Varmora runs 80% of its plants on propane at ₹92 per SCM; Kajaria flags further price rises amid limited visibility on fuel costs
Morbi’s ceramic cluster has resumed large-scale use of propane after supplies normalised following the disruption caused by the Iran war in March. Varmora Granito, a major player, has shifted about 80 per cent of its plants back to propane, citing availability and affordability. Its chairman noted that the company retains the flexibility to switch to LNG from Gujarat Gas if propane becomes costlier, since both fuels are currently accessible.
The fuel mix matters because propane and natural gas are not directly comparable on price alone. Propane is quoted at roughly ₹92 per SCM against about ₹85 per SCM for Gujarat Gas’s natural gas. However, propane carries a higher calorific value of around 11,110, against 8,300-8,400 for natural gas, so less volume is needed to produce the same heat. The effective cost therefore turns on consumption patterns and plant efficiency. Morbi units source propane from Indian Oil Corporation, Bharat Petroleum Corporation and Aegis.
Why fuel costs matter
Fuel is a critical input for kiln operations, and the March shutdown exposed how dependent the cluster is on uninterrupted supply. Production halted on March 5 and stayed largely suspended until April 15. With propane available again, manufacturers are recalibrating, but the price equation remains unstable. Kajaria Ceramics told investors that propane prices rose twice in the preceding fortnight, including a ₹12.5 per SCM increase over two to three days, while natural gas fell ₹5.5 per SCM in the same period. Propane was still about 5 per cent cheaper on Kajaria’s comparison, but the company expects further increases and sees no visibility on gas prices declining.
Natural gas in Morbi has climbed from around ₹50 per SCM on February 28 to approximately ₹85. Tile prices have been raised in response. Kajaria reported increases of 18-19 per cent across categories in Morbi, with broader cluster-wide hikes estimated at 30-40 per cent. Its North and South plants, where gas is cheaper, saw sma…
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