Patel community powers Morbi’s ceramic industry
Morbi was earlier the city or town where clocks and watch parts were made. Readers would recall that the largest company in this sector from here was Ajanta Quartz and this company was known across the length and breadth of this company. Somewhere down the line when technology changed and electronic watches became the norm, this industry died down. They then turned to ceramics and it is now here to stay. In between, Morbi had also become the CFL hub and there were a large number of manufacturers of these lights and fittings.
The ceramic industry employs about 3.5 lakh people directly and possibly another 3-4 lakh get employment in and around this area in ancillary industries. Corrugated packaging is a big allied industry and so is transporting industry. It is reported that Morbi range contributed Rs 1,700 crore towards excise duty in the last fiscal.
This industry should ideally have been situated in Rajasthan as the bulk of the raw material which is clay, limestone and various types of mineral resources are all mined in Rajasthan and then transported to Gujarat. The ingenious spirit of the ‘Patel’ community, which is a high risk-taking community, has ensured that the entire business in Morbi is owned and controlled by them. They have great bonding and are a constant source of support to one another. So much so, that if one factory owner does an innovation or saves cost using a local technique, he invites other manufacturers to see what he has done and benefit from it.
Let us look at the economics of this business and the capital expenditure required to set up a plant. A typical plant cost between Rs 60 crore and Rs 70 crore with land and machinery for a production capacity of 11,000-12,000 sq m plant per day capacity. This would translate into a sales figure of approximately Rs 110 crore per annum. The second plant at the same place would cost an incremental Rs 40 crore to Rs 45 crore and yield a similar top line.
Morbi has its own home-grown labels as well in the form of Varmora, Simpolo and Qutone. These are brands which have grown over the years and have done well for themselves. They have a national presence. Going forward what would be the approach of new players towards branding? Maulik Patel of Sunworld Vitrified said, “There would be some who would try to brand their produce every year. Hardly two or three would succeed as the exercise is costly and also makes the products expensive. Currently, the costing of organised and unorganised players is the difference between overheads and marketing expenses. In terms of quality, the difference is grading where organised players have a higher grading system and Morbi has a marginally lower grading system.” In absolute terms, this is a huge difference and makes branding questionable.
Land prices in Morbi have risen significantly and are probably the highest in the state only because of abundant transfer of end use from agricultural to non-agricultural purposes. Seeing the prosperity of business in the place and the ease of entering partnerships, even farmers are tempted to invest a portion of land prices into business. In Morbi, it is possible to enter into a partnership of 10 per cent or 20 per cent at a ‘pan shop’ (betel nut) and you can exit that without elaborate paperwork. The farmer only invests in a minority stake and rides his luck in business as well.
Arun Kejriwal