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III SEMESTER MBA

INDUSTRY ANALYSIS REPORT

ON

CERAMIC TILES INDUSTRY


Submitted to

DEPARTMENT OF BUSINESS ADMINISTRATION

ANNAMACHARYA P.G COLLEGE OF COMPUTER STUDIES

(Affiliated to J.N.T.University)

BY

Name : G.PRASANTHI

Roll No : 085NIE0022

Supervisor : S.MUNEERA
(Asst. professor)

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CONTENTS
Name of the topic Page No.

1. Profile 1-15

2. Data 16- 23

3. Tools Of Analysis 24-25

4. Analysis 26-34

5. SWOT Analysis 35

6. Observations 36

7. Conclusion 37

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PROFILE
INTRODUCTION:

Ceramic and cement based tile are similar in at least one respect, they both are often
formed by similar means. That is where the similarity ends. After the formation of the tile
body, ceramic tiles go through a firing process. Cement tiles are not fired.

All tiles start out in the earth. Raw materials are quarried and refined. In the case of
ceramic tiles, this includes clays, talc, and other minerals. Obviously cement based tile
include cements and sands. Great care is taken in the proper mixture of these materials, as
each one is critical to the success, quality and characteristics of the product produced.
Once the raw materials are quarried, prepared, and properly mixed, the tiles may now be
formed.

The latin word tegula and its french derivative tuile mean quite precisely a roof tile of
baked clay. the english tile is less precise, for it can in addition be used of any kind of
earthenware slab applied to any surface of a building the word ceramic comes from the
greek word keramos meaning pottery, it is related to an old sanskrit root meaning to
burn but was primarily used to mean burnt stuff.

.Ceramic Industry in India is about 100 years old. It comprises ceramic tiles, sanitaryware
and crockery items. Ceramic products are manufactured both in the large and small-scale
sector with wide variation in type, size, quality and standard. India ranks 7th in the world
in term of production of ceramic tiles and produced 200 million sq. meters of ceramic
tiles, out of a global production of 6400 million sq. meters during 2003-04. State-of-the-
art ceramic goods are being manufactured in the country and the technology adopted by
the Indian ceramic Industry is of international standard. The word "Ceramic" has
originated from the Greek word, "Keramos", which means pottery. It also relates to an
ancient Sanskrit word whose root meaning is to burn, but it is predominantly used to
indicate "burnt stuff". Almost 10,000 yearslater, with the establishment of settled
communities, tiles were manufactured in Mesopotamia and India.

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The first instance of functional pottery vessels being used for storing water and food is
thought to be around 9,000 or 10,000 BC. Clay bricks were also made around the same
time.The usage and the art of making and decorating ceramic tiles had spread and by 900
A.D., decorative tiles had become widely used in Persia, Syria, Turkey and across North
Africa. As transport and communication developed, tile usage and its penetration in other
territories increased. Wars and territory take-overs caused this art to spread even faster.

The Romans introduced tile making in Western Europe as they occupied territories. The
Low Countries of Northern Europe somehow acquired the technology from Persia, while
the Moors brought African tiles with them when they invaded Iberia (Spain). .
By the end of the 12th century, use and manufacture of Ceramic Tiles had spread across
Italy and Spain and into the rest of Europe. Till that time they were mainly used to
decorate the floors of Cathedrals and Churches. The skill had eventually vanished from
Europe in the 16th century following the reformation. A form of tile making had also
evolved among the natives of North and South America at some point. The first
decorative tiles to appear in Colonial North America were imported from Northern
Europe, mainly England the Brits having hijacked the technology from the Dutch.

In the early days, the tiles were hand-made, each tile was hand-formed and hand-painted,
thus each was a work of art in its own right. Ceramic tile was used almost everywhere on
walls,floors,ceilings,fireplaces,inmurals. Today Ceramic tile throughout the world is not
hand-made or hand-painted for the most part. Automated manufacturing techniques are
used and the human hand does not enter into the picture until it is time to install the tile.
They are used in an almost infinite number of ways and you dont have to consider
yourself wealthy to own them. In commercial buildings, where both beauty and durability
are considerations, ceramic tiles will be found, particularly in lobby are as and restrooms.

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In fact most modern houses throughout use Ceramic tiles for their bathrooms and
kitchens and in every vital area of the premise. Ceramic tiles are also the choice of
industry, where walls and floors must resist chemicals. And the Space Shuttle never
leaves Earth without its protective jacketofhigh-tech,heatresistanttiles

HISTORY

Historically, man has desired to create living spaces which were beautiful, durable, and
user friendly with that in mind, ceramic tile has been made by man for 4000 years
beautiful tiled surfaces have been found in the oldest pyramids, the ruins of babylon, and
ancientruinsofgreek cities. Decorative tilework was invented in the near east, where it has
enjoyed a longer popularity and assumed a greater variety of design than anywhere in the
world. during the islamic period, all methods of tile decoration were brought to perfection
in persia. in europe decorated tiles did not come into general use outside moorish spain
until the second half of the 12th century. the tile mosaics of spain and Portugal the
maiolica floor tiles of rennaisance italy, the faiences of antwerp, the development of tile
iconography in england and in the netherlands, and the ceramic tiles of germany are all
prominent landmarks in the history of ceramictile.

The ceramics industry in India came into existence about a century ago and has matured
over time to form a industrial base. From traditional pottery making, the industry has
evolved to find its place in the market for sophisticated insulators, electronic and
electrical items. Over the years, the industry has been modernising through new
innovations in product profile, quality and design to emerge as a modern, world-class
industry, ready to take on global competition.

Though there are a number of large companies in the ceramics sector, small and medium
enterprises (SMEs) account for more than 50 per cent of the total market in India,
offering a wide range of articlesincluding crockery, art ware, sanitaryware, ceramic tiles,
refractory and stoneware pipes among others.Most of the players are grouped together in
clusters.Over the last two decades, the technical ceramics segment has recorded an

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impressive growth propelled by the demand for high-alumina ceramics, cuttings tools and
structural ceramics from the industry.

Through the centuries, tile decoration was improved upon, as were methods of tile
manufacture. For example, during the Islamic period, all methods of tile decoration were
brought to perfection in Persia. Throughout the known world, in various countries and
cities, Ceramic tile production and decoration reached great heights. The tile mosaics of
Spain and Portugal, the floor tiles of Renaissance Italy, the faiences of Antwerp, the
development of tile iconography in the Netherlands, and the Ceramic tiles of Germany
are all prominent landmarks in the history of Ceramic tile.

