 "Better times ahead for Kajaria, Somany")
The recent cut in piped natural gas (PNG) prices by the government of Gujarat has not brought much respite to small and medium ceramic units who have witnessed a 30 per cent fall in demand since the beginning of the year. The fall in demand comes at a time when wall tile manufacturers had expanded their production capacity by about 40 per cent.
PNG prices have recently been cut by Rs 2.07 to Rs 31.86 per cubic metre, from Rs 33.93 per cubic metre for the ceramic industry in Gujarat.
"As the production capacity of ceramic products, mainly in vitrified tile, has been increased by almost 40 per cent in the last two years, with lower demand, the capacity utilisation has been impacted adversely. That way, the recent gas prices cut will not give much benefit to the industry," said Nilesh Jetpariya, president of the Morbi Wall Tiles Manufacturers Association.
Moreover, about 70-80 new units are also coming up by the end of 2016 and this will add more in production capacity. In this case, the industry will continue to face challenges in terms of demand, feel industry insiders.
"Due to dull real estate, infrastructure sector performance, currently, demand is down and we are not expecting any revival in the near future," said M P Shorya, managing director, Orbit Cera Tiles Private Limited.
The industry failed to understand the actual demand scenario, and thus are now suffering from under utilisation of production capacity, which has dropped from 90 per cent around two years back to around 70-75 per cent at present.
"We realised that it was not actual demand and we had made a wrong move. Because of it, currently we are utilising around 70-75 per cent of our total production capacity," said Jetpariya.
Gujarat accounts for 70 per cent of the Rs 30,000 crore Indian ceramics industry and about 900 ceramic units located in Morbi and surrounding areas. Turnover of ceramic industry in Gujarat is around Rs 21,000 crore annually.
