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A Management Research Project Report On STRATEGIC ANALYSIS OF INDIAN CERAMIC TILES INDUSTRY For The Partial Fulfillment of the Requirement of Master in Business Administration Submitted on 27th December, 2012 Submitted To Dr. B. A. Prajapati Head of the Department, S K School of Business Mgmt., HNGU, Patan Under the Guidance of: Dr. Nishith Bhatt Dr. K. K. Patel Faculty Member, Faculty Member, S K School of Busi. Mgmt. S K School of Busi. Mgmt.Prepared By: Contact DetailShakti Dodiya (M) 7874177418 shaktibdodiya@gmail.comHemant Hadiel (M) 9723664224 hemanthadiel@rediffmail.comShoeb Sheikh (M) 9067949799 shoebsheikh786@gmail.comVarsha Tadvi (M) 9998144569 vptadvi@gmail.comS. K. School of Business Management, PATAN. P a g e | I

2. DeclarationA Management Research Project on Strategic Analysis ofCERMIC TILE INDUSTRY under the guidance of Dr.Nishith Bhatt and Dr. K. K. Patel, Project Co-ordinator andFaculty Member of SKSBM. This is the original work done byus. This is the property of the Institute & use of this reportwithout prior permission of the Institute will be consideredillegal & actionable. Shakti Dodiya Hemant Hadiel Shoeb Sheikh Varsha TadviDate: 27/12/2012Place: PATAN Batch :

2011-2013S. K. School of Business Management, PATAN. P a g e | II

3. PrefaceIn todays business world, the resources available are very scare. Henceevery business unit must strive hard to obtain maximum output with theavailable input in order to ensure the optimum utilization of the scareresources. The value of input it measured against the value of output. Thisimplies matching cost per unit of production against the value of outputor selling price.In the present era of the cut throat competition, the need to study thissubject is growing very fast. Every businessmen makes a constant effortto improve is business. In order to formulate suitable policies and soundbusiness decision.Product cost is a base for setting the selling price, for the finding the cost,some costing methods are useful such like, unit costing, ABC costing,target costing etc. Cost are affecting directly to the profit of the business.Higher cost is reason for low profit and with the help of low cost, firmcan earn higher profit. So cost is very important things for anyorganization.Cost Accounting serves as useful tools in the hands of management. Byanalyzing the cost of production of every unit, it helps the management tothe answer to related with the firms decision.S. K. School of Business Management, PATAN. P a g e | III

4. AcknowledgmentPreparing this project is an arduous task. We was fortunate enough toget help and guidance from a large number sources and people. It is apleasure to acknowledge them, though it is still inadequateappreciation to their contributions.We take this opportunity to express my sincere gratitude to all thosewho have contributed directly or indirectly towards completion theproject. It would be different for me to adequately acknowledge ourindebtedness to all such people. All the same, we must mention someof them whose help was of considerable importance.We would like to thank, Mr. Aditya Vyas(Director) SwastikCeracon Ltd., Mr. Prasad (In charge, R&D) for sharing theirvaluable experience, time and knowledge.I would also like to express my gratitude to our course coordinatorand Professor Dr. Nishith Bhatt & Dr. K. K. Patel for his guidanceand support. Yours sincerely, Shakti Dodiya Hemant Hadiel Shoeb Sheikh Varsha TadviS. K. School of Business Management, PATAN. P a g e | IV

5. EXECUTIVE SUMMERYIndian Ceramic Tiles consists of organized and unorganized playerswhich are highly fragmented. There are only 14 major players in theindustry. The indias domestic market is growing at 15% which is higheras compare to global growth rate of 11%. The main products of theceramic tiles industry are

Vitrified Tiles, Ceramic Wall & Floor Tiles.The reports contains the ceramic industry at a glance what are the drivingforces of the industry Indias business vis--vis global scenario of theindustry . what are the major issues of the industry and what are thereasons for attractiveness of the industryChapter -1 discussed the main and the sub objective of the research thedata collection type and tools to analyze the industry.Chapter -2 contains the overall picture of the industry, background, whoare the major players, and their relative market shares , Geographicalpresences, what is the current status and where we must go.Chapter-3 this chapter discusses that what are the global implications andthe what are the exports and imports statistic and who are the majorglobal players of the industry.Chapter4 is one of the most important of the report, it closely discusseswhat are the major issues prevailing in the market, what is the currentscenario of industry? Its further elaborates why industry is running indebt? What moves the big companies right now? What advantages thatceramic tiles industry is likes to get from the development in constructionindustry?What are the digital technology being use by current players, what is thecurrent trends in product such as Vitrified, Floor and Wall tiles? Whytiles are better option over the other natural substitute ? and recentproduction capacity

expansion, mergers and alliance made by top players.Chapter-5 Discusses the industry attractiveness for the investment andwhat major factors one need to take consideration to enter into theS. K. School of Business Management, PATAN. P a g e | V

6. industry ? what are the key success factors and Driving forces of theindustry ? Its further contains 4Ps , PEST Analysis, Porters DiamondModel, Industry Life Cycle analysis and OT Analysis of the industry.Chapter6 here we have closely analyze the top players performance asfar as sales, PAT, and Manufacturing cost are concerned. We have alsoanalyzed the competitive position of the players by use of 9 Cell Metricon the basis of the KSF.S. K. School of Business Management, PATAN. P a g e | VI

7. IndexCH. PAGE PARTICULARSNO. NO 1 Research Methodology .... 1 1.1 Reserch Objectives 2 1.2 Data Collection 3 1.3 Tools 3 2 Research Methodology 4 2.1 HISTORY OF CERAMIC INDUSRTY 5 2.2 CERAMIC TILES INDUSTRY IN INDIA 7 2.3 CERAMIC TILE INDUSTRY STATISTICS 12 2.4 Members in IndianCeramic Tile Industry 14 2.5

GEOGRAPHICAL PRESENCE 16 3 Global Scenario 17 3.1 Global Tile Industry 18 3.2 Leading Manufacturers Overseas 19 3.3 Top 10 Manufacturing Countries. 20 3.4 Top 10 Consumption Countries 20 3.5 Top 10 Exporting Countries. 21 3.6 Top 10 Importing Countries 22 3.7 Top 10 Highest per capita consumption countries 22 4 CURRENT SCENARIO CERAMIC TILE INDUSTRY 23 4.1 Ceramic Tiles 24 4.2 Ceramic tile industry is running in huge debt 26 4.3 Bigger The Better 29 4.4 Construction industry growth boosting ceramic tiles industry 30 4.5 Construction material, equipment output increasing beneficial to ceramic tiles industry 33 4.6 Evolution of digital technology 34 4.7 Role of digital, water inject and nano technology 35 4.8 Latest trend in market with respect to floor and wall tiles 36 4.9 Unique features of tiles available in market 37 4.10 What is cladding 37 4.11 Tiles as option above other substitute 38 4.12 Some Recent issues 40 5 Industry Profile and Attractiveness 41 5.1 KEY SUCCESS FACTORS IN CERAMIC TILES INDUSTRY. 42 5.2 INDUSTRY DRIVING FORCES 43 5.3 4PS OF INDIAN CERAMIC TILE INDUSTRY 47 5.4 PORTERS FIVE FORCES

ANALYSIS 50 5.5 OPPORTUNITIES AND THREATS ANALYSIS 54 5.6 PEST ANALYSIS 67 5.7 INDUSTRY LIFE CYCLE 70 S. K. School of Business Management, PATAN. P a g e | VII

8. CH. PAGENO. PARTICULARS NO Competitors 6 Analysis ............................. 74 6.1 Competitors comparision 75 6.2 FINANCIAL ANALYSIS : COST BREAKS 77 6.3 PROFIT AFTER TAX ANALYSIS 82 6.4 KEY FINANCIAL HIGHLIGHTS OF TOP PLAYERS IN INDUSTRY 83 6.5 KEY RATIO OF THE MAJOR PLAYERS 86 7 Findings and Conclusion .. 93 Bibliography . 96 Annexure .. 100 S. K. School of Business Management, PATAN. P a g e | VIII

9. List of tables SR. PAGE PARTICULAR NO. NO 1 Big Players of Ceramic Tile in India 11 2 Market Capitalization, FIIs and Promoters Share 11 3 Indias comparison with other major exporting countries 13 4 Leading Manufacturers Overseas 19 5 Revenue and Profit of Ceramic tile companies 30 6 Production of Construction Related Industries 32 7 Production of

Construction Material & Equipment 34 8 Threats For New Entrants 50 9 Bargaining Power of Buyers 51 10 Bargaining Power of Suppliers 51 11 Threats from Substitute Product 52 12 Rivals from Existing Players 53 13 Financial Aggregates of Ceramic Tile 54 14 Political Factors 67 15 Economical Factors 68 16 Social Factors 68 17 Technological Factors 69 18 Industry Life Cycle of Ceramic Tile Industry 70 19 Sales Trend Analysis 71 20 PAT Trend Analysis 71 21 Cost Trend Analysis 72 22 Competitors Comparison 75 23 Raw Materials consumed percentage of PBITD 77 24 Power & Fuel Cost Percentage of PBITD 78 25 Employee Cost Percentage of PBITD 79 26 Manufacturing Expenses Percentage of PBITD 80 27 Interest as percentage of PBITD 81 28 PAT Analysis 82 29 Financial Highlights : Kajaria Ceramics Ltd 83 30 Financial Highlights : Somany Ceramics Ltd 83 31 Financial Highlights : Asian Granito India Ltd 83 32 Financial Highlights : Orient Bell 84 33 Financial Highlights : Nitco Ltd. 84 34 Financial Highlights : Regency Ceramics 84 35 Financial Highlights : Murudeshwar 85S. K. School of Business Management, PATAN. P a g e | IX

