The challenges this industry faces in India are customs duty on raw materials, high and volatile fuel costs, and cut throat competition from unorganized domestic players and imports. Customs on raw materials and allotment of fuel costs is a common issue across most sectors. Allotment of fuel prices is not uniform in all states and hence in the end, the overall production costs go up. The unorganised sector accounts for almost 55 % of this industry. This also stands as a hurdle for smooth functioning in this industry.

Glazesed / Ceramic tiles production in India

Based on production data from Central Statistical organisation, India's glazed / ceramic tile production grew by 2.8% to 854151.57 tonne in April-October 2010, which represents deceleration from 3.8% rise to 830546.83 tonne in the corresponding previous year period. However, this can be treated as a fair sample of All India production, and not the actual production in the country, considering the fact that many unorganized sector production data is not captured by the above data. owever,

 Nitco turns around

Nitco turned around with a profit of Rs 6.78 crore in the quarter ended September 2010 as against whopping Rs 8.27 crore of losses in the corresponding previous quarter. This was achieved, thanks to 94% rise in sales to Rs 157.17 crore and improved margins during this period. The losses in the quarter ended September 2009 was due to suspension of sales of vitrified tiles and marbles due to regulatory issues raised by Directorate of Revenue Intelligence regarding compliance and procedural aspects.

Somany Ceramics introduces vitrified tiles

Sales of Somany Ceramics rose 31% to Rs 162.54 crore, while its net profit rose 17% to Rs 5.48 crore in the quarter ended September 2010. Somany Ceramics has introduced glazed vitrified tiles under the Duragres brand. They reportedly have the durability of full-body vitrified tiles and also come with Veilcraft shield technology. They are meant for high footfall areas where durability is the biggest requirement. They are available in the size of 600 x 600 sq. mm, in close to 20 designs. Prices start at Rs 65 per sq. ft. and go up to Rs 80.

Kajaria Ceramics reports 52% spike in net profit

Tiles-maker Kajaria Ceramics has seen its share price rise by over 80% in the past one year, sharply outpacing the Sensex, which gained 16%. This is primarily due to sharp improvement in turnover and profitability in the past few quarters. In the quarter ended September 2010, the company's sales 20% to Rs 221.75 crore on y-o-y basis. This coupled with 31% fall in interest costs to Rs 8.12 crore helped the company to report 52% rise in net profit to Rs 13.32 crore during this period.

Kajaria Ceramics is in the process of adding 6 msm capacity of high-end polished/glazed vitrified tiles at its Gailpur plant to be commissioned by January 2011. Once commissioned, this will replace the company's imports and help improve operating margins. The company is aiming to achieve about Rs 950 crore of turnover in FY11 with operating margins above 16.5%.

HSIL plans foray into ceramic tiles

HSIL is India's leading sanitaryware and glass bottles producer. The company recorded 27% rise in sales to Rs 215.51 crore, but 179% spike in other operating income to Rs 6.48 crore and 12% fall in interest costs to Rs 9.67 crore together helped the company to report healthy 52% rise in net profit to Rs 13.93 crore in the quarter ended September 2010.

HSIL is planning to get into tiles production either by acquiring an existing facility or setting up a greenfield unit, as part of its portfolio restructuring aimed at becoming a total bathroom-ware firm for the middle and upper classes. Simultaneously, the company is also ramping up production capacity of its sanitary products facility in Andhra Pradesh from the present 2.8 million pieces to 4.2 million a year by December 2011. Further, the company will expand capacity of the Rajasthan tap manufacturing unit it had acquired as part of electrical goods maker Havells India's bathroom accessories and fittings business earlier this year.

The company has just entered the tiles segment with the launch of Hindware Italian collection. Presently, it is sourcing the tiles from manufacturing hubs across the world, but later will have their own unit either through acquisition or a greenfield facility. After acquiring Havells India's bathroom accessories business, under the label of Crabtree, HSIL is in the process of doubling capacity of the Rajasthan tap manufacturing facility at a cost of Rs 200 crore within 18 to 24 months to provide a connect to its bathroom accessories business. The company hopes to double its exports within the next 18 months by getting into new markets. Currently, exports constitute 5 % of its turnover, with the major markets located in the UK, Australia and Africa.

Orient Ceramics to buy 63% in Bell Ceramics

Orient Ceramics and Industries (OCIL) announced that it has entered into a share purchase agreement with Bell Ceramics (BCL). OCIL will acquire a 62.92 % stake in the company from its promoter S.K. Jatia. OCIL also said that it would also make an open offer to the shareholders of BCL for the acquisition of up to 24,34,762 shares or 20 % of voting rights. BCL has plants in Vadodara and Bangalore. The total installed capacity of both the plants is 146 lakh sq meter a year. The acquisition of majority stake in BCL is in line with OCIL's inorganic growth strategy.

Decolight Ceramics operations were impacted due to heavy rains

Decolight Ceramics Ltd has informed that, because of the heavy rain accompanied by heavy icefall and storm on November 17, 2010 in the Morbi area, the company had suffered heavy damages. The company lodged a detailed claim with the Insurance Company who had already surveyed the damage. Initially it was hoping that the factory could be got back to operations in three four days, but based on the surveyors and management assessment, it would take around twenty days to regain operations of the factory.

Outlook

With intensifying competition – amongst organised players, with unorganised players and also against imports, have meant players have to straddle across price line with an array of products suited to the consumer taste. Accordingly, the players are launcing matt, satin, stone and wooden styles of finish to attract customers, besides the regular glossy ones. The focus is also shifting on basis of tile sizes, with larger tile sizes, rather slabs, coming into play over their smaller counterparts. This will also be an year when consumers will be introduced to some of the slimmest tiles, with thickness as low as 4.5 mm. The ceramic industry is often considered to be a minor segment within the construction sector.

The unprecedented boom in housing has has widened the overall market size and increased per capita consumption making India one of the top players in the world. India is witnessing strong demand for ceramic tiles, thanks to rebound in real estate and construction sector. As the IT/ ITES, hospitality and healthcare sector growth accelerate, the ceramic tiles is witnessing acceleration in demand growth. Also, the improving rural, semi urban and urban income and the increased urbanisation helps in better demand growth.