PRESENT-SCENARIO:
During the last financial year, SMEs in the Morbi ceramic industry witnessed lower sales
growth NAdue to declining demand in both domestic and international markets. The
growth rate of the industry had gone down from 30%-40% to 10%

Added to the falling orders, the unorganized ceramic and tiles sector had to grapple with
rising costs and stiff competition from the cheaper Chinese products, which were
flooding the domestic market.

Last year, while several small tiles manufacturing units had to cut down production from
four lines to two, many units in Morbi had to shut shop due to increasing production costs
and falling revenues, reveals D Patel, Spokesperson, Laxmi Tiles, a small-sized tile
manufacturing company in Gujarat.

Moreover, small players in the Morbi ceramic industry were severely affected by higher
taxes, rising costs of fuel and transportation, lack of raw materials and a slowdown in
demand from the construction sector. Due to such problems, tile manufacturing units
were compelled to operate at less than half the capacity.

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GROWTH TRENDS:

Indian ceramics industry provides employment to 550,000 people, of whom 50,000 are
directly employed.

As per 2007-08 estimates, there are at present 16 units in the organised sector, with an
installed capacity of 21 lakh million tonnes (MT). This accounts for 2.5 per cent of the
world ceramic tile production. The ceramic tile industry has been growing at about 12 per
cent per annum.

In 2007-08, production of ceramic tiles was estimated to be at a 290.00 million square


metres as against 220 million sq. metres of ceramic tiles, out of the global production of
6,400 million sq.metres during 2006-07, when India was ranked 7th in the world in terms
of production of ceramictiles produced.

Gujarat accounts for around 70 per cent of total ceramic production, and the
unorganised sector,comprising entirely of SMEs, manufactures a staggering 37 per cent
of the countrys total ceramicoutput.

India ranks fifth among tile makers globally, with the unorganised sector accounting for
55 per cent of the countrys total tile business, according to the Indian Council for
Ceramic Tiles and Sanitaryware, an organization of tile makers. Production of tiles stands
at about 340 million sq. m a year, and annual turnover for the organized sector is about
Rs 2,865 crore (US$ 588.77 million), while it is about Rs 3,500 crore (US$ 719.21
million) for the unorganised sector.

The size of the unorganised ceramic tiles industry - comprising wall tiles, floor tiles and
fully vitrified tiles - is around US$ 3.5 billion. These are exported to East and West Asian
countries.

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In sanitaryware industry, at present, the production capacity in organised sector is 1.43
lakh MT per annum, and 3,65,695 MT production has been estimated in 2007-08. In the
small scale sector, there are over 200 units with capacity of 53,000 MT per annum. The
industry turnover is above Rs 500-600 crores (US$ 102.77 million - US$ 123.32 million)
per annum. Sanitaryware industry has been growing by about 5 per cent per annum
during the last two years.

Potteryware, signifying crockery and tableware, are produced both in the large scale and
thesmall scale sectors. There are 16 units in the organised sector, with a total installed
capacity of 43,000 MT per annum and the production was estimated at 58,781 MT for
2007-08. Small-scale sector has over 1,200 plants, with a capacity of 3 lakh MT per
annum. Bone china and stoneware contribute to the major portion of the production of
ceramics tableware. There are, at present, 16 units in the organized sector with an
stalledcapacityof21akh MT. It accounts for about 2.5% of world ceramic tile

EXPORTS:

India exports ceramics worth approximately US$ 1 billion per annum. The main export
products are chemical porcelain and insulators, handicrafts, artware and stoneware
crockery.

The ceramic tile industry has shown a growth rate at about 12 per cent per annum.
These are exported to East and West Asian countries. The exports during 2006-07
amounted to Rs 251.20 crores (US$ 51.63 million).

The exports in sanitaryware industry was to the tune of Rs 93.49 crores (US$ 19.21
million)during 2006-07.

The export of potteryware during 2006-07 was of the order of Rs 45.50 crore (US$ 9.35
million)and major markets include the US and Europe.

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IMPORTS:

Renovation and modernisation of existing houses will also drive the demand
Excise duty on ceramic tiles reduced from 24 per cent to 16 per cent in the Union
Budget 2001-02
Floor tiles projected to grow faster, driven by the shift from Mosaic to ceramic
tiles High growth rate of around 12 % will be sustainable, can even go upto 20 to
25 % according to some analysts. Ceramic Tiles today have become an integral
part of home improvement. It can make a huge difference to the way your
interiors and outdoors look and express
The Indian tile industry, despite an overall slowdown of the economy, continues
to grow at a healthy 15% per annum.
Investments in the last 5 years have aggregated over Rs. 2000 crores and
production during 2006-07 stood at approx. 340 million sq mts.
The Indian tile industry is divided into organized and unorganized sector.
The organized sector comprises of approximately 16 players. The current size of
the unorganized sector is about Rs 3000 crores
The unorganized sector accounts for 55% of the total industry bearing testimony
of the attractive returns from this sector. The size of the unorganized sector is
approximately Rs 3500 crores.
Revenue earning industry - excise mops up over Rs. 350 crores annually from the
organized sector itself.
Indian rank Indian ranks in the top 5 list of countries in terms of tile production in
the world.

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MANUFACTURING PROCESS:

Once the raw materials are processed, a number of steps take place to obtain the finished
product. These steps include batching, mixing and grinding, spray-drying, forming,
drying, glazing, and firing. Many of these steps are now accomplished using automated
equipment.

Batching

For many ceramic products, including tile, the body composition is determined by
the amount and type of raw materials. The raw materials also determine the color
of the tile body, which can be red or white in color, depending on the amount of
iron-containing raw materials used. Therefore, it is important to mix the right
amounts together to achieve the desired properties. Batch calculations are thus
required, which must take into consideration both physical properties and
chemical compositions of the raw materials. Once the appropriate weight of each
raw material is determined, the raw materials must be mixed together.