10. List of charts and graphs SR. PAGE PARTICULAR NO. NO 1 Geographical Presence in India 16 2 Top 10 Manufacturing Countries 20 3 Top 10 Consumption Countries 21 4 Top 10 Exporting Countries 21 5 Top 10

Importing Countries 22 6 Top 10 Countries with Highest Per Capita 22 7 Proportion of the Tiles Market 25 8 Quarterly Performance of Ceramic tiles and sanitary ware 27 9 Construction Vs Ceramic Products PAT 31 10 Growth production of construction related Industries 31 11 Import and Export of Tiles In India 66 12 Sales Trend of Ceramic tiles Industry 71 13 Trend of PAT of Industry 72 14 Trend of Cost of Industry 72 15 9 Cell Matrix of the Major Competitors 76 16 RM Consumption on PBITD 77 17 Power and Fuel Cost on PBIDT 78 18 Employee Cost % on PBIDT 79 19 Manufacturing Cost % on PBIDT 80 20 Interest Cost % on PBIDT 81 21 Trend of PAT of Industry 82 22 key ratios of Asian Granito 86 23 key ratios of Prism Cement 87 24 key ratios of Somany Ceramics 87 25 key ratios of Kajaria Ceramics 88 26 key ratios of Asian Orient Bell 88 27 key ratios of Nitco ltd 89 28 key ratios of Regency Ceramics 89 29 key ratios of Asian Euro ceramics 90S. K. School of Business Management, PATAN. P a g e | X

11. Chapter-1 Research MethodologyS. K. School of Business Management, PATAN. P a g e | XI

12. 1.0 RESEARCH METHODOLOGYTo analyze the present scenario of the Indian ceramic tile industry, We have form thefollowing research objectives and sub objectives of the study. Research Methodologyalso

includes the data collection method s and models used to analyze the data.1.1 Research Objective:Main Objective : Strategic Analysis of Indian Ceramic Tile IndustrySub Objectives :To know what are the major players of Indian Ceramic tiles IndustryTo know what is the present outlook of the IndustryTo Know who are the global players in the international MarketTo Know what is the global scenario of the Ceramic tiles industryTo know about the Indian Scenario and association of the Indian ceramic tilesindustryTo know what are the growth drivers of the present industryTo indentify the driving forces of the industryTo know the attractiveness of the Indian ceramic tile industryTo know the key success factors of the present industryTo know the Political, Economical, Social and Technological Factors affecting theIndian ceramic tiles industryTo know the competitive forces of the industryTo know the probable opportunity and threats of the industryTo know the present performance of the industryTo do comparative analysis of top players of the industryS. K. School of Business Management, PATAN. P a g e | XII

13. 1.2 Data Collection :To perform the strategic Analysis of the Indian Ceramic Tile Industry, we haveselected the two method of data collection 1. Personal Interview with the CeramicTiles Industry Experts 2. Secondary Data has been collected from

variousnewspapers, Journals, Websites, past Industrial reports etc.1.3 Tools:To analyze the industry we have used tools such as Porters Five Force Model, PESTAnalysis, Industry Lifecycle Analysis, 9 Cell Metrix, OT Analysis and EconomicAnalysisS. K. School of Business Management, PATAN. P a g e | XIII

14. Chapter 2 Industry IntroductionS. K. School of Business Management, PATAN. P a g e | XIV

15. 2.1 HISTORY OF CERAMIC INDUSRTYIt is believed that the first clay tiles were produced seven to eight thousand years agoin the area now known as the Holy Land. Many sources independently verify that theactual known history of Tiles (and the known usage of wall and floor tile coverings)can be traced back as far as the fourth millennium BC (4000 BC) to Egypt.In those days, in Egypt, tiles were used to decorate various houses. Clay bricks weredried beneath the sun or baked, and the first glazes were blue in color and were madefrom copper, very exquisite!During that period ceramics were also known to be found in Mesopotamia. Theseceramics bore decorations, which were white and blue striped and later possessedmore varied patterns and colours. Later on, in China too, the Great Center of CeramicArt, a fine, white stoneware with the earliest Chinese glaze was produced during theShang-Yin

dynasty (1523-1028 BC).The usage and the art of making and decorating ceramic tiles had spread and by 900A.D., decorative tiles had become widely used in Persia, Syria, Turkey and acrossNorth Africa. As transport and communication developed, tile usage and itspenetration in other territories increased. Wars and territory take-overs caused this artto 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 fromPersia, while the Moors brought African tiles with them when they invaded Iberia(Spain). It was aboard the ships of Spanish conquistadors that decorative clay tilesfound their way to the New World, where they were used primarily to decorate theChurches of newly built missions.By the end of the 12th century, use and manufacture of Ceramic Tiles had spreadacross Italy and Spain and into the rest of Europe. Till that time they were mainlyS. K. School of Business Management, PATAN. P a g e | XV

16. used to decorate the floors of Cathedrals and Churches. The skill had eventuallyvanished from Europe in the 16th century following the reformation. But thedecorative wall tile art had survived in Turkey and the Middle East and the Delft tilesart survived in Holland.A form of tile making had also evolved among the natives

of North and SouthAmerica at some point. The first decorative tiles to appear in Colonial North Americawere imported from Northern Europe, mainly England the Brits having hijacked thetechnology from the Dutch. The tiles were too expensive for utilitarian purposes in theColonies and were found almost exclusively in the homes of the wealthy.Through the centuries, tile decoration was improved upon, as were methods of tilemanufacture. For example, during the Islamic period, all methods of tile decorationwere brought to perfection in Persia. Throughout the known world, in variouscountries and cities, Ceramic tile production and decoration reached great heights.The tile mosaics of Spain and Portugal, the floor tiles of Renaissance Italy, thefaiences of Antwerp, the development of tile iconography in the Netherlands, and theCeramic tiles of Germany are all prominent landmarks in the history of Ceramic tile.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 almosteverywhere on walls, floors, ceilings, fireplaces, in murals, and as an exteriorcladding on buildings.Today Ceramic tile throughout the world is not hand-made or hand-painted for themost part. Automated manufacturing techniques are used and the human hand doesnot enter into the picture until it is time

to install the tile. They are used in an almostinfinite 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 areas and restrooms.In fact most modern houses throughout use Ceramic tiles for their bathrooms andkitchens and in every vital area of the premise. Ceramic tiles are also the choice ofindustry, where walls and floors must resist chemicals. And the Space Shuttle neverleaves Earth without its protective jacket of high-tech, heat resistant tiles.S. K. School of Business Management, PATAN. P a g e | XVI

17. 2.2 CERAMIC TILES INDUSTRY IN INDIA:2.2.1 Industry Highlights:Ceramic Tiles today have become an integral part of home improvement. It can makea huge difference to the way your interiors and outdoors look and express. The Indiantile industry, despite an overall slowdown of the economy continues to grow at ahealthy 15% per annum. Investments in the last 5 years have aggregated over Rs.5000 crores. The overall size of the Indian ceramic tile industry is approximately Rs18,000 crore (FY12). The production during 2011-12 stood at approx. 600 millionsquare meters.The Indian tile industry is divided into organized and unorganized sector. Theorganized sector comprises

of approximately 14 players. The current size of theorganized sector is about Rs 7,200 Crores. The unorganized sector accounts for nearly60% of the total industry bearing testimony of the growth potential of this sector.India ranks in the top 3 list of countries in terms of tile production in the world. Withproper planning and better quality control our exports (presently insignificant)contribution can significantly increase.2.2.2 BackgroundApart from their decorative looks, Ceramic Tiles are primarily hygiene products andthat is how our broad spectrum of consumers view the product. This is fairly evidentfrom its varied usage from bathrooms and kitchens in average Indian households tomedical centers, labs, milk booths, schools, public conveniences, shopping malls andS. K. School of Business Management, PATAN. P a g e |XVII

