Year 2021 began on a bad note for the Morbi tiles manufacturers as the natural gas supplier, Gujarat Gas, increased the price of natural gas by Rs 4/scm in the new year. Analysts expect Ras Gas too to hike the gas prices on account of recent rally in crude price which will impact tile manufacturers outside Gujarat. However, considering the strong demand conditions, tiles manufacturers may not find it difficult to pass on the increased cost to the final consumers. A price increase of 3-4% is expected due to increase in the price of natural gas.
Meanwhile, demand for Indian (Morbi) tiles from international market is growing unabatedly. Despite the washout in April-May 2020 period due to the COVID-19 lockdown, tile exports rose 41% YoY during July-October 2020 which helped to make up for the loss in revenue in earlier months. Exports have jumped from average Rs 700-800 crore to Rs 1000-1400 crore in past 4 months and more importantly, there is strong visibility of demand for next 6-9 months.
According to industry sources, various countries have imposed anti-dumping duty on Chinese tiles thus making Indian tiles attractive in the international market. Also, there is strong anti-China sentiment owing to COVID-19 which is helping the Indian exporters to increase their market share globally and enter new markets.
Booming export market has helped the players in the domestic market to hold onto their market share and also expand it as substantial portion of the Morbi tiles production is diverted to international market. Many players in the Morbi cluster reported to have tightened their credit terms, substantially reduced the discount offers and have become irregular in meeting their supply commitments. This has helped the domestic branded manufacturers to increase their market share in the domestic market in the aftermath of lockdown relaxation.