Mixing and grinding

Once the ingredients are weighed, they are added together into a shell mixerribbon mixer,
or intensive mixer. A shell mixer consists of two cylinders joined into a V, which rotates
to tumble and mix the material. A ribbon mixer uses helical vanes, and an intensive mixer
uses rapidly revolving plows. This step further grinds the ingredients, resulting in a finer
particle size that improves the subsequent forming process (see step #4 below).
Sometimes it is necessary to add water to improve the mixing of a multiple-ingredient
batch as well as to achieve fine grinding. This process is called wet milling and is often
performed using a ball mill. The resulting water-filled mixture is called a slurry or slip.
The water is then removed from the slurry by filter pressing (which removes 40-50
percent of the moisture), followed by dry milling.

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Spray drying

If wet milling is first used, the excess water is usually removed via spray drying.
This involves pumping the slurry to an atomizer consisting of a rapidly rotating
disk or nozzle. Droplets of the slip are dried as they are heated by a rising hot air
column, forming small, free flowing granules that result in a powder suitable for
forming.

Tile bodies can also be prepared by dry grinding followed by granulation.


Granulation uses a machine in which the mixture of previously dry-ground
material is mixed with water in order to form the particles into granules, which
again form a powder ready for forming.

Forming

Most tile is formed by dry pressing. In this method, the free flowing powder
containing organic binder or a low percentage of moistureflows from a hopper
into the forming die. The material is compressed in a steel cavity by steel plungers
and is then ejected by the bottom plunger. Automated presses are used with
operating pressures as high as 2,500 tons.

Several other methods are also used where the tile body is in a wetter, more
moldable form. Extrusion plus punching is used to produce irregularly shaped tile
and thinner tile faster and more economically. This involves compacting a plastic
mass in a high-pressure cylinder and forcing the material to flow out of the
cylinder into short slugs. These slugs are then punched into one or more tiles
using hydraulic or pneumatic punching presses.Ram pressing is often used for
heavily profiled tiles. With this method, extruded slugs of the tile body are
pressed between two halves of a hard or porous mold mounted in a hydraulic
press.

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The formed part is removed by first applying vacuum to the top half of the mold
to free the part from the bottom half, followed by forcing air through the top half
to free the top part. Excess material must be removed from the part and additional
finishing may be needed.

Another process, called pressure glazing, has recently been developed. This
process combines glazing and shaping simultaneously by pressing the glaze (in
spray-dried powder form) directly in the die filled with the tile body powder.
Advantages include the elimination of glazing lines, as well as the glazing waste
material (called sludge) that is produced with the conventional method.

Drying

Ceramic tile usually must be dried (at high relative humidity) after forming,
especially if a wet method is used. Drying, which can take several days, removes
the water at a slow enough rate to prevent shrinkage cracks. Continuous or tunnel
driers are used that are heated using gas or oil, infrared lamps, or microwave
energy. Infrared drying is better suited for thin tile, whereas microwave drying
works better for thicker tile. Another method, impulse drying, uses pulses of hot
air flowing in the transverse direction instead of continuously in the material flow
direction.

Glazing

To prepare the glaze, similar methods are used as for the tile body. After a batch
formulation is calculated, the raw materials are weighed, mixed and dry or wet
milled. The milled glazes are then applied using one of the many methods
available. In centrifugal glazing or discing, the glaze is fed through a rotating disc
that flings or throws the glaze onto the tile. In the bell/waterfall method, a stream
of glaze falls onto the tile as it passes on a conveyor underneath. Sometimes, the
glaze is simply sprayed on. For multiple glaze applications, screen printing on,

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under, or between tile that have been wet glazed is used. In this process, glaze is
forced through a screen by a rubber squeegee or other device. Dry glazing is also
being used. This involves the application of powders, crushed frits(glass materials),
and granulated glazes onto a wet-glazed tile surface. After firing, the glaze particles
melt into each other to produce a surface like granite.

Firing

After glazing, the tile must be heated intensely to strengthen it and give it the
desired porosity. Two types of ovens, or kilns, are used for firing tile. Wall tile, or
tile that is prepared by dry grinding instead of wet milling (see #2 and #3 above),
usually requires a two-step process. In this process, the tile goes through a low-
temperature firing called bisque firing before glazing. This step removes the
volatiles from the material and most or all of the shrinkage. The body and glaze
are then fired together in a process called glost firing. Both firing processes take
place in a tunnel or continuous kiln, which consists of a chamber through which
the ware is slowly moved on a conveyor on refractory battsshelves built of
materials that are resistant to high temperaturesor in containers called saggers.
Firing in a tunnel kiln can take two to three days, with firing temperatures around
2,372 degrees Fahrenheit (1,300 degrees Celsius).

For tile that only requires a single firingusually tile that is prepared by wet
millingroller kilns are generally used. These kilns move the wares on a roller
conveyor and do not require kiln furnitures such as batts or saggers. Firing times
in roller kilns can be as low as 60 minutes, with firing temperatures around 2,102
degrees Fahrenheit (1,150 degrees Celsius) or more.

After firing and testing, the tile is ready to be packaged and shipped.

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BYPRODUCTS:

A variety of pollutants are generated during the various manufacturing steps; these
emissions must be controlled to meet air control standards. Among the pollutants
produced in tile manufacture are fluorine and lead compounds, which are produced
during firing and glazing. Lead compounds have been significantly reduced with the
recent development of no-lead or low-lead glazes. Fluorine emissions can be controlled
with scrubbers, devices that basically spray the gases with water to remove harmful
pollutants. They can also be controlled with dry processes, such as fabric filters coated
with lime. This lime can then be recycled as a raw material for future tile.

The tile industry is also developing processes to recycle wastewater and sludge produced
during milling, glazing, and spray-drying. Already some plants recycle the excess powder
generated during dry-pressing as well as the overspray produced during glazing. Waste
glaze and rejected tile are also returned to the body preparation process for reuse.

QUALITY CONTROL:

Most tile manufacturers now use statistical process control (SPC) for each step of the
manufacturing process. Many also work closely with their raw material suppliers to
ensure that specifications are met before the material is used. Statistical process control
consists of charts that are used to monitor various processing parameters, such as particle
size, milling time, drying temperature and time, compaction pressure, dimensions after
pressing, density, firing temperature and time, and the like. These charts identify
problems with equipment, out of spec conditions, and help to improve yields before the
final product is finished.

