Mahindra watches as steel price rises

New Delhi HOMEGROWN auto major Mahindra & Mahindra (M&M) is keeping a close watch on recent increase in commodity prices, especially that of steel, to see how situation pans out before initiating any action to safeguard its business, said a top company official.

Over the past few days, domestic steel makers have hiked the prices of hot rolled coil (HRC) and cold rolled coil (CRC) by Rs 4,000 and Rs 4,500 per tonne, respectively. After the price revision, a tonne of HRC will cost Rs 67,000, while the buyers will get CRC for Rs 80,000 per tonne.

According to the sources, the prices of HRC and CRC could again be increased by Rs 2,000-4,000 per tonne in mid-May or early-June. HRC and CRC are flat steel used in consumer-friendly industries such as automobiles, appliances and construction. Already, Tata Motors and Maruti Suzuki India have announced price hikes to offset the impact of rise in input costs. When contacted over the issues, M&M Chief Executive (Automotive Division) Veejay Nakra told PTI that the automaker uses multiple levers to manage its cost.

"As an ongoing process, we always try to mitigate commodity price increases through internal cost measures, be it on material cost through value engineering or by managing our fixed cost" he noted. Having said that the company has taken a price increase in the middle of April, which was necessitated by unprecedented increase in commodity prices over the past many months and it factors in various other input costs as well, Nakra said.

"Depending on the model and the variant the price hike ranged between 1.8 per cent and 3 per cent. Going forward, we will keep a close watch on how the commodity prices play out and take appropriate action accordingly," he added.