Kajaria Ceramics’ expansion projects delayed

Kajaria Ceramics’ expansion projects delayed

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Kajaria Ceramics which has embarked on expansion plans through its joint venture companies in tiles manufacturing capacity has rescheduled its capacity expansion plans. According to company sources, subdued demand condition in the market has forced the company not hurry with the new capacities for the time being. Its JV company, Floera Ceramics where it has 70% stake is now expected to go on-stream by July/August 2019. Earlier the project was scheduled to be completed in the first quarter of the current fiscal. In case of Malutana PVT expansion project involving 5.6 mn sq. m.capacity has now been deferred to the end of the current Financial year. The company has set aside Rs 125 crore for capex in the current financial year.

Going slow on capacity expansion is a conscious decision considering demand slowdown and rising gas prices. However, in the long term, the company expects the demand revival  due to multiple reasons.

Market developments like the NGT order banning coal gasifiers (thus forcing the unorganized industry to come under tax surveillance due to gas procurement), and the improving implementation of the e-Way bill is helping level the field for organized players. Players in the unorganised sector in Morbi are already under stress due to high working capital needs, weak market environment and the disappearance of tax arbitrage which would eventually help the organised players like Kajaria to capture larger market share.

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