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Industry Analysis : Marble and Other Dimensional Stones Industry India's contribution to the world dimensional stone market

is around 10 percent and it produces 27 percent of the world's stone. The annual growth rate of the industry is about 15 percent and it is now the third largest natural stone producer in the world, after Italy and China. (major stones- raj 90%)

SUPPLY OF MARBLE Rajasthan has a large spectrum of minerals in which building stones enjoy an important place. Marble occupies a unique position among building stones due to its pleasant look and easy carving. District Ajmer (Makrana), Rajsamand, Udaipur, Chittorgarh, Banswara, Alwar, Sirohi, Jaipur etc is known for the mining of Marble. Estimated marble reserves of the state are 1100 million tons, which are more than 91% of the total marble reserves of the country.

Marble Supply near Udaipur There are three main belts of marble in Udaipur district iz. Babarmal-Devimata, Jaspura-Daroli and Rikhabdeo. All these three belts produce different types of marbles i.e., pink from BabarmalDevimata, white from Jaspura-Karoli and green from Rikhabdeo. Besides, important occurances are also found in Salumber and Dhariawad tehsils. Babarmal marble deposit: Pink marble of Aravalli Supergroup occurs near villages Devimata and Babarmal. It is located about 25 kms. south of Udaipur. The marble is siliceous, light pink to dark pink in colour, fine to medium grained impurities form grey to greenish color bands which make it attractive. Rikhabdeo Green marble deposit: Green marble is the trade name of serpentine marble. In the past, the only known occurences of this rock were in Baroda (Gujrat), from where it was mined and marketed under the trade name of "Green Marble". After the discovery of green marble in Udaipur and Dungarpur districts of Rajasthan, it has become one of the most popular building stone product from this region.

Jaspura-Daroli marble deposit: Greyish-White coloured, medium grained, crystalline limestone occurring near Jaspura, Daroli villages in 25 km. east of Udaipur on Udaipur-Chittaurgarh highway, is being mined as adanga marble having various patterns and shades. Besides, marble in Udaipur district is also being mined in small amounts near Bamniya, Baroda (Salumber tehsil), Manpur, Lohagarh (Dhariawad tehsil) etc. Marble and other dimensional stones Processing Industry The availability of marble mines near Udaipur region has led to the establishment of marble cutting and processing industry in the region. There are numerous marble processing units in and near Udaipur. The industry is mainly unorganized and the size of the players varies significantly. The processing are units engaged in cutting of marble in the form tiles and slabs of different sizes. Mining and stone cutting activities in Rajasthan have developed over the years and have grown in past 20-25 years play an important role in the economy of the state providing direct and indirect employment to people. The marble explosion and cutting giving good revenue to state and central government through sale of finished products in local and export markets. Marble and granite processing industry is typical in nature, its efficiency is dependent on the quarry products. In many countries processing is done on highly sophisticated machinery for quality production. In Udaipur very few units are using these machines while rest of the industry uses locally fabricated machinery by few existing manufacturers in the country. The industry is characterized by the following features: Initial Investment requirement for setting up a processing unit is relatively low, while the investment required for setting up mining operations is much more. Thus forward integration is easy while backward integration in the industry is difficult. Lately many mine owners have started their own processing units. Suppliers that can provide big quantities and can operate their own quarries have a clear edge over others. This has led to increased competition and price wars for marble. Customer switching cost is low. The product differentiation mainly occurs due to the difference of the materials from the quarry. This enables customer to choose material from the firm with the lowest prices.

There exists a big supply excess due to which the sellers are forced to keep the prices low. Small suppliers sometimes dump the market by lowering their prices severely, just for the sake of selling their product and generating cash. Therefore, bigger marble producers on scale do not always enjoy a clear price advantage even though their average operating cost may be lower.

Also, market competition is highly differentiated by quality (vertical differentiation). This depends on target demand and whether the end user is local or production is done for export purposes.

In addition, horizontal differentiation also exists (according to type and color of marble produced). Usually, horizontally differentiated competition is for suppliers who target the elite market.

