Morbi Ceramic Industry Facing Uncertain Future

Around 800 ceramic factories in and around Morbi are facing an uncertain future. Constant rise in prices of gas, coal and raw materials have seen as many as 100 units shutting down in the last few months. “Around 100 more units are on the verge of closing down by the end of this month due to rise in input cost,” said Mukesh Ughareja, former president of Morbi Ceramic Association. Industry players are blaming overstocking due to rise in product prices and liquidity crunch for closing down of the units. According to the industry association, earlier the gas usage of Morbi units was around 65 lakh standard cubic metres (SCM) per day. Currently, it has come down to 55 lakh SCM due to the closure of units. The ceramic sector, which was already struggling due to high freight and container charges, has been hit hard by increase in gas prices, which have doubled in the last six months. The rise in input cost has also badly affected the export volumes. Since the last three months, the export is down by almost 25%. As the domestic market demand is not high enough, units are facing the problem of overstock. Morbi’s yearly export is worth Rs 13,000 crore which was projected to touch Rs 15,000 crore this year. But if the current situation continues till the end of the year, exports won’t cross Rs 11,000 crore, experts fear. The rise in prices of gas and other raw materials has led to an increase in production cost by as much as 30% which is making it difficult for Morbi manufacturers to compete in the international market. The European countries and China are eating into India’s business, sources said. Nilesh Jetpariya, president of Morbi ceramic industry, said that the rise in input cost is putting strain on ties between manufacturers and buyers. “We are forced to differ from our commitment of supply because we can’t afford the price at which we had booked the order,” Jetpariya said. The industry requires coal for the spray dryer process which is essential for all the units except those making sanitary tiles. “The imported coal is not coming from Indonesia and Gujarat government’s company is providing only 50% of the sanctioned quota of lignite,” Ughareja added. The industry wants the state government to control the gas prices and provide a full quota of lignite coal.