Cost to go up for Morbi ceramics manufacturers -min
Most of the suppliers in unregulated market use coal gasifiers due to lower cost. Shifting to PNG will increase their cost of production thus, further levelling the playing field which is slowly becoming even post introduction of GST and e-way bill system. This will enhance the pricing power of the players in organised market
Last week’s Gujarat High Court’s order directing the Gujarat Pollution Control Board (GPCB) to close ceramic manufacturing units using coal-based gasifiers located in Morbi within stipulated time limits, is likely to impact the volume and cost of production of ceramics in Morbi region. Also, it is likely that the Ceramic Association may go to a higher court for further remedies. In a way, ceramics manufacturers in Morbi got a double whammy last week as Gujarat Gas last week hiked gas prices by INR 1.75/scm (6%) which will push up the cost of production.
Gujarat High Court’s order is the result of complaints filed before the Court and subsequently before the National Green Tribunal (West Zone – Pune) alleging severe irreversible damage to the environment (both water and air) owing to illegal manufacturing practices, particularly using coal gasifiers. It may be recalled here that after the NGT order in November 2017, GPCB had issued showcause notices to 860 ceramic units of Morbi Wankaner region in April 2018 asking why consent to perate be withdrawn for those using coal gasifiers. The latest order of the Gujarat High Court has directed GPCB to take steps to ensure that no further damage is caused to the environment by such ceramics industries using Type-B gasifiers. It may be noted that the industries using Type A gasifiers are already closed and even electrical supplies have been discontinued.
While 50% of Morbi units are equipped with coal gasifiers, 90% of them also have PNG connections. But most of them prefer use of coal gasifiers to reduce fuel costs. Most of the suppliers in unregulated market use coal gasifiers due to lower cost. Shifting to PNG will increase their cost of production thus, further levelling the playing field which is slowly becoming even post introduction of GST and e-way bill system. This will enhance the pricing power of the players in organised market. Also, cost of production advantage enjoyed by Morbi manufacturers vis-a-vis manufacturers in other regions, say Haryana, will narrow down.