18. numerous other centers; which dot our day to day life. A ceramic tile is basically a"utility product" and that remains our promotional slogan. Popular housing projectsare increasingly switching over to Ceramic Tiles moving away from the traditionaluse mosaic and even granite or marble, owing to several factors viz. ease in layingability, versatility, low price and hygiene.Nevertheless, this decorative aspect of a Ceramic Tiles has forever been in theforefront. Heavy churning out of bolder and colorful designs by the

industry aretestament to the fact that most households regard a ceramic tile as an "adornment" foran otherwise "drab look" of their age-old floorings or an unfurnished wall2.2.3 Overall Picture of IndustryCeramic tiles as a product segment has grown to a sizeable chunk today atapproximately 680 Millions Square meters production per annum. However, thepotential seems to be great, particularly as the housing sector, retail, IT & BPOsectors have been witnessing an unprecedented boom in recent times.The key drivers for the ceramic tiles in India are the boom in housing sector coupledby government policies fuelling strong growth in housing sector. The retail boom inthe Indian economy has also influenced the demand for higher end products. Overallthe bullish growth estimates in the Indian economy has significantly influenced thegrowth of the Indian Ceramic tile industry.The main product segments are the Wall tile, Floor tile, Vitrified tile and Industrialtile segments. The market shares (in value terms) are 42%, 46% and 12% respectivelyfor Wall, Floor, and Vitrified. The tiles are available in a wide variety of designs,textures and surface effects. They cater to tastes as varied from rustics tocontemporary marble designs in super glossy mirror finishes.Both, traditional methods of manufacturing (tunnel) and the latest single fast firingmethods are deployed in manufacturing. Some

of the latest trends in manufacturingmethods can be seen in India.S. K. School of Business Management, PATAN. P a g e |XVIII

19. The industry also enjoys the unique distinction of being highly indigenous with anabundance of raw materials, technical skills, infrastructural facilities despite beingfairly capital intensive. A total of over 5,50,000 people are employed in the sector.Out of this, 50,000 people are directly employed and 5,00,000 are indirectlyassociated. The potential is huge considering the per capita consumption of ceramictiles in India. Currently it is at 0.50 square meters per person in comparison to over 2square meters per person for like countries like China, Brazil and Malaysia2.2.4 Where we stand and what we must do?As a foreign exchange earner or a global player, Indian Tile industry has captured theattention of the world in the ceramic tiles segment. To compete internationally, our plantsmust be geared up to large units currently operating in China and Turkey are driven byeconomies of scale. These will also help us in lowering our cost of production significantly.Also, infrastructural support is a key factor that determines the speed of growth. Betterinfrastructure will bring in better growth in terms of consistency and sustenance. Freight,supply of power and gas remains the key cost-related issues impacting

the industry.Availability, consistent supply and reasonable rates are extremely important for the growth ofthe ceramic tile industry.Also, the prevailing anomalies pertaining to Basic Customs Duty on import of ceramic tilesfrom China and raw materials imported from abroad need to be corrected to prevent dumpingof tiles from China. Rural thrust should be enhanced by favorable excise duty and MRP2.2.5 Current Status of the IndustryThe ceramic tiles industry in India has followed similar trends internationally whichhave been characterized by excess capacities and falling margins. Countries likeMalaysia, Thailand, Indonesia, Sri Lanka and Vietnam are setting up their own plants.China has emerged as a major competitor.Producers from Spain and Italy have the advantage of lower transportation costs whileexporting to USA and Germany. In India, the per capita consumption is as low as 0.50square meters per person compared to China (2.6 square meters per person), EuropeS. K. School of Business Management, PATAN. P a g e | XIX

20. (5 to 6 square meters per person) or Brazil (3.4 square meters per person). Risingdisposable incomes of the growing middle class and 40 million units of housingshortage hold out a great potential.A major change that took over the ceramic tiles industry, was the introduction ofvitrified and porcelain tiles. These new

entrant product types are said to be the tiles ofthe future. Internationally these tiles are already the major sellers. These category ofproducts account for almost 50% of total tile sales by value in this industry.These new products and the conventional wall & floor tiles have together made theorganized industry grow to a formidable Rs. 7,200 crores industry. This coupled witha spate of expansions by many players make the industry look very promising in thefuture.The Indian Industry has developed an export market although at the lower end. Involume it constitutes less than half a percent of the global market. (Presently Indiadoes not figure in the list of major exporting countries). But this reality could changeas Indian exports are rising at an accelerating growth annually. The top-end of theglobal export market is presently dominated by China (36.8%) and Italy (15.1%)(Source: Compiled using information fromCorporate Catalyst India, ASCER,Ceramic World Review and other associations.)As far the manufacturing of ceramic tiles is concerned, both the organized as well asunorganized sectors play important role in india. The unorganized players areconcentrated in Morbi, Vankaner, and Himmatnagar cities of Gujarat. There are morethan 250 units in this regions. They produce as much tiles as what is produced by thebig players in rest of the part of the country.Capacity of

Expansion.Increasing number of commercial complexes in the country has bolstered demand forceramic tiles. This massive domestic demand for ceramic tiles in 2012 led to anunprecedented Rs.2000 crore of fresh investment in the industry in last five year. Allthe major players including Kajaria Ceramics, H&R Johnsons, Asian Granito India,SPL, Murudeshwar Ceramics Regency Ceramics and Bell Ceramics have madeS. K. School of Business Management, PATAN. P a g e | XX

21. substantial investment of expand the production capacity. The industry is hopeful thatin the year 2014 most of these fresh capacities would go on production stream.It is expected that this expansion of plant capacity will help the domestic producers toreap economy of scale. This will in turn enable them to price this products morecompetitively in the domestic as well as in the global.Big Players of Ceramic Tile in India.Table:1 Company Name Brand Market Share(%)Kajaria Ceramics Kajaria 21%H&R Johnson Marbonite 19%Asian Granito India --- 10%Somany Ceramics Greiti, Somany 9%Murudeshwar Ceramics Naveen Diamontile 4%Regency Ceramic --- 4%Bell Ceramics --- 4%Note: H&R Johnson Merged with Prism Cement Ltd and Orient Ceramic merged with Bell Ceramics Ltd.Market Capitalization, FIIs and Promoters

Share.Table:2 Market Company Name Capitalization FII(%) Promoter(%) Kajaria Ceramics Ltd. 17277 13.7 53.7S. K. School of Business Management, PATAN. P a g e | XXI

22. Somany ceramics Ltd. 3296 0.2 63.3Asian Granito India Ltd. 1006 - 38.1Orient Bell Ltd. 1389 - 74.8Nitco Ltd 779 10.7 48.9Regency Ceramics Ltd. 106 57.3Murudeshwar Ceramics Ltd. 674 - 57.2Source: www.aceanalyzer.com2.3 CERAMIC TILE INDUSTRY STATISTICS:World Production : 9515 Million sq.mt.Indias Share : 550 Million sq.mt.World Ranking (in production) :3Per capita Consumption : 0.50 sq.mt.G1lobal Industry Growth Rate : 11%Growth Rate (India Domestic Market) : 15%Organized Sector Turnover (India) : Rs 7200 crores Glazed Wall Tile share : 20% Glazed Floor Tile share : 23% Vitrified Tile share : 50% Industrial Tile Share : 7%Unorganized Sector Turnover : Rs 10800 croresInvestments in last 5 years : Rs 2000 croresS. K. School of Business Management, PATAN. P a g e |XXII

23. Organized Sector: Share of Production : 40% No. of units : 14Unorganized Sector: Share of Production : 60% No. of units : 200 Approx. (70% based in Gujarat)Job Potential : 50,000 direct : 500,000 indirect2.3.1 Indias Export performance vis--vis the rest of the worldMajor exporting country were China,

Italy, Spain, Turkey and Brazil. Chinaregistered highest export growth rate of 32% among the major exporting countries.Indias export figures were quite low compared to other countries. In 2011-12 Indiahad a minuscule share of 0.9% total global ceramic exports. Indias comparison with other major exporting countriesTable: 3 % Share In Country Global Exports CHINA 35.25 ITALY 14.45 SPAIN 12.40 TURKEY 4.20 BRAZIL 2.85 IRAN 2.70S. K. School of Business Management, PATAN. P a g e |XXIII

24. MEXICO 2.60 POLAND 2.10 UAE 1.60 THAILAND 1.60 INDIA 0.902.4 Members in Indian Ceramic Tile Industry:-Antique Granito Pvt. Ltd. R.A.K Ceramics India Pvt. Ltd.http://www.antiquegranito.com http://www.rakceramics.comAsian Granito India Ltd. Regent Granito (India) Ltdhttp://www.asiangranito.com http://www.regentgranito.comCengres Tiles Restile Ceramics Ltd.http://www.cengrestiles.com http://www.restile.comS. K. School of Business Management, PATAN. P a g e |XXIV

25. Senso Granito Pvt. Ltd.Coral Gold Tiles Pvt. Ltd. http://www.sensotiles.comEuro Ceramics Ltd. Sentini Cermica Pvt. Ltd.http://www.eurovitrified.com http://www.sentinicermica.comH & R Johnson (India) A Division of Prism Cement Somany Ceramics Ltd.Ltd.

http://www.somanyceramics.comhttp://www.hrjohnsonin dia.comKajaria Ceramics Ltd. Spectrum Johnson Tiles Pvt. Ltdhttp://www.kajariaceramics.comMurudeshwar Ceramics Ltd. Sunheart Tileshttp://www.naveenceramics.com http://www.sunheart.inOracle Granito Ltd. Swastik Ceracon Ltd.http://www.oraclegranito.com http://www.swastiktiles.in/S. K. School of Business Management, PATAN. P a g e | XXV

