Brick prices fall due to low demand in Punjab

A consistent increase in wage rate, coupled with a steep hike in coal price and restrictions on mining, has made survival for small kiln owners difficult

A slowdown in the housing sector and restrictions on coal mining have stalled infrastructure and housing projects in Punjab, adversely affecting the demand for bricks. Due to sluggish demand for bricks in the last three years, sales have crashed and prices have fallen by nearly 10 per cent.

Talking to Business Standard, K K Khanduja, senior vice-president, All India Brick Kiln Owners Association, and former chairman of Punjab Brick Kiln Owners Association, said brick kilns were operating only at 20 per cent of their capacity in Punjab. For many owners, running the klins at low capacities was not viable and hence the operations had to be suspended. This had resulted in the closure of 25 per cent of the kilns.

Some of the brick kiln owners, who had planned to modernise their plants, had put their plans on hold, as a switch to an innovative technology at such low volumes was not viable.

A consistent increase in wage rate, coupled with a steep hike in coal price and restrictions on mining had made survival for small kiln owners difficult, said Kuldip Singh Makkar, Chairman of Punjab Brick Kiln Owners Association.

Sources in public sector banks and private lending institutions confirmed a tepid demand for housing in Punjab. However, the demand for housing by end-users was going steady.

The kiln owners said this segment was the only saving grace. They said structural engineering had undergone a tremendous change. A residential building used to have a 16-inch wall earlier. This was reduced to 9 inches and now, 4.5-inch walls were being preferred. This had reduced the consumption of bricks.

Despite all this, these small entrepreneurs see a light at the end of the tunnel.

Liberalising the key interest rates for housing loans and the government of India's proposal to set up 100 smart cities across India are keeping up the spirits of these SMEs.