Multiple factors have helped the tile manufacturers to post a decent growth in the fourth quarter and the most important being the booming export market. Sustained demand for Indian tiles abroad has helped the industry, especially in Morbi area, to divert substantial portion of the capacity to meet export demand thus helping the manufacturers catering to domestic market to sell their products without compromising on price.
However, most of the demand for tiles in the domestic market has come from tier 2, 3 and 4 cities while major cities have not yet completely returned to normalcy in terms of economic activities. Major tile manufacturers catering to domestic market, like Kajaria, Somany and Cera are likely to post high single digit growth in volume in the fourth quarter.
Despite the strong demand for the tiles there are some issues of concern for the tiles manufacturers, the most important one being the natural gas price which has seen upward revision on couple of time in last two quarters. Since natural gas cost accounts for nearly 25% of the input cost sharp (upward) movement in their prices will impact the cost of production for the tile manufacturers.
Emergence of second wave of covid-19 which is severe in Western part of the country and that too in Gujarat, may play spoilsport for the industry’s growth, at least in the near term. Along with the second wave, industry is also seeing reverse migration of unskilled workers though not on the scale of last year but unless the intensity of the pandemic is controlled situation may soon go out of hand. This is really a cause of worry for the tile manufacturers in Morbi.