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The last financial year proved dismal for the Indian ceramic industry as demand slowed and margins plunged drastically. Sluggish sales growth and contraction in orders made it difficult for SMEs in the industry to sustain their operations. However, things are looking up for small players as the ceramic industry is showing signs of improvement.
The unorganised ceramic and tiles sector, which was once grappling with rising costs and stiff competition from the cheaper Chinese products, is gradually receiving orders. The buoyancy in domestic demand has brought a breather for small-scale ceramic and tile producers, and they are now becoming increasingly optimistic about seeing a recovery in the near term.
Things looking up
In 2008-09, the growth rate of the ceramic industry had declined to 10% from 40% as several ceramic units scaled back production on account of rising input costs.
'Small tile-manufacturing and ceramic-producing units in the country had to cut back output levels from four lines to two, while many in Morbi were compelled to down shuttersdue to the rising production costs and lower offtake,' commented D Patel, Spokesperson, Laxmi Tiles in Gujarat.
However, market players have noticed a positive turnaround in the recent past as demand in rural areas and tier II cities has increased.
According to Morbi Ceramic Tiles Manufacturing Association, about 40% of the small-scale ceramic and tile units which closed last year are becoming operational again. Companies which were operating below capacity till recently have also begun working at over 85% capacity.
'After battling with escalating fuel costs, a demand slump, high transportation costs, exorbitant taxes and a shortage of raw materials, there's finally a flicker of revival. The influx of new orders has infused new life into small units, thereby prompting them to ensure full capacity utilisation,' said M Parekh, Spokesperson, Opera Ceramics in Morbi.
Although the ceramic industry is gradually limping back to normalcy, we are yet to see a complete recovery. Since the sector is dependent on real estate and construction activity for its business, ceramic units would have to wait for resurgence in these industries to witness long-term development.
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David Parks is a well known author and has written articles on Leather Manufacturers, B2B Portal, Jewellery Manufacturers, suppliers, Manufactures and many other subjects.
