Despite being about 2000 km away from the Strait of Hormuz, its impact on the tile industry of Morbi, Gujarat is clearly visible. Due to cut in gas supply, production in many factories has stopped or reduced significantly.
Companies are increasing prices
Big companies like Asian Granito and NITCO have decided to impose fuel surcharge of up to 5% to deal with the rising fuel cost. According to Asian Granito, the company itself will bear most of the increased costs till March 31, but a 5% fuel surcharge has been implemented from March 18.
direct impact on production
Gas is the most essential input in the tile industry, especially for kilns. Due to shortage of gas the production cycle is being affected and costs are also increasing. NITCO says that this will put pressure on profits (margins) and the timing of work may also get disturbed.
Some companies are less affected
Companies like Kerakoll said that they are not dependent only on natural gas, so their production is still normal. They are using alternative fuels.
Impact on exports also
According to CRISIL, India’s ₹ 53,000 crore tile industry may face a major setback. Total revenue may decline by 12% and exports by 67% in FY26. Ongoing tensions in the Middle East and disruptions in shipping routes have led to increased delivery delays and costs. About 40% of the earnings come from exports, of which 15% is from the Middle East.
Increased shipping and logistics costs
The freight cost has increased by 4550% and insurance by 2530%, causing additional burden on the companies. Along with this, due to closure of factories, fixed costs are also being faced.
What next?
If this crisis continues for a long time, the earnings of companies may fall by 78% every month and profits may also reduce.
Big players are in better position
Big companies like Kajaria Ceramics and Somany Ceramics use multiple types of fuels (LPG, LNG, coal etc.) and have plants in different parts of the country, hence they are able to deal with this crisis better. The gas supply crisis has dealt a blow to Morbi’s tile industry. Small units are more affected, while big companies are still recovering. If the situation does not improve soon, prices may increase further and pressure on the industry will continue.