Times of India reported that Tata Steel Managing Director Mr TV Narendran has suggested devising contracts that allow for price adjustments, a move that will help cushion the impact of inflation on companies, particularly small and medium enterprises. Mr Narendran told TOI “SMEs, largely in metals and commodity-based sectors, have been complaining about their margins being significantly dented as prices have been rising for the last several months and there is a change between the time they receive order and supply it. In the longer term we need to look at indexed contracts to protect some of the vulnerable MSMEs and those who are caught between fixed price contracts and volatile input costs.”Mr Narendran said "We need to work out these mechanisms in an environment that is far more volatile than it has been in the past. We are an interconnected world where the geo-political impact will be felt."He added that input cost increase is unlikely to dampen demand, while noting that higher fuel prices may be one of the reasons for a slowdown in demand for two-wheelers. He told "I don't see input costs derailing steel demand yet, although there will be a margin squeeze for all those who can't pass on the increases to the customer. The bigger issue is working capital for MSMEs, which is creating some bottlenecks, for which we need to work with banks.”
Times of India reported that Tata Steel Managing Director Mr TV Narendran has suggested devising contracts that allow for price adjustments, a move that will help cushion the impact of inflation on companies, particularly small and medium enterprises. Mr Narendran told TOI “SMEs, largely in metals and commodity-based sectors, have been complaining about their margins being significantly dented as prices have been rising for the last several months and there is a change between the time they receive order and supply it. In the longer term we need to look at indexed contracts to protect some of the vulnerable MSMEs and those who are caught between fixed price contracts and volatile input costs.”Mr Narendran said "We need to work out these mechanisms in an environment that is far more volatile than it has been in the past. We are an interconnected world where the geo-political impact will be felt."He added that input cost increase is unlikely to dampen demand, while noting that higher fuel prices may be one of the reasons for a slowdown in demand for two-wheelers. He told "I don't see input costs derailing steel demand yet, although there will be a margin squeeze for all those who can't pass on the increases to the customer. The bigger issue is working capital for MSMEs, which is creating some bottlenecks, for which we need to work with banks.”