26. Orient Ceramics & Industries Ltd. Varmora Granito (P) Ltd.http://www.orienttiles.com http://www.varmora.comOzzy Vitrified Pvt. Ltd. Vrundavan Ceramics Ltd.http://www.ozzyvitrified.com http://www.vrundavanceramic.comRadiant Floor Tiles Pvt. Ltd.http://radiantfloortiles.com Siddharth Gran Marbo2.5 GEOGRAPHICAL PRESENCE:S. K. School of Business Management, PATAN. P a g e |XXVI

27. Graph 1 : Geographical Presence in IndiaS. K. School of Business Management, PATAN. P a g e |XXVII

28. Chapter 3 Global ScenarioS. K. School of Business Management, PATAN. P a g e |XXVIII

29. 3.0 GLOBAL SCENARIO OF CERAMIC TILEINDUSTY:3.1 Global Tile IndustryA couple of years

back the world economic slowdown triggered sharp declines inhousing starts in developed regions, such as, the United States, and Europe, which notsurprisingly impacted the ceramic titles market. Rising levels of unemployment,reduction in household wealth, and discretionary spends, falling consumer confidence,lack of credit availability, and budgetary constrains have driven down constructionand renovation activities both in the residentialand commercial construction sectors.In the post recession period, re-emergence of growth driving market fundamentals andrefreshing technological innovations kindled consumer interest and re-energizeddemand patterns. As per reports of Global Industry Analysts, Inc. (GIA), registering aCAGR of around 3.05%, Asia-Pacific represents the fastest growing market forceramic tiles.Sustainability and style factors have continued to influence ceramic tiles industry. Forinstance, most manufacturers from Italy, as well as those from other countries such asSpain, France, Germany, Japan, and others have demonstrated significant interest andmade major investments in sustainable production of ceramic tiles to meet the evertightening environmental standards and regulations.As stated by the new market research report by GIA on Ceramics Tile Market, Asia-Pacific and Europe collectively account for more than 80% share of

the global market.S. K. School of Business Management, PATAN. P a g e |XXIX

30. 3.2 Leading Manufacturers Overseas. Table : 4 THE TOP CERAMIC TILE MANUFACTURERS IN VOLUME IN 2010No Groups Production Prod. % Number of Locations Exports (mill. sq.m) Capacity factories RAK Ceramics 10 UAE, 1 Banglade www.rakceramics.com 117 119 85 15 sh, 1 Sudan, 1 China,1 1 India, 1 Iran2 Siam Cement Group 108 110 20 18 17 Thailand, www.siamcement.com 1 Indonesia3 Ceramica Cleopatra Group 96 103 43 8 Egypt www.cleopatraceramics.com4 Lamosa Grupo 94 120 24 10 Mexico www.lamosa.com5 Marazzi Group 90 n.a. 80 n.a. Italy, France, Spain, www.marazzigroup.com Russia, USA6 Cersanit 68 68 40 3 1 Poland, 1 Russia, www.cersanit.com 1 Lithuania7 H&R Johnson India 65 72 1 9 India www.hrjohnsonindia.com8 Majopar 61 68 2.5 1 Brazil www.majopar.com.br9 Prime Group 59.9 90 0.52 9 Vietnam www.ceramictiles.com.vn 10 Mulia 55 * 76 * 15 7 Indonesia www.muliaceramics.com S. K. School of Business Management, PATAN. P a g e | XXX

31. * EstimatesCopyright: Tile Edizioni 3.3 Top 10 Manufacturing Countries. Production.. China is the largest producer and exporters in Asia. Italy and Spain are the two most important production center in EU.

Brazil is the Largest Producer in Latin America. Among all the major producers china has achieved most rapid growth in production and export. However, quality wise Italy and Spain producer best tile in the world. Italian Ceramic tile are also very costly. The current price of Italian tile I s Euro 8.74 per sq. meter, which are highest among the all producer. Top 10 Manufacturing Countries 4200 Tiles(Million Sq. Mtrs) 753 550 400 387 375 366 287 245 220 Graph 2 : Top 10 Manufacturing Countries 3.4 Top 10 Consumption Countries Consumption. Asia is the largest consumer with a share of 50.8% of the global consumption. EU and South Africa are the two other major consuming areas with consumption of 19.2 % and 10.9% respectively. China tops the consumption list with domestic consumption level 3500 million sq. meter/year, which is almost 5 times of the consumption of the second largest consumer, Brazil. India is 3rd position with domestic consumption of 557 million sq. meter/year. However, the consumption S. K. School of Business Management, PATAN. P a g e | XXXI

32. growth rate in india had a CAGR of 22.26% which is highest among the majorconsuming countries and much higher than the world consumption growth rate of 7%.This might be one of the reason that Indian ceramic companies concentrate ondomestic market rather then

export. Demand in India is very huge so only concern isto fulfill that demand indigenously. Top 10 Consumption Countries Tiles(Million Sq. Mtrs) 3500 700 557 335 330 277 200 186 182 168 Graph 3 : Top 10 Consumption Countries3.5 Top 10 Exporting Countries.ExportsIndias export volume is minuscule and india does not comes in the list of top 15 exportingnations. The graph bellow show the top exporting countries in this industry.S. K. School of Business Management, PATAN. P a g e |XXXII

33. Top 10 Exporting Countries Tiles(Million Sq. Mtrs) 705 289 248 84 57 54 52 42 32 32 Graph 4 : Top 10 Exporting Countries3.6 Top 10 Importing Countries. Top 10 Importing Countries Tiles(Million Sq. Mtrs) 130 129 103 80 59 57 48 43 39 38 Graph 5 : Top 10 Importing Countries3.7 Top 10 Highest per capita consumption countriesS. K. School of Business Management, PATAN. P a g e |XXXIII

34. Top 10 Countries with Highest Per Capita Consumption (Figurs in Sq. Mtrs.) 12.1 6.71 4.4 3.76 3.64 3.14 2.82 2.61 2.45 2.35 Graph 6 : Top 10 Countries with Highest Per Capita CHAPTER 4 Current ScenarioS. K. School of Business Management, PATAN. P a g e |XXXIV What is going on in industry?

35. 4.0 CURRENT SCENARIO CERAMIC TILE INDUSTRYIndias position in Global Tile market improved from fifth position to third positionnow. Since 2006 to 2009 Indian tile industry registered a growth of 44% .Tile industryis growing at a steady 15% per Annam. Same growth will be retained by India year onyear as construction industry is growing in both urban and rural sector. There is ahuge urban housing shortage for migrating community; young people at early age areowning houses with their disposable income. There is a replacement market for tilesnow as tiling have defined fashion in home decor. At commercial projects such asmalls, institutions tiles are specified and used in big quantities. Even today the percapita consumption of tiles in India is 0.15sqm, while at Europe is 6sqm and inChina it is 2sqm. We have a long way to go. There will be comfortable growth forS. K. School of Business Management, PATAN. P a g e |XXXV

36. industry in times to come. India has a tremendous capacity to grow. Though Indiaconsumes lot of tiles, the consumption ratio is much lesser compared to China andEurope. In India consumers need to be educated about the tiles.4.1 Ceramic TilesIndias ceramic tile industry emerged in the 1950s. Tiles form the most significantpart of the Indian ceramics ndustry and consist of floor tiles (46 per cent), vitrifiedand porcelain

tiles (12 per cent) and wall tiles (42 per cent). The floor tiles segment isgrowing faster as compared to wall tiles. Vitrified and porcelain tiles are recententrants into the ceramic tile industry and have increased the size of the marketconsiderably. It is expected that this segment will capture the bulk of the marketgradually, replacing the conventional floor and wall tiles segment. These tiles are lightand have the added advantage of being offered in designer looks as compared tomosaic tiles, which are heavier and more expensive to transport. Both, organised andunorganised sectors play a key role in the manufacturing of ceramic tiles in India. Market share (%) 42 Floor tiles 46 Vitrified and porceline tiles Wall tiles 12 Graph 7 : Proportion of the Tiles MarketS. K. School of Business Management, PATAN. P a g e |XXXVI

37. Ceramic wall and floor tiles, porcelain/vitrified tiles, in both organised andunorganised sector collectively is at 550million square metres which is about Rs13000/ crores per Annam.Ceramic tiles as a product segment has grown to a sizeable chunk today at 340Millions Square meters production per annum.However, the potential seems to begreat, particularly as the housing sector, retail, IT & BPO sectors have beenwitnessing an unprecedented boom in recent times. The ceramic tiles sector has beenclocking a robust growth of 12-15%

consistently over the last few years. Today, Indiafigures in the top 5 countries in the world manufacturing ceramic tiles.The key drivers for the ceramic tiles in India are the boom in housing sector coupledby government policies fuelling strong growth in housing sector. The retail boom inthe Indian economy has also influenced the demand for higher end products. Overallthe bullish growth estimates in the Indian economy has significantly influenced thegrowth of the Indian Ceramic tile industry..Because of the global slowdown, only larger players will be able to expand their basewhere as smaller players will have to either shut down operations or will have tocollaborate with larger ones. Being a larger player with better market understandingand technical knowhow, we will be able to offer a better level of service and qualitythan smaller unorganized players in these turbulent times.4.2 Ceramic tile industry is running in huge debtFor the second quarter in a row, the Indian ceramic tiles and sanitary wares companieshave posted aggregate net loss on a moderate growth in top line in Q1 FY13.Increasing financial cost has been a major factor for profits falling in the ceramic tilesindustry. Of the 12 companies under review, almost eight companies saw substantialincrease in their interest cost while two large ceramic tile makers saw their financialcost jump 2-5

times from a year ago level. This implies accumulation of huge debt byceramic tile makers to build green field and acquire brown field capacities.Overall manufacturing expense increased by about 10% in the June quarter whilesales realization was up just 5% deteriorating the operating margin significantly. AndS. K. School of Business Management, PATAN. P a g e |XXXVII

