturers’ and Traders’ Association (PMTA), which claimed that rates of raw materials have gone up by four times in some cases and sales reduced to 25%.Despite this, the fixed expenses, like minimum power charge, wages and rents, have remained the same, causing a turmoil in the industry, it said.
PMTA president Gurdeep Singh Batra said, “Close to 70% of traders and factory owners dealing with plastic raw material or making plastic goods are on the verge of permanent closure. Rates of raw materials have gone up four times and there is hardly any demand. The statements of the Central and the state governments have proven to be totally false, take for example the Centre and the RBI’s claim that collateral-free loans are being given by banks.”
Batra added, “Banks are refusing loans to Ludhiana businessmen without a collateral. Situation is so bad that earlier when we used to pledge properties for availing loans, we were given loans of up to 150% of our property’s value, but now not even 50% is being offered. The day is not far when Ludhiana will see hundreds of shops, factories, offices connected with plastic business close permanently. Once prosperous businessmen will soon be bankrupt.”
Mukesh Marjara, general secretary of the PMTA, said, “During the past one year, the rate of acrylonitrile butadiene styrene (ABS) has skyrocketed from Rs 85 per kg to Rs 320 per kg. The rate of low density polyethylene (LDP) has gone up to Rs 120 per kg from Rs 80 per kg. Similarly, the rate of linear low density polyethylene (LLDP) has increased from Rs 62 per kg to Rs 92 per kg. The rate of polypropylene (PP) has increased from Rs 72 per kg to Rs 100 per kg. Few months back, the rates had gone up even more, but due to no demand in the market, these fell but are still almost four times of what they used to be last year.”
Mohan Lal Khurana, association chairman, said, “We have been into this business for decades and have seen many ups and downs, but this is for the first time that we are witnessing such a situation when the closure of hundreds of businesses seems inevitable. The main reasons for this turmoil are unjustified increase in the rates of plastic raw materials, fall in demand to almost 25% due to lockdowns, no financial support from banks to fight the crisis and no relaxation in the recurring expenses, like fixed power charges, rent, property and municipal taxes, among others.”