Wednesday, August 30, 2017
I am listing down the problems we are facing in Granite industry especially in state of Tamilnadu .
Blow No 1
Environmental clearance certification It has been more than 6 months since Environmental clearance issues cropped up for granite industry . Till now absolutely no clarity on when this will be sorted out --
Implication: Half of Granite quarries closed. running quarries increased the price, No corresponding price increase possible from international market . Already marked blocks are rotting in sun/rain and not sure if they would be saleable when the issue gets sorted out.
Blow No 2
Implementation of weight restriction on transport carriers. since 4 months we are unable to more Jumbo sized blocks for processing/export from Many parts of south India especially from AP and Telungana. 300X200X200 used to be the most convinient size for gangsaw cutting factories. after wire dressing if we spot and crack/blemish in one side , we could always at in the other direction and still get 300X200 slabs. But now unless blocks are well dressed by wire and 100% sure of quality at quarry , many factories are reluctant to but dressed down sizes. this resulting in increased cost for quarries too. Cost increase 3-4 %
Blow No 3
GST Implementation. Most of the granite blocks/processed slabs are exported and Govt has promised 90% refund of the Huge levy (28% for slabs) with in 6-7 working days. It has been 60 days now and a hint about when we will get refund. if we need to believe recent clarifications, any one who is exporting under LUT ,especially merchant exporters, need to wait more than a year for the refund. clear deadly blow for all small/medium sized companies . This will cost the products 3-4 % more on additional working capital. atleast here Govt. must ensure refund before 30 days
For detail report ready our other article on GST on Granite industry
Blow No 4
District Mineral Foundation fund ( DMFF) : Though this is implemented in AP /Telungana more than a year back, Tamilnadu state just issued notification for additional seignorage fee of 30 % . Already seignorage fees are highest in Tamilnadu, without engaging industry or consulting to review the seignorage fee this additional levy is enforced. for small Black granite we buy from TAMIN we will be ending up paying as high as 7800 per CBM (around 125 USD) only as seignorage fee + 12 % GST on this fee . cost increase 30 USD/CBM for blocks and 300 USD for black granite slabs per container and 150 USD per container for colour granite slabs. In per ton basis we are paying almost more than Rs 1500( 25 $),which is probably highest in any minerals (Iron, bauxite, coal ,zinc etc)
Blow no 5
Declining value of USD: Cost of running business usually increases by 10-15 every year in India usually because of increase in wages, rental, transportation, power cost etc. usually part of this met by Rupees's depreciation againt USD and part of increased efficciency on productivity. But since January Rupee has actually strengthened about 7% against USD. In the same period Euro has appreciated about 15 % against USD. This costs 7 % on Value of export. while the purchasing power of Rupee has declined in real term due to inflation, It is had to understand how rupee can strengthen otherway.
Blow no 6
Daily revision of Fuel prices
Since last one month Diesel prices steadily climbed to Rs 4 /Lite or 6 %. every day revision is creating confusion on transporters and they go on safer side by factoring default price increase sitting the daily revision. in Granite business upto 25 % is spent only on Transporting the blocks/slabs. what costed us Rs 1600 per MT from Khammam/warangal to Chennai today cost not less Rs 2000/ MT. That is Rs 1600 Or USD 25/ CBM on blocks additional than before.