A sharp fall in the Indian rupee against the US dollar has resulted in a windfall gain for the ceramic cluster in Morbi, Gujarat.
A sharp fall in the Indian rupee against the US dollar has resulted in a windfall gain for the ceramic cluster in Morbi, Gujarat. The industry which has a large number of exports orders on hand has witnessed an impressive gain in profit margins because of the depreciation of the rupee.
“It is a good time for us as the rupee depreciation has added nearly 4-5% more to our profit margins. In terms of value, we believe that our exports growth would be about 20% because of the fall in the rupee against the dollar,” said KG Kundariya, president of the Morbi Ceramic Association.
The ceramic industry has taken several steps to boost exports and as a result has a large number of export orders on hand now. Small and medium manufacturers which are doing direct exports from Morbi since the last couple of years will get support due to rise in profit margins.
Kundariya said, “Morbi is the home of about 750 small and medium size manufacturers and it is having nearly 90% share in production in India. Most of these units are now involved in exports business. A rise in profit margin will help expand further.”
According to the industry estimate, during the first half of the current financial year, India exported ceramic tiles worth Rs 6,000 crore. The figure could go up to Rs12,500-13,000 crore by the end of 2018-19. Last year, the country had exported about Rs 10,000 crore.
However, big corporates are not seeing much benefit in rupee depreciation as it has increased the cost of energy and transportation within the country.
Kamlesh Patel, chairman and managing director of Asian Granito India, said: “Organised players like us do not see much benefit of rupee depreciation as other costs like transportation, imported materials and energy have gone up.”
Moreover, big players are more focused on domestic business rather than exports. So, benefits of rupee depreciation mostly elude them.
GG Trivedi, CEO of Somany Ceramics and council member – west zone of the Indian Ceramic Society, said, “Morbi-based manufacturers are more active in exports business and that’s why their margins have gained due to rupee depreciation. Big corporate players, on the other hand, are largely focused on the domestic market and their exports share is nominal.”
Morbi is the third-largest manufacturing hub for ceramics in the world after China and Italy.
The turnover of the Indian ceramic industry is estimated at Rs 33,000 crore. Of that, Morbi alone contributes about Rs 30,000 crore annually. The city provides employment to more than 4.50 lakh