38. this was despite the fall in raw material cost. Other expenses including administrativeand selling expenses, power and fuel, went up 14% while employees costs increased12% during the quarter. Rising costs has been a bane on the industry over the past twoyears. In FY 11 production cost rose 30% and further by 27% in FY12 amidslowdown in sales growth.Sales revenue of 12 listed companies with market capitalization of over Rs 3,200crore aggregated Rs 1,500 crore, up 4.8% compared to the same quarter a year ago. Insimilar comparison, this quarter saw a total net loss of Rs 36 crore as against netprofits of Rs 48 crore last year. Operating expenses totaled Rs 1,400 crore whileinterest outgo touched Rs 127 crore. The companies under review Asian GranitoIndia, Cera Sanitaryware, Decolight Ceramics, Euro Ceramics, HSIL, KajariaCeramics, Murudeshwar Ceramics, Nitco, Orient Bell, Regency Ceramics, RestileCeramics and Somany Ceramics.

Interest expenses of Nitco increased five folds to Rs59.92 crore for the quarter while Orient Bell paid Rs 6.51 crore as interest more thandouble it had paid in June 2011 quarter.Rising interest cost has also been adversely impacting the tile makers. In FY 12interest expenses increased 34% to Rs 340 crore. Companies which saw interest costrising more than 50% in FY12 were Asian Granito India, Cera Sanitaryware, EnglishIndian Clays, Kajaria Ceramics, Nitco, and Orient Bell with latter two seeing a jumpof 1.6 times.S. K. School of Business Management, PATAN. P a g e |XXXVIII

39. Graph 8: Quarterly Performance of Ceramic tiles and sanitary ware Source: www.infrawindow.comFourth largest company by sales as well as market capitalization, Somany CeramicsQ1FY13 revenue grew 11% while sales volumes declined 1% y-o-y and realisationsgrew 13% y-o-y. Outsourced manufacturing business contribution was flat at 43%.Operating margin declined to 9.3% due to increase in power and fuel costs and thiscoupled with high tax expense led to 9% decline in PAT. Contribution from valueadded products VC, Duragres and digital tiles increased significantly in the past oneyear. The higher strength and abrasion resistant quality of VC and Duragres tiles andthe unique characteristic of digital tiles have raised the demand for

these tiles; hencetheir contribution to the consolidated top-line increased to 29% in Q1FY13 from 17%in Q1FY12.In October 2011, Somany acquired 26% stake in Vintage Tiles Pvt. Ltd and a similarstake in Commander Vitrified Pvt. Ltd. in April 2012. With these acquisitions it gotS. K. School of Business Management, PATAN. P a g e |XXXIX

40. access to 5.2 mn sq.mt. of capacity at a capital outlay of Rs 19 crore as against agreenfield expansion cost of Rs 120 crore.Kajaria Ceramics, the largest manufacturers of ceramic/vitrified tiles in India with anannual capacity of 38.30 mn. sq. meters, saw sales and net profits grow 31% and 32%respectively during the year. Its timely capacity addition and robust distributionnetwork enabled Kajaria to effectively capitalise on increasing volumes andsustaining growth under trying circumstances.Orient Bell posted the highest sales growth among the 12 companies under review.This was possible after it acquired Bell Ceramics in March 2012. Revenue jumped71% while net profits declined 12%.The Rs 1,227 crore loan exposure of the ceramic tiles maker Nitco Ltd. was thelargest of the 17 referrals that were received by the corporate debt restructuring(CDR) cell in July valued at close to Rs 7,500 crore. The lead bankers for the issuewere Punjab National Bank (PNB) and State Bank of India (SBI).

NITCO reportedrevenues of Rs 202 crore with a net loss of Rs 79 crore in the quarter ended 30 June2012. The companys interest expense has bloated to Rs 60 crore during the quarterfrom Rs 10 crore in June 2011 quarter.Source: www.infrawindow.comS. K. School of Business Management, PATAN. P a g e | XL

41. 4.3 Bigger The BetterCeramic tiles and sanitary wares companies have posted a 24% growth in top lineduring FY12. However the bottom line saw a degrowth of 48%, blighted by 27%rise in production cost and 34% increase in interest expenses. Total productionvolume during the year was up by just 6% with glazed and ceramic tiles output up6.4% and that of ceramic and porcelain ware up 1.5%.High cost has been a bane on the industry in the past two financial years. In FY 11production cost rose 30% and further by 27% in FY12. During the same years,revenues clocked 29% increase in FY11 and a marginally lower rate of 24% in FY12.Of the 13 listed companies under review, five companies posted decline in their topline. They include Decolight Ceramics, Euro Ceramics, Murudeshwar Ceramics,Regency Ceramics and Restile Ceramics. They accounted for only 9% of aggregaterevenue of the 13 companies. The same companies also reported net loss during theyear, excluding Murudeshwar Ceramics but Nitco adds to the

list. Those who sawtheir net profits decline in FY 12 were Asian Granito India, Decolight Ceramics,English Indian Clays, Murudeshwar Ceramics, Nitco and Restile Ceramics.Rising interest cost has also been adversely impacting the tile makers. In FY 12interest expenses increased 34% to Rs 340 crore. Companies which saw interest costrising more than 50% in FY12 were Asian Granito India, Cera Sanitaryware, EnglishIndian Clays, Kajaria Ceramics, Nitco, and Orient Bell with latter two seeing a jumpof 1.6 times.Bigger the BetterLarge size companies have put up a better performance, than the smaller ones. Widerreach, complete value chain have been the dominant factor for large companies.Indias top sanitary ware and bathroom equipment maker HSIL ended the year with anet profit of Rs 110.10 crore, compared to Rs 87.35 crore in 2010-11. Commenting onthe results, JMD Abhishek Somany JMD stated that higher share of revenue fromvalue added products including digital tiles and glazed vitrified tiles helped companyreduce the adverse impact of increase in the cost of energy, raw materials, borrowingsS. K. School of Business Management, PATAN. P a g e | XLI

42. and rupee depreciation. The company operates its business under two divisions -Building Products and Container Glass. Both the business divisions demonstratedrobust growth trajectory during the

year.Kajaria Ceramics, the largest manufacturers of ceramic/vitrified tiles in India with anannual capacity of 38.30 mn. sq. meters, saw sales and net profits grow 38% and 33%respectively during the year. Its timely capacity addition and robust distributionnetwork enabled Kajaria to effectively capitalise on increasing volumes andsustaining growth under trying circumstances.Orient Bell posted the highest sales growth among the 13 companies. But the resultsinclude revenue of Bell Ceramics which was amalgamated with the Orient Ceramicsand Industries effective from 30 March 2012. Revenue jumped 87% while net profitsincreased 38%. However, this was against the 15% fall in net profits during FY 11.Table: 5Source: www.infrawindow.com4.4 Construction industry growth boosting ceramic tiles industryThe output of construction related industries was relatively faster in the year endedMarch 2012. While the general Index of Industrial Production showed dismal growthof just 2.8% during the year, the 13 construction related industries (see table below)production was up 6.6%. However, this growth was against 4.9% increase of 2010-11.S. K. School of Business Management, PATAN. P a g e | XLII

43. Going ahead, these industries will continue to display robust growth in 2012-13 giventhe spending promises of the government on infrastructure

development. Primarily,cement and steel will boost the over sentiments. Amid disappointing GDP growth of5.3% for the March quarter, strong dispatches of the cement, just before the start ofthe monsoon, has raised hopes of better growth in 2012-13. A 10-12% growth fromtwo top cement makers, the industry will hit a growth of 11-13 per cent in May.Industry officials believe that 2012-13 would be able to see the industry clock growthof 8-9%. Similarly, steel production too will be supported by construction activitywhile a large portion of the demand would emanate from automobile industry. Construction VS Ceramic products PAT CONSTRUCTION INDUSTRY ceramic products 1423 1082 1055 891 698 567 373 193 182 163 70 114 68 48 2005 2006 2007 2008 2009 2010 2011Source : CMIE Graph 9 : Construction Vs Ceramic Products PATS. K. School of Business Management, PATAN. P a g e |XLIII