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PRODUCTS:

Technical ceramics consists of adhesives, alumina products bearings, beryllium


products biocreamices dental bioceramices,medical implants,boride products, carbide
products,catalysts,cermet coating, boron nitride, carbon-carbon composites, ceramic-
polymercomposites,intermetallicculters,knives,cuttingtools,dies,engine
components,tilters,fuel cells,glass-ceramices heat exchanges.

Artistic ceramics products consists of ceramics artware, sculptures, glass artware,


lighting, ornamental aware pottery. These are typically mass consumptions items and
have large market shares new designs styles command consumer attraction and sales.

Electrical and electronic applications includeantennas,dielectric capacitors,


conductors crystals,diodes,electrical porcelain insulators,ferrits and Ferro
management filters,forsterite ceramics tiles high voltage insulators hybrid circuits I c
packing,R.C.l low voltage hard and soft magnets,oscillators,SAW piezo electric, pyre
electricals,rectifiers,resistors,thick-film,resonators,semiconductors,sensors,spark
plugs,substacts aluminum nitride substrate glass substacts,silicon carbide, super
conductors,microwaves,wire tapes,thermistors,transducers transformes,ultrasonic
ceramics varistors

KEY PLAYERS:

Saint-gobain was one of the foremost players to enter India and the success story is
exemplary for other potential entrants. The saint-gobain group entered India in1966 by
acquiring a majority stake in grind well Norton. Location at sriperumbuder near Chennai,
with an initial investments of 125 million this plant manufacturer float glass for
mirrors,architectural,automotive segments and otherapplication.This groups net turnover
has seen a steady increase over the years. glass a accounted for the majority of sales,
followed by adrasives,ceramics&plastics and reinforcement.

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DATA

Income details

Ceramic Tiles
Rs. Crore (Non-Annualised) Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08
Total income 2203.35 2589.05 3138.64 3774.3 4854.56 5493.02
Sales 2107.72 2510.74 3085.36 3737.64 4802.09 5419.27
Industrial sales 2030.12 2403.78 2757.59 3045.98 3653.24 3911.52
Sale of goods 2019.74 2396.65 2751.42 3036.12 3634.61 3854.34
Sale of scrap 1.17 1.36 2 1.82 2.24 2.9
Sale of raw materials 0.03 0.06 0 0 0.89 3.47
Job-work income 0.47 1.16 1.9 3.17 6.59 14.14
After sales service income 0 0 0 0 0 0
Construction income 0 0 0 0 0 25.63
Sale of electricity & gas 0 0 0 0.25 4.88 5.57
Fiscal benefits 8.71 4.55 2.27 4.62 4.03 5.47
Income from non-financial services 77.6 106.96 327.77 691.66 1148.85 1507.75
Trading income 75.91 98.51 322.9 687.74 1147.01 1505.65
Income from financial services 15.14 18.6 9.64 12.65 23.82 43.34
Fee based financial services income 0 0 0 0 0 0
Fund based financial services income 12.38 11.18 8.78 8.09 14.32 22.58
Interest income 7.8 7 6.34 4.38 6.16 10.59
Dividends 0.93 1.01 0.89 2.27 5.66 9.48
Income from leasing,etc. 3.65 3.17 1.55 1.44 2.5 2.51
Income from treasury operations 2.76 7.42 0.86 4.56 9.5 20.76
Profit on sale of investments 0.51 1.14 0.36 4.24 3.6 7.52
Profit on long term investments 0.47 0.43 0.35 0 1.27 3.21
Profit on current investments 0.04 0 0 0 0.92 3.77
Income from other treasury operations 0.27 0.31 0.32 0 0.05 0
Gain relating to forex transactions 1.98 5.97 0.18 0.32 5.85 13.24
Other income 6.4 6.26 7.85 10.1 13.04 14.41
Prior period & extra-ordinary income 74.09 53.45 35.79 13.91 15.61 16
Prior period income 72.67 49.69 33.85 10.56 6.22 14.13
Cash prior period income 0.17 36.32 11.57 1.39 1.26 2.72
Bad debts recovered 0 0 0.01 0 0 0
Residual and combined cash prior period income 0.17 36.32 11.56 1.39 1.26 2.72
Non-cash prior period income 72.5 13.37 22.28 9.17 4.96 11.41
Provisions written back 10.76 11.95 20.91 9.05 4.87 11.41
Residual and combined non cash prior period income 61.74 1.42 1.37 0.12 0.09 0
Extra-ordinary income 1.42 3.76 1.94 3.35 9.39 1.87
Profit on sale of fixed assets 0.55 3.54 1.12 1.23 8.46 1.36
Insurance claims 0.4 0.22 0.82 1.96 0.93 0.51
Contra entry for depreciation added 0 0 0 0 0 0
Gain on change in accounting policies 0 0 0 0 0 0
Change in stock 5.36 57.87 125.87 100.25 189.71 96.27
No of companies 33 35 36 35 35 29

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Expenses details

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Ceramic Tiles
Rs. Crore (Non-Annualised) Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08

