Weak real estate sector hits ceramic industry hard

Acche din (good days) seem to be eluding the ceramic industry in Morbi, as it faces a downturn in business because of weak demand from the real estate sector. Business, industry sources say, is down by 40 per cent and export demand is also down.

According to sources, production capacity in Morbi's ceramic industry has increased from two million boxes to three million boxes per day over the past year, and many units are planning to increase production. Production capacity is expected to touch 3.5 million boxes by December 2014.

"Many units started increasing their production, expecting good demand from the real estate sector. But, demand has not picked up and as a result, the industry is facing the burden of over-capacity over the last six months, mainly in the wall tiles segment," said M P Shorya, managing director, Orbit Cera Tiles Private Limited.

Shorya, who is also the secretary of the Morbi Dhuva Glaze Tiles Association, added that the ceramic industry in Morbi is not expected to emerge from the current overcapacity situation for the next two years. Demand or no demand, overall business, he said, will be down by at least 20 per cent over the next two years.

Compounding the weak domestic market business is the slowdown in exports, which have declined by 30-35 per cent.

Kaushik Patel, managing director, Ceramic Trade Centre, said: "Worldwide demand for ceramic products has decreased by almost 30-35 per cent in the current financial year because of a dull real estate sector. Asian markets are weak and revival will take time."

In a related development, all board members and directors of the Morbi Dhuva Glaze Tiles Association resigned last Sunday. There is now no active body to represent the industry. Sources said dissatisfaction among members of the association and the governing body had recently grown because of inappropriate handling of issues related to the industry - mainly the price of gas and the dispute with the Gujarat Pollution Control Board.