Trust you and your family are staying safe during this challenging time.
The ongoing COVID-19 pandemic continues to create challenges thought-out the world economy, including the mineral and metal-dependent transformer industry. At Shreejee Electronics, among other challenges, many of our material suppliers are struggling to meet our demand – resulting in cost increases and aggressive commercial terms, to maintain our supply of these scarce materials.
Increase in COGS
To recover rapidly rising raw material inputs, we are compelled to increase our costs of goods sold.
- Copper wire prices have increased approximately 100% in the last 10 months.
- Iron cores are now on above 60% from their base averages from the last year.
- Ferrite Core has increased at a rate of 30-35%
Aggressive commercial terms with suppliers
Our suppliers are also aggressively revising commercial terms – reduced payments terms and increase in delivery lead time.
- To keep the working capital demand, our suppliers have reduced our credit period by 50%.
- The supplies delivery schedule have also delayed significantly.
Given this situation and after carefully analyzing increased materials and overhead costs, we are writing to inform you of an inevitable price increase across all product lines and give you adequate notice to manage and incorporate this change accordingly. We request you to kindly contact us before placing any orders.
Apart from the price increase, we are compelled to revise our payments and delivery terms with you. The same will be discussed and agreed upon mutually in coming weeks.
As always, we will try to re-establish prices and other terms as the market and costs dictate.
In addition, we are at the same time experiencing strong demand across all product lines. Therefore, despite our significant capital investments, we are allocating our production capacity based on your firm order placement and our best demand visibility to maximizer the efficiency of our manufacturing operations.
Please be assured that Shreejee Electronics has made every effort to keep this increase to a minimum while still achieving our desired goals by not increasing our share of profits or margins. This pricing action and revision in the overall business strategy will continue to provide the high level of service and quality you have come to expect and deserve from Shreejee Electronics.
We greatly appreciate your continued business and support through this time of tumultuous change. If you have any further questions or concerns regarding this, please do not hesitate to reach out. Our team is more than happy to discuss this situation with you.
Prabhat Kumar Nagar