Total expenses 2114.81 2516.18 3130.17 3757.38 4871.38 5376.62


Raw materials, stores & spares 550.62 638.09 891.57 898.53 1114.11 1148.29
Raw material expenses 460.86 526.65 771.76 772.51 968.92 978.45
Stores, spares, tools consumed 89.76 111.44 119.81 126.02 145.19 169.84
Packaging expenses 40.73 70.91 75.09 103 123.15 129.72
Purchase of finished goods 69.37 168.55 374.99 616.41 982.67 1276.82
Power, fuel & water charges 346.87 439.67 478.11 576.01 682.4 734.53
Compensation to employees 156.26 191.2 217.38 247.48 328.44 391.22
Indirect taxes 252.7 214.88 219.86 279.44 345.85 371.76
Excise duty 228.18 187.47 189.18 226.98 269.7 291.85
Royalties, technical know-how fees, etc. 1.43 0.28 0.27 0.59 0.54 0.5
Rent & lease rent 14.76 17.22 16.52 18.86 26.71 34.74
Repairs & maintenance 27.83 37.79 41.62 43.51 52.63 55.13
Insurance premium 6.65 7.4 12.27 11.61 15.5 14.14
Outsourced manufacturing jobs 5.62 7.71 7.06 7.21 7.52 7.33
Outsourced professional jobs 4.27 6.7 8.23 7.26 11.15 11.28
Directors' fees 0.01 0.04 0.12 0.17 0.21 0.19
Advertising expenses 35.62 39.54 64.44 51.01 59.11 60.5
Marketing expenses 85.18 108.7 117.62 175.72 227.08 227.12
Distribution expenses 71.61 96.72 116.01 143.81 208.87 182.63
Travel expenses 20.76 25.7 29.2 28.91 38.41 45.96
Communication expenses 8.44 9.98 10.07 7.53 9.68 10.74
Printing & stationery expenses 1.54 1.97 1.88 1.95 2.7 2.84
Miscellaneous expenses 24.23 27.48 33.04 54.06 70.83 80.19
Other operational exp. of indl. Enterprises 0.79 7.22 6.05 9.84 10.47 5.85
Other operational exp. of non-fin. services enterprises 0 0 0 1.02 0.8 0.8
Fund based financial services expenses 173.54 144.75 151.23 165.2 190.14 221.62
Interest expenses 171.17 142.01 147.77 161.54 185.66 217.52
Financial charges on instruments 2.37 2.72 3.46 3.63 4.42 4.04
Other fund based financial services expenses 0 0.02 0 0.03 0.06 0.06
Fee based financial services expenses 7.74 10.52 10.59 9.34 12.23 11.74
Bill discounting charges 0 0 0 0 0 0
Bank charges, guarantee fees, etc. 7.74 10.52 10.59 9.34 12.23 11.74
Treasury operations expenses 1.57 1.04 1.48 2.55 3.41 14.82
Loss on sale of investments 0 0.12 0.27 0.01 2.06 10.09
Loss on sale of long term investments 0 0.05 0.15 0 0.01 0
Loss on sale of current investments 0 0 0 0 2.05 10.09
Loss relating to forex transactions 1.57 0.92 1.21 2.54 1.35 4.73
Loss on revaluation of investments 0 0 0 0 0 0
Total provisions 15.12 4.44 4.67 4.95 4.72 3.5
Provisions for bad/ doubtful advances, debts 9.19 4.22 4.48 4.95 4.36 3.27
Depreciation (net of transfer from reval. reserves) 137.51 151.42 165.39 185.2 214.88 226.22
Amortisation 6.17 6.13 4.13 3.93 5.41 3.89
Write-offs 7.68 5.96 7.68 6.97 3.42 5.47
Less: Expenses capitalized 9.67 1.31 0.68 0.63 1.12 0.99
Less: DRE & expenses charged to others 0 0 0 0 0.25 0.38
Prior period & extra-ordinary expenses 12.16 12.03 5.67 10.19 13.72 5.62
Prior period expenses 8.71 8.74 3.81 5.16 2.97 1.86
Cash prior period expenses 0.71 4.42 2.34 2.79 2.93 0.79

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Prior period taxes 0.71 4.2 0.37 2.35 2.5 0.52
Residual and combined cash prior period expenses 0 0.22 1.97 0.44 0.43 0.27
Non cash prior period expenses 8 4.32 1.47 2.37 0.04 1.07
Prior period depreciation 7.28 0.13 0.99 0 0 0
Residual and combined non cash prior period expenses 0.72 4.19 0.48 2.37 0.04 1.07
Extra-ordinary expenses 3.45 3.29 1.86 5.03 10.75 3.76
Loss on impairment of assets 0 0 0 0 6.24 0
Loss on sale of assets 3.43 3.29 1.85 2.58 2.87 0.93
Loss on change in accounting policies 0 0 0 0 0 0
Provision for direct tax 37.7 63.45 58.61 85.75 105.99 92.83
Corporate tax 14.3 28.17 29.24 50.98 66.63 74.54
Deferred tax 29.04 35.43 32.92 33.13 36.56 20.2
Less: Deferred tax assets / credit 5.64 0.16 3.55 4.14 3.16 8.38
Other direct taxes 0 0.01 0 5.78 5.96 6.47
Fringe benefits tax 0 0 0 5.61 5.85 6.37
Profit /surplus after tax 93.9 130.74 134.34 117.17 172.89 212.67
Research & development expenses 1.28 0.73 1.35 1.12 2.07 2.49
Research & development expenses: Capital account 0.38 0.08 0.14 0.1 0.16 0.2
Research & development expenses: Current account 0.9 0.65 1.21 1.02 1.91 2.29
No of companies 33 35 36 35 35 29

Assets

Ceramic Tiles
Rs. Crore (Non-Annualised) Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08

19
Gross fixed assets 2757.68 3057.35 3392.52 3891.72 4416.02 4690.55
Land & building 488.38 489.66 516.43 621.84 713.45 777.57
Plant & machinery 2109.82 2370.63 2629.51 2891.46 3323.02 3413.32
Transport & comm. equipment/infrastructure 28.35 34.08 36.81 44.65 53.25 58.36
Furniture,amenities & other fixed assets 54.4 65.02 72.17 139.07 106.14 125.59
Capital work-in-progress 72.51 93.18 132.34 188.58 212.88 308.42
Intangible assets 4.04 4.05 5.26 6.12 7.26 7.29
Net pre-operative expenses pending allocation 0.18 0.73 0 0 0.02 0
Net lease reserve adjustment 0 0 0 0 0 0
Less: Cumulative depreciation 909.38 1040.49 1172.43 1280.43 1465.02 1577.14
Less: Arrears of depreciation 0 0 0 0 0 0
Net fixed assets 1848.3 2016.86 2220.09 2611.29 2951 3113.41
Investments 77.36 120.22 126.8 179.12 154.92 200.79
Equity shares 58.3 94.57 96.59 94.05 105.1 131.3
Preference shares 0.82 0 0 2.01 2.01 2.01
Mutual funds 13.81 19.91 25.85 81.78 21.48 63.5
Debt instruments 0.55 0.06 0.16 0.16 0.16 0.16
Approved securites (slr/statutory req.) 0 0 0 0 0 0
Assisted companies 0 0 0 0 0 0
Others 3.96 5.99 4.36 1.12 26.17 3.82
Less: Provision for dimunition in value of investments 0.08 0.31 0.16 0 0 0
Group companies 46.46 80.31 83.1 82.54 93.65 119.85
Non-group companies 27.02 34.23 39.4 95.36 35 77.02
Market value of quoted investments 24.01 15.41 19.35 7.74 32.3 66.69
Deferred tax assets 86.14 61.03 74.06 66.51 60.19 49.26
Current assets 1076.19 1218.58 1482.35 1921.93 2473.92 2687.26
Cash & bank balance 57.71 74.73 83.56 195.5 261.93 175.76
Inventories 520.65 613.8 778.61 917.56 1169.73 1265.42
Receivables 473.64 498.77 570.65 713.04 918.54 1095.57
Expenses paid in advance 24.19 31.28 49.53 95.83 123.72 150.51
Loans & advances 57.16 44.82 31.07 10.81 36.27 151.78
Deferred revenue expenditure 32.84 16.44 13.64 13.89 15.96 13.97
Total assets 3177.99 3477.95 3948.01 4803.55 5692.26 6216.47
No of companies 33 35 36 35 35 29

