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In a booster to ceramics industry, Gujarat Gas cuts prices

Rutam Vora Ahmedabad | Updated on September 08, 2020 Published on September 08, 2020

Industry sees 4-5% cost benefit making them globally competitive

In a major boost to the tiles and ceramics industry in Gujarat, the State government on Tuesday reduced gas prices by ₹2.5 per standard cubic meter (SCM).

State-run city gas distribution (CGD) firm Gujarat Gas Ltd (GGL) supplies piped natural gas to ceramic clusters in Morbi, Surendranagar and Sabarkantha districts.

The relief is likely to help domestic ceramics players compete with China, the world’s largest producer of ceramics, in the the international markets.

While the move is set to improve the profitability for the ceramics players, it has also brightened the prospects for a larger share in the export market.

“Currently, China dominates in the world ceramics market covering about 55-60 per cent of the global market. But now many countries are avoiding purchases from China such as US, Europe or Middle East and they are turning to India. That is a game changer for our industry,” said Prafulla Gattani, Executive Director, Asian Granito India Ltd, a leading ceramics player based in Ahmedabad.

Asian Granito plans to double its export business this fiscal. “We had done about ₹150 crore of exports last year, and we are set to touch ₹310 crore exports this year," Gattani told BusinessLine.

While announcing the reduction in the gas prices for the ceramics industry, Gujarat Chief Minister Vijay Rupani stated that in these pandemic times the industry needed this relief to compete successfully in the international markets and increase exports.

Gujarat Gas, in which Gujarat government holds 74.68 per cent stake through its companies including Gujarat State Petronet Ltd, Gujarat State Fertilizers & Chemicals Ltd, and Gujarat Alkalies & Chemicals Ltd, saw its shares tumbling by over 4 per cent on the BSE on Tuesday to close at ₹288.95.

Gujarat Gas currently, supplies about 6.5 million standard cubic meters per day of natural gas in these three ceramics clusters.

For the industry, gas costs comprise about 30-35 per cent of the total costs. A reduction in gas prices is expected to bring down costs by about 4-5 per cent whereas industry expects the profits to improve by about 1-2 per cent.