44. Source: www.infrawindow.com Graph 10 : Growth production of construction relatedIndustriesAccepting particle boards, the growth has been positive in all the segments with someeven posting double digit increases. For example, marble tiles and slabs output wasup 27% while earth moving machinery manufacturing stepped up by 14% during theyear.The two key components of construction cement and steel structural, sawproduction grow 6.6% and 8.8%

respectively. This implies that availability of primaryconstruction material was ample in that year. During the year, cement productiontouched 251 million tonne while finished steel production was at 79.5 milliontonne. Financial results of cement companies suggest that the volume growth was notas robust, but price increases helped their top line grow 25% in 201112.Moving on to other items, production inched up in case of porcelain and ceramicsanitary wares, granites, marble tiles/slabs, plywood, wood veneer, particle boards,glass sheet, toughened glass and material handling equipment.Paints industry has been sluggish this year but have managed to post a positive growthof 0.4% in production during the year. This is surprisingly a low growth if onecompared the financial results of paints companies. Top five paint companies haveposted a top line growth of 25% and their bottom line has increased 20%.S. K. School of Business Management, PATAN. P a g e |XLIV

45. Table:6Source: www.infrawindow.com Figure 5: Top 10 Countries with Highest Per Capita4.5 Construction material, equipment output increasing beneficial toceramic tiles industryConstruction material and equipment accounting for close to 5% of the IIP, recorded ayear-on-year growth of 9.5% in their output in January 2012. This was primarily ledby higher

production of key construction materials cement and steel structures. Boththese components saw production grow 10.9% and 23.9% respectively during themonth. Apart from these, output of marble tiles & slab, granites, also posted doubledigit growth in January. However, last year their output had declined sharply and thusthe current growth is largely a recovery. The complementary, glazed & ceramic tilesand porcelain & ceramic sanitary ware also posted positive growth but not so robust.The wood industry was not so positive in January as plywood production inched up4% while wood veneer and particle boards output dropped sharply. The glass industrytoo was sluggish during the month with glass sheet production rising just 2.5% whiletoughened glass declined.Production of paints of all kinds grew faster this January at 7.4% from 5.5% last year.The industry has also added capacity reflecting the increase in output.S. K. School of Business Management, PATAN. P a g e | XLV

46. Material handling equipment industry has partially recovered from the significantdrop seen last year. For the year as a whole until January, material handlingequipment production grew by 1.9% as against 42% decline seen in April 2010 toJanuary 2011 period.Output of earth moving machinery dropped in January by 3.7% after posting a robust31% growth in

January last year. Cumulatively, for the first 10 months of 2011-12,the industry has recorded a growth of 19.4% slower than the 34% growth in thesimilar period of 201011.Table : 7Source: www.infrawindow.com4.6 Evolution of digital technologyDigital tile is now entering in India. It started in ceramic bodies as of now in Indiathere are no limitations in width. It comes in the length of 4ft and width of 2ft. Chinais a country which manufactures vitrified in huge capacity but India will be ahead interms of digital tiles. We can provide variety of looks with digital tiles like woodenfinish, metallic, stone look etc.S. K. School of Business Management, PATAN. P a g e |XLVI

47. Digital printing technology is the latest trend that is seen in the market. The biggestboon of using digital printing technology is that it enables the printing to be done onuneven surfaces reaching to the edges of the tile. Today the bigger slabs of tiles insizes like 3 ft x 2 ft and 4 ft x 6 ft are used more than the standard square shaped ones.Slim tiles are also catching up in the market.Digital printing is a printing process which is fast and offers a very superior quality ofprinting. The high resolution enables it to give a more glossy and detailed finish andtiles that replicate natural products like stone and wood can be created through thistechnology. It has been a rage lately since one can achieve a stone look

on the floorand walls without the hassle of maintenance.A New technology comes with the new features; As New Digital Printing technologyhas changed the look of tile industry. This technology can imprint the realistic imageon tiles with high clarity and design durability. It gives natural stone & woodendesign on tiles. Asian Granito is pioneer in the bringing the worlds latest technologyin India.With Digital technology we can give modern look to the space. On flooring, we canreplace wooden flooring to the attractive Digital Vitrified tiles as well as it can beused in place of natural marble.With a photo like finish, Digital Tiles create an astounding effect on walls, and areappropriate for use in any and all spaces for a spectacular visual. With unlimiteddesigns possibilities, sharper finishes and high resolution printing, Digital tiles is nowbecoming ceramic art for the walls. Created based on principles and proceduressimilar to those used in graphic art work, digitally printed tiles offer photo like highresolution impressions on ceramic tiles.The biggest advantage is that these tiles can becustomized also as per the choices. Few people want their faces on tiles or theimpressions of their hand or feet on the tiles. It can be done through transfer printingtechnology.Ability to produce life-like patterns across the whole surface, even the edges. Inkjetprinting allows users to print smooth,

uneven and textured tiles and borders, with thefacility to print large images that eliminate any obvious repeat patterns in the finaldisplay. In addition, printers gain the freedom to produce variable and personalizedS. K. School of Business Management, PATAN. P a g e |XLVII

48. images. Digital technology extend the advantages offered by ceramic tiles overcompeting cladding materials, such as stone, glass or metal.4.7 Role of digital, water inject and nano technologyDigital printing technology offers an opportunity to create unique, same to same, highdefinition permanent images with most desirable surface finish and feel. Technologycan successfully replicate images of wood, marble, stone, metal, granite, glass wallpaper, textiles from silk to rough hessian and in huge color tones and gradients.Another advantage of technology is to create ultra-slim (4 to 5mm thick)large formattiles which are cost effective due to less weight in logistics, installation on existingsurfaces and reduces dead weight in multi storey apartments. Technology can easilyconvert tiles into manufacturing slabs even in size of 4ftx 6ft, 6ft x 8ft looks possible,apart from creating various geometrical shapes such as hexagons, octagons. New lookfor wall and floor tiles can be offered by adopting latest technology that is available inthe market in dozen of

different ways with various surface textures, feel, design canbe created for stronger, seamless, surface free from scratch, stains, water, acids andchemicals. Tiles can be used from Ramps to slopes to multi function floors, interior,exterior for residential commercial applications also.Water jet technology is already being used by few companies, offering complexshapes like circles, ovals, waves, floral patterns of different kind for floor dcor whichis a reality now.Nano technology is getting popular for vitrified tile flooring. Self organizing Nanoparticles will form an invisible layer on the surface with having excellent water/dustrepellent, stain proof, anti-bacterial properties, and retains rich surface finish for along period of time.4.8 Latest trend in market with respect to floor and wall tilesLarge Format Tiles continue to rise in popularity-led by 2ft by 1ft tiles withadvanced Digital Printing Technology replicating marbles,stones, metal, wood,wallpaper, colors and gradients in color,textile patterns and Floral designs.Retro geometrical designs will be popular for normal wall applications.Skinny tiles with 4 to 5mm thickness will be popular for wall dcor which is easier tocarry and cut, less expensive, easier to transport, easy to handle and install.S. K. School of Business Management, PATAN. P a g e |XLVIII

49. Thinner tile for walls is future.Wood look a like tiles are not new. What you will see now as fashion, is

weatheredwood-used up, rustic with reclaimed looks ,bold new colours, formats, reinterpretationof classic designs.Tiles for kitchen with having special applications, bath walls, exterior claddingetc.,tile for each purpose is huge in variety will be seen today.3D Tiles without glasses, For wall dcor ,tiles featuring dimensional layers, curves,and waves with contemporary artistic look as room dividers, shower niches, shall beseen here.For Floors, wide variety of vitrified tiles will be available starting from basic salt &pepper technology to economical soluble salt printing continuing with Lapata, highgloss-polished, full mass products (MDR) multiple charged and future with solublesalt printing, multicolor granular products in polished and honed finish, rustic stoneeffect tiles, glazed vitrified tiles in popular sizes of 60x60cm, 80x80cm, 1mtrx1mtrwill rule the tile market in India. Italy and Spain have lost their rank in worldrace,but will continue to lead the world as innovators for world ceramics.4.9 Unique features of tiles available in marketAs worlds third largest producer of tiles the variety of tiles products are available inthe market. For kitchen wall decor, small size tiles with attractive patterns can be seenin wide range of colors, sizes are there in the market. From blue pottery tiles to tinysize tiles with custom decor, crafted hand cut stones, glass

tiles and large format tilesby organized sector are available.Wall dcor and bathrooms are built with concepts in mind seeing from abstract tomodern contemporary, colorful, classic, art-deco, geometric design, floral and manysuch concepts are made popular by tile companies.In popular wall, sizes with highlighter products, from hi-gloss, matte, satin finish torough rustic, surfaces can be used to create wall dcor.Today in the market place one gets to see both Indian and imported tile products withdecor material where minimalist or modern trendy, period- antique style decoration iseasy to create because of such products are available.For exterior cladding, both Indian and imported products are available where one canhave vitrified tiles in rustic finish, interlocking digistones. For paving and passage andfloor applications vitrified unglazed products are available with several non slipS. K. School of Business Management, PATAN. P a g e |XLIX

