Morbi tile industry's switch to LPG, causes demand loss for Gujarat Gas

With natural gas prices 135 per cent higher than a year before, industries in India are looking for alternatives such as LPG, which has even seen a rate reduction. Being India's top gas supplier, Gujarat Gas Ltd, has also been ranked as the best on Environmental, Social and Governance (ESG) parameters. But now it may suffer a blow in Morbi, where the robust tile industry is switching to LPG, to tackle rising production costs.

Morbi sends out 90 per cent of the ceramics which are used across India, and represent a major chunk of the market for Gujarat Gas. But the volume of gas the firm supplies to Morbi is now down by two thirds as the local manufacturers don't want natural gas.

While Morbi is important to Indians, the export of its tiles abroad has dropped amid global headwinds, further prompting cost-cutting measures. Every tile maker has invested Rs 60 to 70 lakhs in the infrastructure to adopt LPG in place of natural gas, which is why they are less likely to go back.

Exports are significant for Morbi, as they bring in Rs 15,000 crore of the total 50,000 crore revenue for the tile local industry. The district's tile makers also represent 70 per cent of Gujarat Gas's sales to the industrial sector. ICICI Bank has also predicted a 40 per cent rise in business for the sector, as the geopolitical tensions in Europe seem to be receding.

Apart from that a key competitor China is bogged down by covid restrictions due to Xi Jingping's policies. But Gujarat Gas has suffered demand loss even after cutting prices of Piped Natural Gas.

Published on: Wednesday, November 23, 2022, 09:26 PM IST