Substitute Products: Ceramic slabs and tiles have come out as one of the major substitute products over marble and granite products. These alternatives are cheaper to use, much lighter and can be obtained in several customized shapes sizes and designs. Marble gains over these substitutes in its finish, strength and its elite perception.

Market As per the Report of the Working Group for 12th Plan, Planning Commission of India, the growth is continuing and the demand for marble and other dimension stones, viz, granite, sandstone, etc. and stone products is anticipated to grow at around 15% CAGR. Marble and other dimensional stones are usually cut in form of tiles and slabs of different sizes and are used for construction purposes. Marble industries in Udaipur cater to both the domestic and export markets. With the decrease in price of marbles, marble has become a viable option for the middle class customers which have led to the increase in the demand over the years. Udaipur marble industries cater to customers all over India with major customers located at -------------------. The domestic customers are mainly real estate agents, builders and distributors. Exports of marble (total) increased to 321,293 tonnes in 2010-11 from 275,502 tonnes in the previous year. Out of total marble exported in 2010-11, exports of dressed marble at 251,567 tonnes constituted 78% while exports of other marbles at 69,726 tonnes accounted for remaining 22% (INDIAN BUREAU OF MINES , 2011). The industries in Udaipur are involved in two ways, Indirect Export where they cater to export agents which in turn are involved in exporting

the material to the builders and distributors and direct exports, where the processing industry is involved in export of material to offshore customers. Almost 50% of the worlds marble output is consumed in the Middle East , Far East and European countries. Major countries where the Udaipur mining companies export to are: --------------------------------------------

FACTORS AFFECTING SUPPLY-DEMAND The demand for marble for domestic use has increased in past few years, mining and processing operations have become more effective operationally but the prices for the finished products have come back sharply. In our opinion, the present hard times faced by the industry in the state are in fact a result of imbalance of demand and supply of marble in the market, along with some external factors. Increased Production Lured by the high profit margins of the trade and low entry barriers for new entrants, several entrepreneurs have entered in the industry. Advent of sophisticated mining machinery and development of new mining fields have also led to increased marble production. The biggest role in this has been played by the invention of wire saw & chain saw for marble mining and diamond gang saw for the processing. To bring down the cost per ton of production, most of the big mine owners followed the principle of increasing the production. As a result markets were flooded with marble and there were few takers. Moreover, the reduction in wastage has also resulted in increased production. All this resulted in supply of huge surplus to the demand in the market. Increased Supply Capacity Some new deposits of marble have been discovered. Earlier in Rajasthan there were only two marble producing regions, i.e. Makarana and Ambaji, but now 20 districts of the state are producing marble. As supply of marble kept on increasing the prices were forced to come down. Decrease in growth rate of construction activities. There has been a global reduction in the growth rate of construction activities since last few years. Marble industry has its sole dependence on the construction industry. The production of marble has increased in the past few years and the construction activities too have increased. The core of the problem is that rate of growth of marble production is having an increasing trend

whereas the growth rate of construction activities world over is having a declining trend. So the supply of marble is much more than what is required.

Overall Global Recession Faced by the World Economy The whole world economy is facing the recessionary trend since past few years. This has affected most of the industries, but the commodities of necessity. As marble is not an essential commodity, marble and related industries have faced a decrease in demand due to decreased purchasing power of consumers. This phenomena is not limited to India but is evident the world over. Experts are of the opinion that the world economy is right now going through the troughs of the trade cycles. International Disturbances Major disturbances in the world and especially in the Indian subcontinent have attributed to decrease in exports of marble from India. Following the growing tensions with the neighboring countries, India has to give due cognizance to its militia and defense. Other Marble Producing Nations This is yet another reason for decreased exports from India. Other countries like China, Italy, Greece, Spain etc. are not only producing good quality of marble, but they have shelved their prices too, in the past few years.

ABOUT COMPANY Location: Size (Area) Equipment: Varieties: Major Customers: Aim: 1. Export 2. Mine PROCESS FLOW