Rising input costs squeeze fan makers

GUJRAT: Sharp increases in the prices of raw materials have put the electric fan manufacturing sector in Gujrat and Gujranwala under strain during the current season, with manufacturers saying both sales and production economics have been hit.

Industry stakeholders said the sector was facing mounting pressure because of continued increases in the prices of essential inputs, including copper, silver and fan blades. Manufacturers alleged that a cartel was influencing raw material prices, especially after recent tensions in the Gulf and the closure of the Strait of Hormuz over the past couple of months.

According to manufacturers, scrap that was previously imported from Dubai has become harder to obtain. They said local dealers, particularly in Gujranwala, were holding back stock and releasing it at prices of their own choosing, further complicating procurement for producers.

One manufacturer said copper, which was available at about Rs1,000 per kilogram five years ago, had climbed to Rs4,100 per kilogram in the current manufacturing season. He added that the price of electric fans had gone up by 15 to 20 per cent per unit, while the overall cost of doing business had doubled under existing conditions.

Sales outlook weakens in peak season

Manufacturers estimated that fan sales may fall by 40 to 50 per cent during the current season. They said the period from February to mid-June is normally when manufacturers supply dealers, and that this stretch is considered the peak sales season every year.

They further said that smart lockdowns in commercial markets had also contributed to weaker sales. In addition to domestic market pressures, manufacturers said exports of Pakistani-made electric fans could also suffer because of tensions in the Gulf region.

The industry also pointed to tax-related pressures. Manufacturers said the Federal Board of Revenue’s push to meet tax collection targets had created further difficulties for local producers and made business operations more challenging.

The combined effect of higher raw material costs, supply constraints, market disruptions and tax pressure has left the fan manufacturing industry in the two regions facing a difficult season, according to manufacturers.

Manufacturers maintained that the rise in input costs and disruptions in supply had significantly altered the business environment for the sector this year.