Over 400 tile makers in one area in Gujarat have shut down after a ban on coal gasifiers

• Over 400 of 550 wall tile plants running mainly on coal gasifiers have been closed post the National Green Tribunal (NGT) ban on ceramic units in Morbi, Gujarat.
  
• Given that, the tile manufacturing units are now considering to switch to natural gas as an alternate.
  
• Nearly 70% of total output in the ceramic industry in India comes from Gujarat alone.

Soon after the National Green Tribunal (NGT) banned ceramic units running on coal gasifiers in Morbi, Gujarat, the tiles industry has witnessed a major hit.

Largely impacted by the ban, the tile manufacturing units have shut down, switching to natural gas as an alternate. The switch, however, may increase fuel expenses for the manufacturers considering the PNG prices.

Hope floats that this would close the price gap between unorganised players in Morbi and branded tile makers like Kajaria Ceramics, Somany Ceramics, Cera Sanitaryware, and Asian Granito and help these companies gain market share.

According to media reports, of the 800 ceramic units in total, over 400 wall tile plants running majorly on coal gasifiers have been closed so far owing to shortage of raw material that has been impacting the operation costs for these units.

The Morbi ceramic industry had expected a huge growth. In fact, the industry is reportedly planning to establish 50 new wall tiles manufacturing plants. After the ban on March 6, the production has reportedly dropped by 60%-70%.

"Among these units, those most affected will be the wall tile and soluble salt tile manufacturers as they were meeting nearly their entire thermal energy requirements through coal gasifiers," Suprio Banerjee, vice president and head, Mid-Corporate ratings of ICRA reportedly said.

India being the third largest ceramic producer in the world has been eyeing the global market. Given the fact that nearly 70% of total output in the ceramic industry comes from Gujarat alone, the new regulations may also affect the large ceramic players.

The ceramic industry is equally bifurcated into two — organised players comprising large ceramic producers and unorganised players. While for the unorganised players, tighter tax compliance and stretched working capital requirements has put forth an urgent need to raise prices by nearly 15%–20% due to raw material shortage, the organised players are still projecting a positive graph, benefitted either by market share or margin, Edelweiss Securities said in a report.

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The world's third largest ceramic industry is banking on India's love for gaudy tiles