Rush to set up ceramic tiles units abates

Rush to set up ceramic tiles units abates

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Volatility  in natural gas price, rupee depreciation and uncertainty over exports to GCC - all seem to have taken their toll on the confidence of the prospective investors in the sector. This is quite visible from the sharp decline in IEMs submitted to government for setting up new units in recent months

One of the biggest problems faced by ceramic tiles manufacturers in recent times was the falling price of tiles, mainly vitrified tiles. This in-turn was due to rapid addition to manufacturing capacity, especially in Morbi region of Gujarat. Statistics available with the government also show that there was mad rush to set up ceramic units between 2016 and 2018.

Ceramic units proposed to be set up
Year No of units Investment in Cr Rs
2016 84 4280
2017 72 3106
2018* 46 1642

*Till November 2018

The above table clearly shows that investment in new ceramics units peaked in 2016 and thereafter it has seen continuous slide, both in terms of number of proposals as well as amount of investments. While in 2016 there were 84 proposals for setting up ceramic manufacturing units amounting to total investment of Rs 4,280 crore, it came down drastically to just 46 proposals in 2018 amounting to Rs 1642 crore. In fact, in the month of November 2018, there was just one proposal to set up vitrified tiles manufacturing unit with a capacity of 72,750 tonnes.

No of Ceramic units set up recently (completed projects)
Year No of units Investment in Cr Rs
2016 3 104
2017 6 257
2018* 28 1153

*Till November 2018

However, in terms of number of units actually implemented, 2018 is the best year with as many as 28 units going on stream. In 2016 and 2017 only 3 and 6 units were implemented, respectively. In other words, most of the projects announced in 2016 and 2017 were actually completed in 2018, is also possible that many units who completed their projects might not have informed the same to the government.

Volatility  in natural gas price, rupee depreciation and uncertainty over exports to GCC – all seem to have taken their toll on the confidence of the prospective investors in the sector. This is quite visible from the sharp decline in IEMs submitted to government for setting up new units in recent months. For example, from August 2018 to November 2018, in all just four IEMs were submitted with October recording ‘Nil’ submissions. Also, fear of over capacity and recent sharp correction in the end products must have played in the minds of prospective investors. Recently, there were also instances of clampdown on suspected tax evaders in Morbi area by the tax authorities which may also deter the new entrepreneurs from taking the plunge immediately.

IEM (Industrial Entrepreneur Memorandum) is the information relating to setting up of industries which the industrial undertakings which are exempted from the requirements of Industrial Licensing under I (D&R) Act, 1951, are required to file with the Department of Industrial Policy and Promotion (DIPP). Recently, the government renamed DIPP as Department for Promotion of Industry and Internal Trade.

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