10% growth predicted in ceramics industry

Friday, 30 May 2003, 07:00 Hrs
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CHANDIGARH: The ceramics industry in northern India has expressed optimism about business prospects over the next six months with an overall growth up to 10 percent.

A business perception survey released by the PHD chamber of commerce and industry indicated that half the units surveyed in Haryana, Uttar Pradesh, Madhya Pradesh and Rajasthan reported a decline in profits during the last six months.

The survey released Thursday attributed the decline to the recessions prevailing in the domestic and global markets.

However, the survey stated: "The prospects ahead are certainly better in view of the prevailing boom in the housing industry which is rekindling hopes of a consequent rise in demand for tiles and sanitary ware as a furnishing material."

The survey points out 67 percent of the units expect a growth in sales during the next six months. Another 33 percent expect to retain their sales margin.

Besides, 67 percent expect their profit margins to either increase or remain the same in the coming fiscal.

Companies are also upbeat about their future exports prospects with almost every company surveyed predicting a higher or the same level of exports.

According to the survey, almost all companies have described the prospects of business improvement in the next six months as good. It revealed that only 17 percent of the companies achieved capacity utilisation of over 80 percent.

"The revival of domestic demand continues to be a cause for concern. Not surprisingly, 83 percent are not contemplating fresh investment in the existing business units in the coming months."

It was found that around 50 percent of the corporates were not threatened by competition from imports. Moreover, the anti-dumping duty imposed on import of items such as vitrified porcelain tiles from China and Middle East has also served to protect the industry against cheap imports.

The remaining 50 percent are of the view that influx of cheap imported goods in large volumes remains a problem area. The progressive reduction of the import tariff in view of India's World Trade Organisation commitments is also adversely affecting the domestic industry.

The survey said that the respondents found themselves constrained by the business environment prevailing in north India. Among the four most important factors that hinder business development, infrastructure and power remain the foremost problematic areas.

"Industry is of the opinion that the prevalence of bad roads as well as inconsistency and poor quality of power and high power tariff is adversely affecting their cost of operation," the survey said.

The industry feels there is an impelling need to focus on internal reforms, which would revive demand and improve the investment climate in the region.

It strongly demanded the immediate restoration of supply of natural gas to affected units in the National Capital Region of Delhi.
Source: IANS
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