Liabilities

Ceramic Tiles
Rs. Crore (Non-Annualised) Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08

Net worth 961.04 1065.48 1151.08 1391.8 1908.75 2422.86


Authorised capital 436.69 437.84 452.73 437.93 570.78 504.78
Issued equity capital 297.86 297.53 306.59 282.33 335.14 316.04
Paid up equity capital (net of forfeited capital) 293.34 293.82 303.07 270.66 323.44 315.89

20
Forfeited equity capital 0.03 0.03 0.03 0.02 0.03 0.03
Paid up preference capital (net of forfeited capital) 137.82 136.33 137.28 70 38.49 30.74
Capital contibution, suspense and application money 11.18 36.27 10.04 24.04 5.6 36.4
Reserves & surplus 518.67 599.03 700.66 1027.08 1541.19 2039.8
Free Reserves 620.99 727.56 836.77 1126.71 1662.46 2095.34
Security premium reserves (Net of deductions) 237.08 252.09 250.99 387.41 740.79 982.21
Other free reserves 383.91 475.47 585.78 739.3 921.67 1113.13
Specific Reserves 89.83 80.09 71.06 74.3 67.26 65.17
Revaluation Reserves 25.16 1.1 0.02 0.02 0.02 0.02
Less Accumulated losses 217.31 209.72 207.19 173.95 188.55 120.73
Total borrowings 1445.68 1537.15 1764.67 1949.18 2219.21 2184.39
Bank borrowings 772.22 890.22 1181.3 1366.11 1781.59 1669.49
Short term bank borrowings 419.73 397.11 450.53 489.67 707.11 706.07
Long term bank borrowings 352.49 493.11 730.77 876.44 1074.48 963.42
Financial institutional borrowings 345.83 292.15 147.88 71.18 50.8 62.83
Central & state govt. (usually sales tax deferrals) 0 0 0 0 0 0
Debentures / bonds 138.1 113.17 95.13 55.2 80.09 45.03
Convertible 8.67 11.98 11.98 3.63 13.76 0
Non-convertible 129.43 100.99 82.95 51.57 65.78 44.61
Fixed deposits 40.33 40.68 33.92 25.7 21.83 20.86
Foreign borrowings 0.82 26 78.41 146.88 148.56 157.64
Of which : euro convertible bonds 0 0 0 0 0 0
Borrowings from corporate bodies 15.83 34.71 43.45 47.21 60.39 74.1
Group / associate cos. 2.96 5.39 4.55 0.66 0.83 0.64
Borrowings from promoters / directors 19.29 9.46 11.19 23.64 29.02 35.4
Commercial paper 0 40 80 60 0 50
Hire purchase borrowings 5.48 3.36 3 4.37 5.09 3.82
Deferred credit 34.9 33.21 33.21 30.79 29.84 30.89
Other borrowings 72.88 54.19 57.18 118.1 12 34.33
Secured borrowings 1275.32 1320.31 1471.11 1543.78 1936.86 1845.2
Unsecured borrowings 170.36 216.84 293.56 405.4 282.35 339.19
Current portion of long term debt 115.19 154.76 217.84 159.15 197 141.25
Current liabilities & provisions 490.82 591.3 732.3 1147.05 1227.55 1271.27
Sundry creditors 278.5 328.56 444.93 711.24 723.01 755.53
Acceptances 3.08 11.27 14.89 60.01 63.95 20.33
Deposits & advances from customers & employees 50.07 57.19 69.1 80.96 88.86 83.94
Interest accrued 24.89 21.26 15.85 15.72 17.2 15.26
Share application money 0.19 0.15 0.15 0 0 0
Other current liabilities 89.88 111.99 103.44 134.74 140.07 171.19
Provisions 44.21 60.88 83.94 144.38 194.46 225.02
Deferred tax liability 280.45 284.02 299.96 315.52 336.75 337.95
Total liabilities 3177.99 3477.95 3948.01 4803.55 5692.26 6216.47
Net worth (net of reval & DRE) 903.04 1047.94 1137.42 1377.89 1892.77 2408.87
Contingent liabilities 305.31 362.61 393.54 395 517.11 618.61
No of companies 33 35 36 35 35 29

21
Profits

Ceramic Tiles
Rs. Crore (Non-Annualised) Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08

PBDITA 448.82 496.49 513.7 557.25 689.31 757.23


Depreciation 137.51 151.42 165.39 185.2 214.88 226.22
Amortisation 6.17 6.13 4.13 3.93 5.41 3.89

