Asian Ceramics



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The year 2017 was one of the worst for Indian ceramic industry in recent history. Twin blows of demonetization and Goods & Service Tax (GST) kept the growth muted for more than six of the twelve months of the year.

Though, the actual production and consumption numbers in ceramic tiles and sanitary ware are not out yet, it is a common consensus among major producers and other stakeholders (ceramic associations, leading builders) that overall demand in domestic industry fell by at least 3- 5 percentage points for ceramic tiles, while it was almost flat for sanitary ware.

First two months of the year 2017 were affected by the de-monetisation exercises undertaken by Indian government in the month of November 2016. As, the exercise sucked up 86 % of the total cash from the system in one stroke, there was huge slowdown in the retail market for a period of three to four months. Retail sales only limped back to normalcy in the month of March 2017.

As the market started to gain momentum in April, GST implementation announcement in the month of May put a brake to ceramic tile production by producers and stocking by distributors and retailers. As, the distribution channel was apprehensive about the billing procedure post 1st July 2017, they stopped taking fresh inventories from the month of May.

Even after the implementation of GST in July, a great confusion prevailed in the market in the months of July and August. Sales of ceramic tiles started to get stabilized in the month of September.

Cumulatively, months of January, June and July were badly affected, while months of February, May and August were affected to some extent in terms of total ceramic tile sales.

This year has also already seen issues. Recent natural gas price hikes by public sector Company, Gujarat Gas Limited (GGL) has created a host of problems for ceramic tile and sanitary ware producers in the state of Gujarat. GGL has hiked piped natural gas prices for ceramic units in Morbi by INR 2.50 per standard cubic meter (SCM) to INR 27.37 per SCM. The new rates came into effect from the second half of December 2017.

“A number of producers are facing losses due to price hikes. The gas company has hiked the prices without any intimation to us. 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,” K G Kundariya, president of Morbi Ceramic Association told Asian Ceramics during the Indian Ceramics exhibition in Gandhinagar.

Kundariya further said, “ It is next to impossible for us to pass on our burden to the customers due to the ultra competitive nature of industry and threat of Chinese producers getting a foothold in the domestic market. Morbi alone consumes about three million SCM a day and because of the new rates, the industry will have to bear an additional burden of over INR 10 million on gas bill on a daily basis.” Challenging times indeed.

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