Morbi, the biggest cluster of the ceramic industry in India, will cut production by taking a holiday for a month from August in order to balance the demand-supply ratio.
The decision was taken last week at a meeting of ceramic association, where 95 per cent of the units agreed for a month’s holiday. Stocks are piling up in the godowns of the units because of slow demand.
Morbi’s yearly turnover is Rs 50,000 crore and yearly export is about Rs 15,000 crore. The only biggest competitor of Morbi in the world is China.
The input cost for the industry is high because of high prices of piped gas which increased exorbitantly following gas shortage in the world market due to the Russia-Ukraine war. The industry could not increase the price for the export because of tough competition from Chinese and European countries and it had eaten up industry’s profit in the last six months. The export was affected due to the war and stocks are piling up.
And in the domestic market, the demand has gone down because of a slowdown in construction of affordable houses. This is because of price rice in raw material in the real estate sector and increase in interest rate for home loans.
Nilesh Jetpariya, former president of Morbi Ceramic Association, said: “We have decided to go on a one-month vacation from August 10 to balance demand and supply. Currently, we have excessive supply against demand as a result of which we are not able to increase the price which is eating up our profit.”
According to him, around 50 new units have come up and they added 10 per cent to total production but the demand has decreased by at least 20 per cent over the last six months. “Overall, 30 per cent inventory remains unsold every month which is piling up in godowns,” he said. The ceramic industry works for 24 hours and it cannot stop temporarily for a few hours.
There are around 2 lakh workers working in Morbi’s ceramic industry and majority of them are migrant workers. The industry has decided to allow ‘leave without pay’ to those workers who want to go to their native places. Those who want to stay will be given some additional work of repairing and maintenance.
Haresh Bopaliya, president of Morbi Ceramic Association’s Wall Tiles Division, said: “About 95 per cent of members agreed with the idea of one-month vacation and now we are working out a mechanism to execute this plan. We have more than 50 per cent stocks piling up and there is no space in the godowns to house any extra stock.’’