22
PBIT 305.14 338.94 344.18 368.12 469.02 527.12
Interest paid 171.17 142.01 147.77 161.54 185.66 217.52
Financial charges on instruments 2.37 2.72 3.46 3.63 4.42 4.04
Fee based financial services expenses 0 0.02 0 0.03 0.06 0.06
PBT 131.6 194.19 192.95 202.92 278.88 305.5
Provision for direct tax 37.7 63.45 58.61 85.75 105.99 92.83
Corporate tax 14.3 28.17 29.24 50.98 66.63 74.54
Deferred tax 29.04 35.43 32.92 33.13 36.56 20.2
Less: Deferred tax assets / credit 5.64 0.16 3.55 4.14 3.16 8.38
Other direct tax 0 0.01 0 5.78 5.96 6.47
Fringe benefits tax 0 0 0 5.61 5.85 6.37
PAT 93.9 130.74 134.34 117.17 172.89 212.67
PAT (as reported by the Co.) 55.78 133.9 124.46 113.95 173.19 212.38
Prior period & extra-ordinary income 74.09 53.45 35.79 13.91 15.61 16
Prior period & extra-ordinary expenses 12.16 12.03 5.67 10.19 13.72 5.62
Net prior period & extraordinary transactions -61.93 -41.42 -30.12 -3.72 -1.89 -10.38
PBDITA net of P&E 386.89 455.07 483.58 553.53 687.42 746.85
PBIT net of P&E 243.21 297.52 314.06 364.4 467.13 516.74
PBT net of P&E 69.67 152.77 162.83 199.2 276.99 295.12
PAT net of P&E 31.97 89.32 104.22 113.45 171 202.29
Distribution of profits (%)
PBDITA 100 100 100 100 100 100
Depreciation & Amortisation 32.0128337 31.732764 32.9998053 33.9398834 31.958045 30.3883893
Financial charges 38.6658349 29.1546658 29.4393615 29.645581 27.5841058 29.2671975
Tax 8.39980393 12.7797136 11.4093829 15.3880664 15.3762458 12.2591551
PAT 20.9215276 26.3328567 26.1514503 21.0264693 25.0816033 28.0852581
Non--provisions for: 7.61 5.74 3.22 2.85 2.7 3.15
Diminution in investement 0 0 0 0 0 0
Sundry debtors 4.25 3.48 3.22 2.82 2.67 3.11
Loans & advances including NPAs 1.72 1.72 0 0.03 0.03 0.04
Loans & advances to group cos. 0.54 0.54 0 0 0 0
Interest expenses 1.1 0 0 0 0 0
Power expenses 0 0 0 0 0 0
Gratuity 0 0 0 0 0 0
Others 0 0 0 0 0 0
No of companies 33 35 36 35 35 29

TOOLS OF ANALYSIS
1. Cost Structure:

Cost structure shows the percentage of cost incurred to a product. It is the relationship
between fixed charges and value added. Here value added means sales-(raw material
expenses + power, water& fuel consumption).Fixed charges means compensation
paid to employees, interest paid and depreciation.

Cost Structure = Fixed Charges

23
Value Added

2. Operating Performance:

Operating performance shows the relationship between EBIT and Total assets.

Operating Performance = EBIT X100


Net Assets

3. Net performance:
Net performance shows the relation between net profit and total assets.
Net performance=Net profit X100
Total assets.

4. Financial Performance:
Financial performance shows the relationship between profit after tax and net worth.

Financial Performance = Net profit X100


Net Worth

5. Growth Rate:

Growth rate of sales represents how much percentage of sales are increased or decreased
in a year as compared to the previous year.
Growth Rate = Current Year -1
Base Year

6. Trend analysis:

24
Trend analysis is used for estimating the future value of the industry or company.
Straight line trend is represented by the equation.

Y= a+bx
In order to determine the values of the constants a and b the following normal equations
are to be solved.

Y=Na+bx
2
Xy=ax+bx

7. Coefficient of correlation:

Correlation is the degree of association between two variables and it represented in


terms of a coefficient known as coefficient of correlation. The range of correlation
coefficient is-1and+1.If the coefficient is negative, then the variables are inversely
proportional and maximum when it is -1. If it is 0, there is no association between the
variables. If the coefficient is positive then the variables are associated directly and it is
maximum when it is =1.

R = (x-x)(y-y)
_2 _2
(x-x) (y-y)

Analysis
Financial performance:
Financial performance= Net profit X100
Net worth
Table.1 (Rs. in crores)

25
Years Net profit Net worth Financial
performance

2003 93.9 961.04 10

2004 130.74 1065.48 12

2005 134.34 1151.08 12

2006 117.17 1391.8 8

2007 172.89 1908.75 9

2008 212.67 2422.86 9

Graph:1
Financial performance

14
12 12
12
10
10 9 9
8
ratio

8
6
4
2
0
2003 2004 2005 2006 2007 2008
years

Interpretation:
From the above table it is observed the financial performance of ceramic tiles industry is
constant during the years 2004-2005 & 2007-2008.There is increase in financial
performance due to increasing in net profit is more than that of net worth.

Cost Structure:
It shows the relationship between Fixed charges & Value added.
Cost structure= Fixed charges
Value added
Table.2 (RS.in cross)

26
S.no Particulars 2003 2004 2005 2006 2007 2008

1. Sales 2107.72 2510.74 3085.36 3737.64 4802.09 5419.27

2. Raw materials 460.86 526.65 771.76 772.51 968.92 978.45

3. Power& fuel 346.87 439.67 478.11 576.01 682.4 734.53

4. Compensation 156.26 191.2 217.38 247.78 328.44 391.22


to employees

5. Interest paid 171.17 142.01 144.77 161.54 185.66 217.52

6. Depreciation 137.51 151.42 165.39 185.2 214.88 226.22

7. Value added 1299.99 1544.42 1835.49 2389.12 3150.77 3706.29

8. Fixed charges 464.94 484.63 527.54 594.22 728.98 834.96

9. Cost Structure 0.36 0.31 0.29 0.25 0.23 0.23

Graph: 2

27
Cost structure

0.4 0.36
0.35
Cost structure 0.31
0.29
0.3
0.25
0.25 0.23 0.23

0.2
0.15
0.1
0.05
0
2003 2004 2005 2006 2007 2008
years

Interpretation:
From the above table it is observed that the cost structure of ceramics tiles industry
efficiency had increased from the year 2003 to 2007.It is because of increases in sales is
more than that of fixed charges. But in the years 2007& 2008 its efficiency is constant
because the value of fixed charges and value added are same.

