Rising raw material costs halting tile production at Morbi | Gujarat | SURFACES REPORTER Material news update

A constant rise in prices of coal, gas and other raw materials have started adversely affecting the ceramic production in Morbi where almost 800 units in and around the district are either shut or on the verge of it. A report by SURFACES REPORTER (SR).

Rising prices of raw material

Gas and coal are one of the primary components for the manufacturing of ceramic tiles. However, Gujarat Gas ltd, the firm that supplies gas in the Morbi region has hiked the prices several times in 2020. Recently, from November 1, the prices are again hiked by Rs 11 per standard cubic meters (SCM) raising the prices to Rs 58 for Morbi ceramic cluster. The increased value was actually Rs 61 per SCM after including VAT. Till the year 2020, the gas price was Rs 24 which is now more than doubled halting the growth of the industry.

 

According to the Morbi Ceramic Association, Natural gas accounts for 35 per cent of production cost in this industry and big hikes lead to a substantial increase in production cost. Ceramic units in Morbi make up for the majority of the 10.5 mscmd of natural gas that Gujarat Gas records in sales volumes across 25 geographical areas.

The similar hikes in the prices of raw materials have also hurt the production in the ceramic city of India, causing many small industries to close down altogether.

The input cost has led to some serious damage on the export volumes as well. While earlier, the exports were expected to rise by 30-40%, from the last three months they are actually down by 25%. This is also leading to the problem of overstock as the domestic demand is not enough.

In an exclusive conversation with SURFACES REPORTER (SR)Mr. Nilesh Jaitpariya, President, Morbi Ceramic Association ( Wall Tile Division), said, “Right now 20% production is reduced and this quarter will be a little beaten up. There are many reasons including a number of holidays in last month. However, rising gas prices and container freight charges remain the most important challenges which is why inputs coast are not getting down in this quarter.” He also pointed out that while Branded players are still doing well despite the set backs, this quarter may not be good for them as well due to raging COVID in the metro cities. 

According to the experts, Morbi’s yearly export is worth Rs 13,000 crore which was projected to touch Rs 15,000 cr by the end of 2022 but its seems with the current situation, it won’t even cross Rs 11,000 cr.

The market sources also believed that India's share is gradually shifting to Europe and China as the rising input costs has increased the production costs by 30% making morbi extremely vulnerable in the international market.

SURFACES REPORTER View

The ceramic industry of Morbi is very crucial for the development of the surrounding region. It houses many mid level and small tiles players who require constant govt support to sustain particularly post COVID when every business is hit badly with the pandemic and subsequent lockdowns. Though it is true that the industry is seeing growth over the years, it is majorly substantiated by the larger players in the game and many small and mid level players are facing the brunt of the rising costs and halting productions. Therefore, the government must act fast to provide necessary aid to the industry to save it from the worst.

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