The Hindu Business Line : Falling sales, delay in export realisations hit granite industry

Chennai, Dec. 9 Falling sales and huge delays in realising sale proceeds, the granite industry is in dire straits. The industry fears huge losses of jobs — jobs that are manned by unskilled, rural folk.

The fall was evident last year itself, as a direct consequence of the sub-prime crisis in the US. (The industry caters to the housing sector, where the sub-prime crisis and the consequent financial meltdown began.)

In 2007-08, granite exports fell to Rs 4,287 crore from Rs 4,724 crore in the previous year. (Practically, all production is exported.) The first half of the current year saw a 20 per cent drop compared with the same period last year. The industry expects a 50 per cent drop in the current year. “Even that is not such a major problem,” says Mr R. Veeramani, Chairman, Granite, Natural Stones and Product Panel of the Chemicals and Allied Products Export Promotion Council. The bigger problem is that of realisation of export proceeds — the importers are simply not paying up. Mr Veeramani points to a situation where a company is making profits only on paper and yet has to pay tax on such profits.

Alongside, the prices of the products are also plummeting. On an average, prices have come down by 25 per cent over the last six months. For instance, ‘black granite’ which used to sell at $95 a square metre, today sells, with some difficulty, at $70.

There are about 1,200 factories that cut rough blocks mined from hills into saleable products such as tiles, monuments (gravestones) and sculptures. According to Mr Veeramani, who is also the Chairman of Gem Granites, at least 70 per cent of these factories are working at 20 per cent capacity or less.

In Tamil Nadu, home to about 60 per cent of the industry, there is an additional problem. Because of the absence of a State Government leasing policy, very few quarries are with the industry. Most of the quarries are under the control of the state-owned Tamil Nadu Minerals Ltd (TAMIN) and most of TAMIN’s quarries are lying unoperated, says Mr N. Mahesh, President, Tamil Nadu Granite Quarry Owners & Exporters Association.

As such, granite companies in Tamil Nadu have to get their rough blocks from other States, which adds to the costs. The industry wants NPA norms relaxed from three months to 18 months, so that the banks continue to provide working capital to the units. It also sought a moratorium of two years on interest payment for bank loans and interest subvention by the Government on fresh borrowings.

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