50. designs and in various sizes. Along with Indian products Asian and Europeanproducts are also widely seen in the market place. Customers, architects, designersnow have comfortable variety of designs to choose from.4.10 What is cladding?Cladding is a concept which is picking up in the market. Tiles which appear to looklike any natural stone are used for

cladding on exterior walls and mostly on lobbyareas too. In future there will be lot more of buildings which will have claddin Placeslike China uses Tiles for cladding of Buildings. There is a need for the Indian marketto pick up the concept of cladding too.Comparing Indian market with China market.India has a lot of potential. Indians believe in quality and durability which may not beacquired from Chinese products. Thus these factors make us very competitive to chinaand give us an edge over China.We make world class products. Tiles are consumed in 180 countries and we arepresent in 150 countries done with tiles4.11 Tiles as option above other substituteToday tiles are used in larger quantities and for almost every other project. Tiles areman-made and easy to lay and maintain. They come in various patterns and textureswhich a natural product may fail to provide. Natural products will not be available asper your design. There will always be limitations with regard to the colours anddesigns. Natural products like granite, marble requires lot of treatment like cutting,polishing, laying etc. The process is more time consuming as it takes15 days formarble to set, whereas tiles take only 48 hours. In the long run, there might be ahigher possibility of scarcity of natural resources. Since tiles are man-made, it iseasily available. These are some of the key reasons to choose tiles over other

naturalproducts.Tiles are not natural stones, they are more of an engineered product. Initially peopleused cement screens for the flooring. Then the need to have something more elegantand easy-to-maintain came in and then emerged tiles. Mosaic tiles were the first tofind a market in India and ceramic tiles followed owing to their elegant look.Aesthetics was always the driving force and vitrified tiles followed suit lending aS. K. School of Business Management, PATAN. P a g e | L

51. more glamorous and lustrous appearance. Since then vitrified tiles have been offeringvarious options like (GVT) Glazed Vitrified Tiles and (GPVT) Glazed PolishedVitrified Tiles. The current trend in flooring is Glazed Vitrified Tiles. It provides aglossy and smooth polish or a rustic look as desired. Initially tiles were screen printedbut now, digitally printed tiles are also available in the market.Tiles offers value for money, are easy to maintain, reasonably priced and very easy toapply. Besides, they are durable, hygienic and aesthetic. Besides, the variety availableis huge. Tiles are also available in anti-skid varieties which are ideal for bathroomsand wet areas.Vitrified Tiles have far superior properties compared to marble or natural granite.Being a manufactured product, their quality is controlled, whereas in naturallyoccurring marble and granite good quality is just a coincidence. Vitrified tiles

possessmuch better mechanical strength, scratch resistance, resistance to acids, alkalis andchemicals, resistance to staining etc compared to marble or natural granite. It is usedin high traffic area too.Ceramic Tiles is another form which has two separate bodies, one is base and on thatthere is Glazed body. It can be designed and widely used in decorative nature. It hasmore than 10% of water absorption. Mainly used in bathroom wall-floor and kitchenand elevation wall. It can be used at low traffic area.Glazed Vitrified Tiles is new form of tiles which has both the features with goodstrength and aesthetic designs.When compared with other flooring options like stone and marble, tiles make formuch faster and effortless installation, especially with all the new age techniques andequipment available such as the Tile Master by Somany. However, the exact amountof time required depends on the size of the room. The best thing about tiles is that youdont need to work hard to maintain them unlike marble, which has to be polishedafter regular intervals to retain its finish. In the case of tiles, the finish is long lasting.If one has to remove tiles from a particular area, it will not take much time and effort.Moreover, if you just need to take out one tile, you can do that easily without breakingthe other tiles if the

spacers are used.S. K. School of Business Management, PATAN. P a g e | LI

52. Big companies increasing their market presence through alliance,merger and takeover and production capacity expansioncompanies are now looking forward to a rapidly growing in tile market. Because ofthe global slowdown, only larger players will be able to expand their base where assmaller players will have to either shut down operations or will have tocollaborate with larger ones. Being a larger player with better market understandingand technical knowhow, we will be able to offer a better level of service and qualitythan smaller unorganized players in these turbulent times.Recently , Asian tiles merged with Asian Granito (I) ltd, another big merger was ofH&R Johnson Ltd merged with Prism Cements Ltd, and last but one of importantmerger was of Orient ceramics and Bell Ceramics Ltd.Somani Ceramics has recently announced that they are going to invest 100 cr in nextthree years for enhancing its production facility.they have recently bought 26% stakein commander vitrified company as well as , has formed a marketing and distributionalliance with Italys IRIS Ceramiche and Fiorano Modenese-MO (FMG), whichbelongs to GranitiFiandre Group (CastellaranoRE). they have also bought 26% stakein vintage tiles.Another big company Kajaria ceramics has

acquired majority stake in Vennarceramics. They have also bought majority stake in Jaxx vitrified tiles company.Marking its entry into the sanitary ware and bath fittings business, tiles maker KajariaCeramics, has entered into a pact with Turkey-based Eczacibasi for marketing andsales of VitrA brand products in IndiaBiggest company in ceramic industry in the world, RAK ceramics is going toestablish manufacturing facility in gujarat with an investment of Rs500 cr by mid2012.Chinese and Italian companies have opened offices in Morbi, Gujarat to provide aftersales services to the ceramic industry. Morbi is well known as hub for ceramic itemsand vitrified tiles in Indian ceramic industry4.12 Some Recent issues:Fuel Supply: a Major concern to become competitiveThere exist few alternatives sources of fuel for the domestic ceramic industry likeS. K. School of Business Management, PATAN. P a g e | LII

53. 1. Liquefied Petroleum Gas(LPG) 2. Propane Gas 3. Light Diesel Oil(LDO) 4. Coal 5. Liquefied Natural Gas(LNG)Presently ceramic and refractory industry spend 35% of the total production cost asthe fuel and energy cost. The recent gas finding by the reliance and ONGC have givensome hope that the industry will get sufficient supply of gas at reasonable price in thelong

term. CHAPTER 5 Industry profile & PATAN.S. K. School of Business Management, P a g e | LIII

54. 5.1 KEY SUCCESS FACTORS IN CERAMICTILES INDUSTRY.First KSF in ceramic industry is manufacturing process, the manufacturing processshould be efficient and there are rapid changes observed in manufacturing industry.Manufacturing process is mainly energy driven in ceramic tiles industry which isgoing through high raw material and fuel costs, which is obstacle in the profitabilityof the industry.Second KSF is Technology being used in the industry. The current trend is of digitaltiles technology production. Digital printing is a printing process which is fast andoffers a very superior quality of printing. The high resolution enables it to give a moreglossy and detailed finish and tiles that replicate natural products like stone and woodcan be created through this technology. It has been a rage lately since one can achievea stone look on the floor and walls without the hassle of maintenance.S. K. School of Business Management, PATAN. P a g e | LIV

55. Water jet technology is already being used by few companies, offering complexshapes like circles, ovals, waves, floral patterns of different kind for floor dcor whichis a reality now.Nano technology is getting popular

for vitrified tile flooring. Self organizing Nanoparticles will form an invisible layer on the surface with having excellent water/dustrepellent, stain proof, anti-bacterial properties, and retains rich surface finish for along period of timeCladding is a concept which is picking up in the market. Tiles which appear to looklike any natural stone are used for cladding on exterior walls and mostly on lobbyareas too. In future there will be lot more of buildings which will have claddin Placeslike China uses Tiles for cladding of Buildings. There is a need for the Indian marketto pick up the concept of cladding too.Comparing Indian market with China market.Third KSF is promotion and dealers network in industry. Products are now-a-dayamarketed through opening , showrooms of tiles and display houses through bigorganized companies such as Kajaria, Asian Granito, and Somany Ceramics to reachcustomer in urban areas. As well as company need to have strong supply chainnetwork to reach the customer with their products. Now a-days companies are alsoconcentrating on branding of products as per the targeted customer segment of theirvalued added products.5.2 INDUSTRY DRIVING FORCESGlobal economy grew @5% in year 2010 compared with a negative growth with a0.6% in 2009. India`s GDP grew 8.6% in Year 2010-11 and in the year 2011 it isexpected to grow at 4.5%. Although

the world is on its way to recovering from theglobal economic crisis, key concerns in the international economy and financialsystem, including high unemployment and banking problems, require attention.ProductionThe world economic slow down in 2009 adversely affected the growth of CeramicTiles Sector. Among these European Union suffered the most significant fall inS. K. School of Business Management, PATAN. P a g e | LV

