Home News Rising costs stare at Morbi tiles manufacturers

Rising costs stare at Morbi tiles manufacturers

Morbi tiles manufacturers may be seeing continued surge in exports order but that has not come without any price tags attached to it. Yes, Morbi tiles manufacturers are now concerned about rising costs which may take away part of their competitiveness in the market.

For example, Gujarat Gas, with effect from 24th December, 2020, has increased its gas tariff by Rs4/scm (15-18% increase) by lowering the discount structure to Rs 0.5/scm from Rs 4.5/scm. It may be noted that in the view of falling crude prices, Gujarat Gas had offered a discount of Rs 2/scm in June 2020, which was then increased to Rs 4.5/scm in September 2020.

Further, inland transportation costs have seen sharp increase in recent weeks due to surge in diesel prices which in turn is due to crude oil prices going up. Meanwhile, sea freight rates are also going up amid container availability woes.

Meanwhile, the business activity at Morbi is gathering momentum, on the back of exports and seasonal uptick in domestic markets. Most of the tile manufacturers have already taken 5-10% price increases and are now eyeing capacity additions. About 50 new units are under construction at Aniyari which is 14km away from Morbi, while 100 existing units are doubling capacity. However, the likely delay in shipments in the wake of current pandemic and expected delay from machinery manufacturers as they are flushed with orders could push the commissioning of these plants to August-December 2021. Further, a majority of these plants are likely to be GVT-based and export-dedicated.

According to analysts, Morbi volumes are estimated to register 1% YoY growth in FY21 as against the steep fall anticipated during 1QY21.

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