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Morbi is limping back to normalcy

Morbi, the ceramics cluster of India, is slowly limping back to normalcy after prolonged closure due to nationwide lockdown. While April and May were blank months as far as operations are concerned June saw slow pick up in the activity. Nearly 60% of the units have started operations after lockdown with utilisation rate of 70-80%.

In their endeavour to restart the operations tile manufacturers are aided by friendly pricing of natural gas. According to the industry sources, Gujarat Gas has reduced gas prices in Morbi by Rs 2-2.5 to Rs 29/scm. The industry expects another drop in gas prices by Rs 1-2/scm in July’20 as Ras Gas, spot gas and domestic gas prices have declined.

According to the industry, demand has been on expected lines and is satisfactory on domestic front in the backdrop of prolonged lockdown. On the exports front too things are looking normal and Morbi ceramics industry expects exports to grow 10—20% during the current financial year.

However, the industry is facing problem vis-à-vis financing which is hard to come by. Most of the Morbi players are now working on a cash and carry model and demanding 90% cash down-payment as against earlier practice of 10%. Most of the Morbi players are forced to follow this practice as the majority of working capital is blocked in receivables. The Morbi industry works on a lean inventory model as production is based on order. Labour shortage has added to the cost which has gone up by 5-10%. The industry expects labour to return in next 4-5 weeks.

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