Operating Performance:

28
It shows the relationship between EBIT& Total Assets.

Operating Performance= EBIT X100


Total Assets
Table.3 (Rs.in crores)

Years EBIT Total Assets Operating


Performance

2003 305.14 3177.99 96

2004 338.94 3477.95 97

2005 344.18 3948.01 87

2006 368.12 4803.55 76

2007 469.02 5629.26 82

2008 527.12 6216.47 84

Graph:3

Operating performance

120
96 97
100 87
82 84
76
80
Ratio

60

40
20

0
2003 2004 2005 2006 2007 2008
Years

Interpretation:
From the above table it is observed that the operating performance of ceramics tiles
industry is fluctuated during the study period. In the year 2004 the ratio has shown
highest value indicating a great operating performance for complete period. This is
because of more increase in sales when compare to net assest

Net performance:

29
Net performance shows relation ship between in net profit and total assets.
Net performance= Net profit X100
Total assets.
Table:4 (Rs.in crores)

Years Net profit Total assets Net performance

2003 93.9 3177.99 29

2004 130.74 3477.95 37

2005 134.34 3948.01 34

2006 117.17 4803.55 24

2007 172.89 5692.26 30

2008 212.67 6216.64 34

Graph:4

Net performance

40 37
34 34
35 30
29
30
24
25
Ratio

20
15
10
5
0
2003 2004 2005 2006 2007 2008
years

Interpretation:
From the above table it is observed that the net performance of ceramics tiles industry is
showing fluctuations during the study period. In the year 2004 the ratio has shows highest
value indicating a great net performance for the complete period. This is because of more
increasing in net profit when compare to total assets.

Growth trend in total assets:

30
Growth rate of sales represents how much percentage of sales are increased or decreased
in a year as compared to the previous year.
Growth Rate = Current Year -1
Previous Year
Table:5 (Rs.in crores)

Years Assets Trend in (%)

2003 3177.99 ---------

2004 3477.95 9

2005 3948.01 13

2006 4803.55 21

2007 5692.26 18

2008 6216.47 9

Graph:5

Growth trend in total assets

25
21
20 18
values

15 13
9 9
10

0
2003 2004 2005 2006 2007 2008
yeras

Interpretation:
From the above table it is observed that the growth trend in total assets of ceramics tiles
industry is fluctuating during the study period. In the year 2006 the trend value is
increased because of increase in assets.

Growth trend in total Income:

31
Growth rate of sales represents how much percentage of sales are increased or decreased
in a year as compared to the previous year.

Growth Trend = Current Year -1


Previous Year
Table:6 (Rs in crores)

Years Total Income Trend in (%)

2003 2203.35 ------------

2004 2589.05 17

2005 3138.64 21

2006 3774.3 20

2007 4854.56 28

2008 5493.02 13

Graph:6

Growth trend in total income

30 28

25
21 20
20 17
values

15 13

10

0
2003 2004 2005 2006 2007 2008
years

Interpretation:
From the above table it is observed that drastic increase in trend can be seen in the year
2007.In the same way there is more decrease in trend in year 2008.This is due to increase
in total income in year 2008.

Trend analysis:

32
Trend analysis is used for estimating the future value of the industry or company. Straight
line trend is represented by the equation.
Y= a+bx
Table:7 (Rs.in crores)

Years Net worth

2003 961.04

2004 1065.48

2005 1151.08

2006 1391.8

2007 1908.75

2008 2422.86

2009 2630.27

2010 2858.771

2011 3161.633

Graph:7
Trend analysis

3500
Trend analysis

3161.633
3000 2858.771
2500 2630.27
2422.86
2000 1908.75
1500 1391.8
1065.48 1151.08
1000 961.04
500
0
2003 2004 2005 2006 2007 2008 2009 2010 2011
values

Estimated value of net worth for 2009 is 2630.27.


Estimated value of net worth for 2010 is 2858.771.
Estimated value of net worth for 2011 is 3161.633.

Correlation between sales& profit:

33
Correlation is the degree of association between two variables and it represented in terms
of a coefficient known as coefficient of correlation. The range of correlation coefficient
is-1and+1

R = (x-x)(y-y)
_2 _2
(x-x) (y-y)
Table: 8 (Rs.in crores)

Years Sales Profit

2003 2107.72 93.9

2004 2510.74 130.74

2005 3085.36 134.34

2006 3737.64 117.17

2007 4802.09 172.89

2008 5419.27 212.67

COEFFICIENT OF 0.927
CORRELATION

Interpretation:
The coefficient of correlation sales & profit is 0.92.This indicates that there is a strong
associated between sales&profits.As it is positive relationship .It means both the
variables are moving in the same direction.

SWOT ANALYSIS

34
STRENGTHS:

Consistent growth of 12-15 percent inspite of slow down in economy.


The Indian ceramic export market is rising the rate of 15 percent per annum.

WEAKNESS:

Not much importance given on brand building and networth thus creating
hindrance for export growth.
Lowper capital consumption (0.15 sq.mt.p.a) as compared to developed nations.

OPPOURTUNITIES:

The construction and housing boom to provide bolstering demand for ceramic
files.
The untapped rural market supported by a strong growth witnessed by Indian
agriculture. Provides tremendous potential for the domestic exramic
manufacturers.

THREATS:

Freight,supply of power and gas remains the key cost-related issues impacting the
industry.
Basic customers duty on import of ceramic files from china and raw materials
imported from abroad should be corrected to prevent dumping of files from china.

35
OBSRVATIONS

The Financial performance of ceramic tiles industry is constant during the years
2004-2005 & 2007-2008.There is increase in financial performance due to
increasing in net profit is more than that of net worth.

The cost structure of ceramics tiles industry efficiency had increased from the
year 2003 to 2007.It is because of increases in sales is more than that of fixed
charges. But in the years 2007& 2008 its efficiency is constant because the value
of fixed charges and value added are same.

The operating performance of ceramics tiles industry is fluctuated during the


study period. In the year 2004 the ratio has shown highest value indicating a great
operating performance for complete period. This is because of more increase in
sales when compare to net assest.

The Net performance of ceramics tiles industry has fluctuated during the whole
period. In the year 2004 the ratio has shows highest value indicating a great net
performance for the complete period. This because of more increasing in net
profit when compare to total assets.

The growth trend in total assets of ceramics tiles industry is fluctuating during the
study period. In the year 2006 the trend value is increased because of increase in
assets.

It is observed that drastic increase in trend can be seen in the year 2007.In the
same way there is more decrease in trend in year 2008.This is due to increase in
total income in year 2008

The coefficient of correlation sales & profit is 0.92.This indicates that there is a
strong associated between sales&profits.As it is positive relationship .It means
both the variables are moving in the same direction.

36
CONCLUSION

Ceramices tiles industry is currently in the midst of a transformation with major


capital expenditure underway and improving operating efficiencies is the major
concern of all players. The analysis carried out on industry indicates the good
operating, financial performance of the industry. The growth rate of sales is
satisfactory. Also the cost structure indicates its efficiency in controlling cost. The
future trend of sales is also in increased condition.

37