Morbi ceramic factories likely to shut down due to rising costs

Approximately 800 ceramic factories in and around Morbi are encountering an uncertain future.

The constant surge in costs of gas, coal and raw materials have observed as many as 100 units closing down in the past few months. About 100 more units are on the verge of shutting down by this month-end due to an upsurge in input price, Mukesh Ughareja, former president of Morbi Ceramic Association, told the media. Industry players are blaming overstocking due to an increase in product costs and liquidity crunch for shutting down the units.

As per the industry association earlier, the gas usage of Morbi units was about 65 lakh standard cubic metres (SCM) per day. Presently, it has dropped to 55 lakh SCM due to the shutting down of units. The ceramic industry, which was already toiling due to high freight and container costs, has been hit hard by an upsurge in gas costs, which have doubled in the past six months.

The increase in input price has additionally severely impacted the export volumes. Since the past three months, the export has dipped by nearly 25%. As the domestic market demand is not high enough, units are meeting the issue of overstock. Morbi’s annual export is Rs 13,000 crore which was estimated to reach Rs 15,000 crore this year. But if the present situation persists till the year-end, exports won’t touch Rs 11,000 crore.

The surge in costs of gas and other raw materials has led to a rise in production price by as much as 30% which is making it tough for Morbi producers to contend in the international market.

Image Source