The Morbi ceramic industry is facing the grim prospect of losing business with the public sector company Gujarat Gas Limited (GGL) suddenly increasing natural gas prices. Industry watchers feel the rate hike will have an adverse impact on existing orders in view of the fact the hike burden cannot be passed on to the customers. It may be mentioned that GGL has hiked piped natural gas prices for ceramic units in Morbi by Rs 2.50 per standard cubic meter (SCM) to Rs 27.37 per SCM. The new rates came into effect from last week. “We will have to face loss in profit and in some cases we will be in complete loss as the gas company has hiked the prices without any intimation. Our profit margins are between 5% to 12% and rise in gas rates has increased the production cost by 7-10%. Earlier, the government and gas company used to interact with us before revising the prices but this time they increased it without consulting the industry,” said K G Kundariya, president of Morbi Ceramic Association. Domestic demand is slow at present but the industry has over Rs 3,000 crore export orders on hand which they have to fulfil in next two months and more than 5,000 export inquiries are pending. Ceramic units are not in a position to pass on this extra burden to their customers.
Kundariya said, “We are not in a position to pass on our burden to the customers. This might not be acceptable to them also and in this condition, we have to take load on us. We have over Rs 3,000 crore of exports orders in hand at this time and to sustain our credibility in international market, we have to fulfil them in time.” The city consumes about three million SCM a day and because of the new rates, the industry will have to bear an additional burden of over Rs 1 crore on gas bill on a daily basis. Nilesh Jetpariya, president of wall tiles division of the association, said, “Ceramic industry is the largest consumer of piped natural gas and our daily consumption is about three million cubic meter. All of a sudden price hike by the gas company will lead ceramic units to face financial loss of about Rs 1.20 crore per day.” Morbi in Gujarat is the third largest manufacturing hub for ceramics in the world after China and Italy and accounts for 90% of the total ceramic production in the country. There are about 750 units of ceramic which produce 1,820 million square meters of wall, floor and vitrified tiles and sanitaryware products. The turnover of Indian ceramic industry is estimated at about Rs 33,000 crore and of that Morbi alone contributes about Rs 28,500 crore annually. The city proves employment to the over 4.50 lakh people. The ceramic association is planning to make a representation to the petroleum minister of Gujarat and government officials over gas prices issue. The industry is also considering increasing the prices of ceramic products for new orders in domestic market.
