Granite units fear raw material shortage

With the granite processing units in Andhra Pradesh and the neighbouring states of Karnataka and Tamil Nadu being on an expansion spree since the last two years, the industry majors feel that there could be a shortage of raw material in a couple of years down the line.

"Unless exports are regulated, there could be an acute shortage of raw material in the next two years," N V Rattaiah, managing director of Divyashakti Granites Ltd (DGL), told Business Standard. At present, nearly 45 per cent of the total raw blocks excavated are being exported.

Most of the sick granite processing units in Andhra and other two states made a turnaround from the year 2000 following a one-time settlement of their debts by their lenders and a spurt in both external and domestic demand for the granite products. Now, many of them are expanding their capacities.

Rattaiah said that the number of gang saws in the industry has increased from 100 to 200 in the past two years following expansion capacities.

DGL itself added two gang saws last year at a cost of Rs 7 crore and was in the process of installing two more gang saws at a cost of Rs 10 crore, expanding its total capacity from the initial level of 70,000 sq metres to 2.10 sq metres a year.

Similarly, he said that five to six other granite units like Pokarna of Hyderabad and Nova of Bangalore expanded their capacities while Jaswal Granites, La Mansion, Laxmi Durga, Indo Rock, Ravileela, Vajra and various other granite units in Karnataka and Tamil Nadu have been revived and are doing well.

Incidentally, 80 per cent of the total granite processing units in the country are located in the three southern states.

That the going is well for the granite industry is indicated by the fact that DGL's sales turnover increased significantly from 2002-03. The company's turnover, which stood at Rs 14.19 crore in 2002-03, increased to Rs 19.12 crore during 2003-04 and to Rs 32 crore in 2004-05. "With the completion of our new expansion project by July 1, we are expecting to achieve a turnover of Rs 45 crore in 2005-06 and Rs 60 crore in 2006-07," Rattaiah said.

On the other hand, Mahi Granite Private Limited managing director Krishna Rao said the shortage may not be acute as eight to 10 new quarries are coming into operation in a year's span.

Besides, the existing quarries were being mechanised to expand production. Availability of raw material was also likely to increase as the export of raw blocks to Italy was on the decline.

According to Rao, the issue of raw material shortage is cropping up as many granite units are concentrating on exports to the US. The US market needs few specific colours of granite that could lead to shortage.

However, Russia and many European countries are opening up their markets to India. These countries require different colours of granite and the problem of raw material shortage can be resolved if the granite manufacturers diversify their exports to these countries.