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Stone Industry News

 

Stone industry seeks relief to survive recession

 

April 30, 2009

 

The Indian granite and natural stone industry is in dire straits. With its major markets including the US and Europe badly hit by recession, the stone industry in the large developing countries is clueless on survival other than seeking government assistance. According to various reports, nearly three hundred stone businesses in Hosur, Bangalore and Hyderabad are on the verge of being closed  down . In Tamil Nadu, more than 30 quarries out of  165 in total are closed. It is estimated that granite exports this year will be significantly less than in the fiscal year of 2007-08.

Granite and stone importing countries such as the US, China, Italy have largely reduced their demands. According to experts, India's granite and natural stone exports could be down by 15-20 percent this year.

Over the last several decades, the Indian granite industry has been greatly modernized to meet global standards. Fabricated stones, sculptures and monuments made in India have been exporting to the countries all over the world. With its skilled manpower and advanced stone technology, India has contributed to the world prestigious monuments such as the Holocaust Museum and the Vietnam War Memorial in Washington; Hiroshima Atom Bomb Memorial in Japan and Black Forest of Germany. However, the global recession has dampened India's hopes for sustained growth in stone exportations. The industry is finding the ways of survival.

 
 

Major problems

One of the major problems for the stone industry in India is the payment of over twelve percent service tax on the commission paid to agents abroad for getting business. Many agents are willing to get 3-4 containers of business every month on a 10-12 percent commission against invoice prices, so the suppliers have to work at 5% margin in order to be competitive in pricing. Apparently, the high taxes to the government erodes the profit margin.

According to reports among 165 business units that supplied finished stone products, nearly 30 have been shut down in the last few months. These units were heavily dependent on the US, which is the largest importer of finished products such as monuments and tombstones. Five years ago, nearly 70 percent of granite export was raw blocks and 30 per cent was finished product. The percentages are now completely the reverse. So the problems that the suppliers of the finished products are facing reflect the situation in the entire stone industry.

The US and European stone markets have been badly hit by the global economic crisis although there is still some demand from China for granite blocks. Many stone companies indicate that they have to reduce their prices by 25-30% during this recession.

It is predicted that the recovery in the stone industry will not likely to happen until September, 2009.  Preliminary data suggest that during the current fiscal year, the demand for stone products from US is down as much as 50% while the demand from China and Europe has also dropped by nearly 30%.

With reduced global demands and pitiful profit margins, the stone industry worldwide is suffering staggering downturn as a direct result of the recession.

 
 
 

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