However, the Tamil Nadu Ceramics and Refractory Manufacturer’s Association (TANCERMA) is really optimistic about the changing industry outlook. In an exclusive interaction with SupportBiz, V. Somasundaram, President, TANCERMA, said the industry will bounce back to profitability in two to three months.
As the long-standing power crisis is mostly resolved now, how is the ceramics and refractory industry performing?
The industry has not been performing that good for the past two years, mainly due to the power crisis. We mainly depend on the steel industry, which has been badly affected by the frequent power interruptions and that had a direct impact on our business growth as well. However, with the power crisis resolved now, we are hopeful that the industry will be back to its growth track in the next few months. Moreover, the demand for the bed materials (for power plants) used in high temperature boilers will definitely go up as the power problems are over. We also hope that the current financial slowdown will slowly improve in the coming months, which should improve our growth prospects as well.
What are the other major issues the industry is faced with now?
The industry here in south has many issues and the critical issue is the production cost. The companies in northern India has a much lower production cost than us because of the disparity in fuel costs. Many of the northern states have their own gas plants. More than 50 percent of our production cost is spent on fuel requirements. We spend Rs.14/ kg for fuel gas for ceramics while manufactures in states like Gujarat spend just Rs.6-7/kg. Similarly, when we spend Rs.3/kg for refractory, players there spend as little as Rs.1/kg. The selling price for ceramics is Rs.20/kg and refractory is Rs.6/kg, which makes the industry here an unlikely competitor to the north industry. As the North Indian companies slowly invade our territories with this pricing advantage, it becomes really tough for us to go forward.
In addition, entrepreneurs in Tamil Nadu also suffer from the unavailability of good quality raw materials.
So how do you propose to meet these challenges?
Natural gas is available in Buvanagiri and Narimanam, places not very far from Vriddhachalam. If we can make this natural gas available to the industry here, the business will flourish, rates will come down and another 200-300 industries will come up here for sure. With an investment of Rs.100 crores, natural can be brought by pipes to Vridhachalam.
We approached the government to make raw materials available for the industry. We requested the government to provide us a mine, like the fireclay mines at Panruti. Giving us access to one of the many mines under the Tamil Nadu Minerals Limited will offer us an unlimited availability of raw materials at home.
We further demanded the government to take initiatives to connect all the industries by industrial feeder and not through rural feeder.
We are also in the process of creating refractory and ceramic clusters, which is an Rs.12 crore project. We have already opened our ceramic cluster (Rs. 90 lakhs project) and our refractory cluster will begin its operation by 2015. The center government has granted us Rs.7 crores while state government has provided us with 1.5 cores, the rest of the amount will be raised by our members.
What are your other suggestions for the betterment of the industry?
We request the government to open a branch of the Central Glass and Ceramics Research Institute (CGCRI) in Vriddhachalam so that we can train our members better. We have also asked the government for a special economic zone in Vriddhachalam just for the fact that ceramics and refractory are available only in this area in Tamil Nadu. If the government helps us out with this, Vriddhachalam will be on par with other leading industries in the state. A special economic zone status can improve our quality and production of refractory, tiles, ceramics etc. This can improve the infrastructure and other facilities in here which will definitely attract more players to the industry including foreign companies.
How do you look at the future of ceramic and refractory industry?
It all depends on how well we improve our infrastructural facilities here. The future is definitely looking bright for us. I should also acknowledge the fact that the present government is helping us in many ways. Indian Refractory Makers’ Association and Indian Ceramic Society are also helping us to improve our research and development programs. So, we are really optimistic and are looking ahead to an improved business scenario for ceramics and refractory industry.