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The current sanitary ware market size in India is approximately Rs 1700 crore and is growing annually at a sustained rate of 15-16%. The development in the construction sector, health care and hospitality sector, housing sector and social infrastructure creation have continued to have positive influence on the growth of the sanitary ware industry. The organized segment of the Indian sanitary ware industry has a very few players but constitutes 60% of the total market share as the segment is characterized by superior products and the players in the segment such as HSIL use latest technology. There is relatively large number of players in the unorganized sector, which is characterized by basic sanitary ware products, and this sector constitutes about 30% of the total market share of the sanitary ware industry.
The Indian tile industry ranks third in terms of production and consumption after China and Brazil.
The tiles industry largely comprises ceramic wall and floor tiles and polished and glazed vitrified tiles. The competitive intensity is less in the vitrified tiles segment; the country imports vitrified tiles (especially glazed). Tiles are largely consumed by residential, commercial, retail, hospitality and aviation segments. The industry is fragmented with organised players accounting for 50% of the industry turnover; the balance was represented by small unorganized/ unbranded players, primarily in Gujarat. Rapid capacity addition, increased home ownership and rising brand aspirations resulted in a gradual shift of consumer preference towards value-added products.
Kajaria Ceramics, the largest manufacturers of ceramic/vitrified tiles in India reported consolidated Net sales of Rs 389 crore during Q2FY13. Out of which Rs 321 crore was from the own manufacturing and the rest are outsourced. The company has a margin of about 20% in own manufacturing and about 8-10% for outsourced sale. The consolidated Net profit was up by 38% at Rs 27 crore in Q2FY13 over Q2FY12. The company expects to achieve 20-25% topline growth in FY13. Total of about 10.75 M sq meter of sale happened during the quarter. According to the management, despite various challenges, company continued to perform better than the market, which grew by about 13%. Management expects H2 FY'13 to be even better than H1 FY'13. It expects the growth momentum to continue for its industry and according to the management; there is no worry for branded business as people continue to shift from unbranded to higher and better-branded players.
HSIL (Hindusthan Sanitary ware) is the largest Indian sanitaryware manufacturer. The Building Products provides a range of building products comprising sanitary ware, such as Water closets, wash basins, pedestals, squatting pans, urinals, and bidets; accessories, including PVC cisterns and fittings/seat covers; and faucets consisting of showers, kitchen faucets, and bathroom faucets. The Container Glass division provides various glass products to beverage, beer, food, pharmaceuticals, liquor, and chemical industries. The Company indicated that in this challenging environment it continues to focus on improving margins through better product mix, costs rationalization & improvement in plant efficiencies.
Cera Sanitaryware, the third largest company in the organised sector with 20% market share reported 44% surge in the Net Profits to Rs 11.03 crore on the back of healthy 52% rise in the Net Sales at Rs 111.38 crore during the latest quarter ended September 2012 when compared to the corresponding quarter last year. The company has commissioned the new Tunnel Kiln in August 2012 and commenced production in September 2012, thereby the installed capacity of the company increased to 2.7 million pieces per annum.
Somany Ceramics with the plants in Kadi (Gujarat) and Kassar (Haryana), with the production capacity of 20 million square per annum is the producer of the highest quality of ceramic glazed tiles, vitrified tiles, sanitary ware or porcelain floor tiles. During the quarter ended September 2012, the net profits of the company grew by 39% to Rs 8.02 crore on the back of 24% rise in the Net Sales to Rs 257.75 crore when compared to the corresponding quarter last year.
Ceramic Tiles production has been falling continuously since December 2011 to August 2012 on a y-o-y level. The production fell by 8% to 120245 tonnes in August 2012 when compared to the 130373 tonnes production in the corresponding month last year. While on an m-o-m level, the production fell by 6% in August 2012 after remaining flat at about 127800 tonnes for the previous two months i.e. June and July 2012.
Outlook
With the rise in the income levels of middle class, increasing awareness for sanitation and hygiene among the people and increasing urbanization, India will have a huge market for the sanitary ware products. The export market will also grow simultaneously as the major players are set to enter the international market and many multinational companies entering the Indian market will further improve the industry. However, the industry is currently impacted by the overall economic slowdown and the continuous increase in the cost of major inputs including power & fuel.
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