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COVID-19 disaster: Working capital crunch hits Gujarat ceramic cluster

Nearly 900 models in and round Morbi city are closed even earlier than the announcement of first part of lockdown.

India’s largest ceramic trade cluster, located in and round Morbi city located within the western a part of Gujarat, wouldn’t be capable to begin operations for a minimum of a few months following extreme working capital crunch and different points, even after availing permission from the state authorities to begin manufacturing actions.

“Nearly 900 units in and around Morbi town are closed even before the announcement of first phase of lockdown. Now the government is encouraging us to start production. But most of these units are facing scarcity of working capital as more than Rs 1,200 crore have been stuck since mid-March. We don’t see any possibility of payment from different stakeholders in near future even if lockdown would be lifted,” says Nilesh Jetparia, president of Morbi Ceramic Association, including that in such crucial scenario, the trade would require some form of bundle from banks to handle the difficulty.

Moreover, there was no demand from home in addition to worldwide markets and therefore it could take a minimum of couple of months to begin manufacturing, he says. The ceramic trade of Morbi and elsewhere should look forward to the revival of real-estate sector and solely after that some demand could be generated, he added.

Many export-oriented models in Morbi had produced tiles and different sanitary gadgets after they obtained export orders, however on account of COVID-19 outbreak they don’t seem to be capable of provide items which have already been manufactured for shipments in numerous nations, says Dinesh Sadsania, a number one exporter in Morbi. Nobody is aware of when these costly merchandise specifically manufactured for export markets could be shipped to totally different nations, he lamented.

Nearly 25% to 30% of the Morbi ceramic cluster’s complete manufacturing is being exported to over 170 nations internationally. Of the entire export, practically 35-40% is being exported to Middle-East nations. According to Sadsadia, on account of holy month of Ramzan, markets in Muslim-dominated nations would stay shut until May 25, 2020. Against the annual turnover of round Rs 45,000 crore, the cluster’s worth clever exports stands at roughly Rs 13,000 crores.

“In domestic market ceramic units give up to five months credit to dealers. Huge amount of Morbi based units stuck with dealers. Looking to years of business relations, we can’t pressurise dealers to pay money instantly as they are also facing financial crunch in current situation,” he added.

Sources within the trade additionally foreseeing points associated to transportations in addition to migrant labourers who’ve gone to their home-state following lockdown. Owners of ceramic models are giving ration to these employees and their households who determined to not return to their natives and as an alternative most popular to remain at Morbi.

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