Many ceramic tile manufacturers have entered into fuel linkage agreement with the petroleum/energy companies to ensure regular fuel availability and guard against price volatility
Rising fuel price is a matter of grave concern for energy intensive sanitaryware manufacturing industry who are already badly hit by poor demand due to double whammy of demonetization and GST. Under the normal circumstances the manufacturers would have readily passed on the fuel price hike to the consumers but not under the present market conditions. However, some manufacturers are contemplating moderate price hike in the beginning of the third quarter to cover the cost of rising fuel costs.
Tile manufacturing involves a highly energy intensive manufacturing process and as such gas and power prices are critical for the operations of the industry. Also, transportation cost too impacts the industry in the wake of increasing diesel prices. Fuel cost usually accounts for around 25% of the sales of ceramic tiles manufacturers. Many tile manufacturers have entered into fuel linkage agreement with the petroleum/energy companies to ensure regular fuel availability and guard against price volatility.
Largely dominated by family-owned and managed units, Indian Ceramic Tiles industry is the world’s third largest manufacturer of ceramic tiles at 825 million square metres (in calendar year 2014) in CY14, after China and Brazil. India is also the third largest consumer of tiles in the world, accounting for about 6.25% of global ceramic tile consumption.