Business Daily from THE HINDU group of publications
Thursday, Jun 15, 2006
Business Daily from THE HINDU group of publications Thursday, Jun 15, 2006 |
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Corporate
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Outlook Regency Ceramics pins hopes on gas in K-G basin C.R. Sukumar
Prioritisation The company has segregated the limited supply of gas by prioritising its use for kiln firing and started using alternative fuels for other activities.
Hyderabad , June 14 Hit by shortages and high prices of natural gas, Regency Ceramics Ltd, the Rs 153-crore ceramic tiles manufacturer, is pinning hopes on the recently announced huge gas reserves in the Krishna-Godavari basin. Both Reliance Industries Ltd (RIL) and Gujarat State Petroleum Corporation (GSPC), which claimed huge finds of natural gas in the KG basin, are expected to begin their production sometime next year. "The overall short supply of natural gas and abnormal increase in gas prices continue to be the cause of concern for the industry in the region. It is more so in our case since our regular operations and strategic expansion undertaken in the previous years are more dependent on the gas supply from K-G basin. As against 100 per cent capacity utilisation in 2003-04, the company could only utilise around 60 per cent capacity in the last two years," the RCL Chairman and Managing Director, Dr G.N. Naidu, said. GAIL (India) Ltd, which supplies natural gas to the industry in the region, had upwardly revised the cost of gas prices by 80 per cent with effect from July 1 last year. GAIL had also reduced the gas supplies to companies like Regency. To counter the threat, the company has segregated the limited supply of gas by prioritising its use for kiln firing and started using alternative fuels for other activities. At present, the company is dependent only to an extent of 70 per cent on natural gas and is meeting the balance 30 per cent requirement from imported coal, which costs nearly same that of natural gas but comes without any supply constraints, Mr Naidu told Business Line. The company expects the increased and uninterrupted gas supplies from Reliance and GSPC from next year onwards to enable it overcome the current fuel constraints, he said. According to Mr Naidu, the expansions and modernisations undertaken by almost all players during the last two years to cope with the increased demand coupled with dumping of cheap Chinese imports had created oversupply positions in the country. The industry is now in consolidation mode, struggling for reasonable price realisation. "Towards addressing this risk, Regency is focussing on its research and development activities for offering best in terms of varieties of product mix with number of designs, qualities, value-added products and innovative concepts," he said.
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