Soda Ash Industries: A Victim of Policy Paralysis?
N N Radia, COO, Soda Ash, GHCL Ltd

In an exclusive interaction with CEW, N N Radia, Chief Operating Officer, Soda Ash, GHCL Ltd illustrates some of the major predicaments that the Soda Ash industry has been facing due to the prevailing Policy Paralysis and Anti Dump Policy.

Natural Soda Ash Versus Synthetic Soda Ash
The first and foremost challenge is the dilemma of making the right choice between natural soda ash and synthetic soda ash. Moreover, the prevailing cost disparity in the prices of natural soda ash which is comparatively far less than synthetic soda ash has killed competitiveness. Adding fuel to the plight is the dumping of soda ash by China and other natural soda ash manufacturing countries which further diminishes the competitiveness of Indian soda ash manufacturers.

Raw Material versus Policy Paralysis
High input cost of raw materials is the other deterrent factors in the progress of soda ash industry. Variation in season and meteorological condition and external demand of salt makes it costlier for soda ash industries. Besides, availability of good quality of limestone due to the stagnation in decision making for mining sector has forced the Indian industries to get limestone from abroad which is about four times costlier than domestic limestone. According to Radia, cost of energy in soda ash manufacturing is about 45 per cent of total production cost. This means that an increase in input energy cost reduces the competitiveness of Indian players versus Global players. Apart from that, the multiple government taxation on power makes the manufacturing of soda ash uncompetitive as compared to global players.

Logistics versus Pricing
Most of the soda ash manufacturers are located in Gujarat. Distance between consumers and manufacturers increases the soda ash transportation costs. Average freight to customers in southern and eastern region from western region (Gujarat) is approximately USD 50 per MT whereas the average freight for imports ranges between USD 25 to USD 30 PMT. Due to this transportation cost, difference between domestic and imported soda ash, imported soda ash becomes attractive for eastern and south India based customers. To manufacture one MT of soda ash about 4-5 MT of raw materials is required. Hence transportation cost of raw material is significant. High diesel prices further aggravate the situation.

Despite these demotivational factors, Radia is very optimistic on the Indian market. According to him, rising GDP and urbanisation will certainly lead to higher per capita use of products manufactured through soda ash. Moreover, supportive policy from the new government for mining, cheaper import of coal and labour laws will accelerate the pace of the industry. Besides, improved road and water ways will help in reducing cost of logistics. He further added that increase in demand of glass due to growth in Automobile sector and construction industry, growth of water treatment industry, mining, flue gas desulphurisation will help in growth of soda ash industry.