56. production by 25% in 2009. The Impact was not felt globally because of positivegrowth in Asia (6.3%) and Africa (11.90%). China is the world`s largest producer ofceramic tiles, contributing 42% of the world`s total production. India`s rank improvedfrom 5th in 2006 to 3rd in 2009 with a growth of around 44% during that period.ConsumptionA similar trend was seen in world tile consumption which grew at 1.3% in 2009 asagainst 3.6% in 2008. China is the largest consumer of ceramic tiles while Asiacommands 62% of the total demand. Asia continued to dominate highest demandgrowth at 8.2% resulting in a total consumption of 5,273 sqm.Indian Ceramic IndustryThe Indian ceramic tiles industry is the world`s third largest producer as well asconsumer after China and Brazil. The Indian Ceramic Industry is growing at a 15%CAGR per annum over the last 5 years, owing to the emergence of tiles as a

durable,cost-effective and convenient flooring solution over natural stone. The IndianCeramic Industry is equally divided into the branded and unbranded segments. Theunbranded segment comprises small players concentrated in Gujarat. There ischanging industry trend, with an increased preference for branded products.The branded segment is gaining market share owing to rapid capacity addition andshift to value-added products, which explains the 20% growth of the top 10 players asagainst the industry average of 10%, correspondingly increasing market share from32% in 2005-06 to about 40% in year 2010-11.Per Capita ConsumptionIndia`s per capita tiles consumption is a mere 0.42 sq.m while the world average is 3times higher at 1.20 sq.m. and China`s average is more than 5 times higher at 2.26sq.m.Low per capita consumption:S. K. School of Business Management, PATAN. P a g e | LVI

57. India`s per capita tile consumption is 0.42 sqm, one of the lowest in the worldcompared with China`s 2.26 sqm, and more than 5 sqm in some European countries(CRISIL Research, December 2010). The increase in disposable income andurbanization is expected to enhance Indian tile consumption.Industry Growth Drivers Replacement Demand:With an increase in disposable incomes, urbanization and lifestyle

changes,consumers are replacing traditional low-end tiles with superior quality. The demandfrom the replacement market is a mere 12% in India compared with 40% in Spain,Italy and China, indicating a huge opportunity for high-end tile markets.Shift towards Vitrified tiles:The tile industry is classified into ceramic glazed and vitrified tiles (Polished andglazed). The market for flooring is witnessing a shift from marble, granite andceramic tiles to glazed and polished vitrified tiles owing to superior mechanicalstrength, resistance to scratches, acids, alkalis, chemicals and staining.Growing urbanization:-Over the last decade, India`s population grew 1.38% while urban population grew at28%. Urban India accounts for 28% of the total population, which is expected totouch 41% by 2030, resulting in further growth for the real estate sector. (CRISILResearch, December, 2010)Housing Shortage:The housing shortage in India`s urban areas is expected to increase from 19.3 millionunits in 2008 to 21.7 million units by 2014. Shortage in rural areas is expected todecrease from 26.7 million units in 2008 to 19.7 million units by 2014. (CRISILResearch, December,2010)Growing Middle Class:-S. K. School of Business Management, PATAN. P a g e | LVII

58. The Indian middle-class is expected to increase from 160 million people in 2009-10 to267 million people

by 2015-16. By 2025-26, the number of middle-class Indianhouseholds is likely to double from 2015-16 levels to 547 million individuals (Source:Economics Times, 6th February, 2011)Commercial Real Estate:-With the emergence of India as a preferred global outsourcing hub for manufacturingand service industries, commercial real estate demand grew. Progressive liberalizationand relaxation of FDI norms will drive demand growth for commercial spaces at 20-22% over five years. Major demand is expected from the IT/ITes sectors, requiringmore than 250 million sq.ft office space by 2012-13. (Source: IBEF)Airport Modernization:The government will invest around US$ 7.5 billion for airport infrastructuredevelopment under the revised Eleventh Five Year Plan (Source: Emkay Research). Itplans to modernise, re-develop and upgrade around 80 airports. Further, the AirportsAuthority of India (AAI) will upgrade 35 nonmetro airports in the country at anestimated cost of around US$ 1 billion and modernise the airports of various metros,owing to a growing thrust in the tourism industry and airport infrastructuredevelopment, providing a tremendous opportunity to tile manufacturers.Hospitality sector:With India emerging as a preferred tourist destination, Indian tourism is expected togrow at a 9% CAGR over the next 10 years.

The country expects to add nearly 90,000rooms in the next five years in luxury, upscale, midscale and budget hotels, 143%more than the existing 62,404 rooms in 2009-10, providing an impetus to high-endceramic tile demand. (Source: Economic Times, 18 May, 2011)Healthcare sector:S. K. School of Business Management, PATAN. P a g e |LVIII

Vitrified TilesS. K. School of Business Management, PATAN. P a g e | LIX Ceramic Floor Tiles Ceramic Wall Tiles 59. The Indian healthcare sector is valued at US$ 50 billion and accounts for 5% of GDP.With India emerging as a medical tourism hub, growth in lifestylerelated healthissues, improved healthcare insurance penetration, rising treatment expenses,government initiatives and increasing disposable income, the sector is expected todouble its size to US$ 100 billion by 2015. (Source: Economic Times, 28 Jan 2011)5.3 4PS OF INDIAN CERAMIC TILE INDUSTRY:Product.The ceramic products have traditionally been associated with the aesthetic value ofcultures. Today, due to increasing hygiene consciousness and growing tendency toadopt new construction materials has boosted with the demand of the product. Theproduct is also associate with the Kitchen and ornamental items.Types of Tiles:

Glazed TilesAs worlds 3rd largest producer of tiles, the variety of the tile product are available inthe market, for kitchen, wall dcor, small size tiles, with attractive patterns can beseen in wide range of colors, sizes, are there in the market. From the blue pottery tilesto tiny types with custom dcor, crafted hand cut stones, glass tiles, and large formattiles by organized sectors are available.Wall dcor and bathroom are built with concept in mind seeing from abstract tomodern contemptory, colorful, classic, art deco, geometric design, floral and manyconcepts are made popular by tile companies.In popular wall sizes with highlighter products, from high gloss, matte, satin finish torough rustic surfaces can be use to create wall dcor.Today in the markets place one gets to see both Indian and imported tiles productswith dcor material where modern trendy, period antic style decoration is easy tocreate because such products are available. For exterior cladding both Indian andimported products are available where one can have vitrified tiles in Rustic finish,interlocking dig stone. For paving and passage and floor application vitrified unglazedproducts are available with several non slip design and various sizes. Customers,architect, designers now have comfortable variety of design to choose from.Ceramic tiles are very convenient as compare to marble, granite and stone in

term ofprice, color choice, weight, sizes, surface and availability.Price.Though Indian ceramic industry is the facing pricing war from China, our price isreasonably low in premium market like Europe , Canada and US. Only things we needis proper sales networks in this market.In the market like Middle East and Africa, the price play an important role. So weneed to lower down factory cost by the use alternative sources of fuel. Thegovernments gas pipeline project will bring down the energy cost drastically.S. K. School of Business Management, PATAN. P a g e | LX Porcelain Tiles 60.

61. Recently, morbid cluster has incurred a huge loss of Rs.100 crore in February, 2008and Gujarat Ceramic Tiles Units are switching to coal gas fire furnishes due toincreasing the gas prices. (Source: BS_21_Jul_2012)The prices of the Morbi based ceramic products have hiked prices by 12% with gasand other raw material prices rising continuously at the time rising coupled with lowerdemand plaguing the industry and the rise in RM prices had added further woes.(source: BS_08_June_2012)Place.Gujarat has a highly developed ceramics industry concentrated in the Morbi,Wankaner, Thangadh, Bamanbor, ShaparVeraval areas in Rajkot district. Theindustry has a turnover os around Rs. 10000 Crore per annum in the state.These areas in the Sauarashtra region are rich in

red soil(fire clay), which is the rawmaterial for the ceramic industry. In addition, raw materials such as volestonite andfeldspar are acquired from mines in Bikaner an Jaipur. Powder used in the industrycomes from the Pune and Udaipur. Fuel Gas is supplied from the porbandar.Ceramic product like glazed tiles, sanitary ware and kitchenware are manufactured inmorbid and thangadh and are ecported to contryes in the middle east and Africa.The ceramic industries earn foreign exchange woth Rs.100 crore a year. There areclose to 500 units in the ceramics industry in the region. Of these, 200 are engaged inthe production of the tiles.Promotion.Indian Ceramic companies now displays their product range at internationalexhibitions held in the major trade hubs like Dubai, Singapore etc. Also brand loyaltyis given due to important.In the December 2012, there is an Asian Region ceramic tile association exhibition inGujarat University Hall, Ahmedabad. Many companies from the india and overseasS. K. School of Business Management, PATAN. P a g e | LXI

62. will launch their product in this extravaganza. This exhibition will definitely give aplatform to the small players in this industry and international exposure which wasotherwise not possible.Many ceramic companies in Gujarat have launched online portals to directly come

incontact with customers. Visitors of the site can customize the designs at their will andorder a sample of the tile before buying it.Big players like Asian Granito, Kajaria, have already established their brand showrooms at the big cities of the selected states to display theirs products and directlyreach to their customers. Recently, Orient Ceramic have open their show rooms inAndhra Pradesh in Feb-2011. After successful launches in Uttarakhand, Assam,Kerala, Chhattisgarh. Delhi, Hariyana, Rajasthan, Punjab and UTs and Chandigarh.(Source: BS_23_May_2011)Somany Ceramics had decided to revise its plan of opening retail stores in thecountry. It was earlier planning to open 60-65 retails store but now it will go aheadwith 50 strores. (Souce:BS_18_Aug_2011)5.4 PORTERS FIVE FORCES ANALYSISPorters Five Force model for ceramic tile industry will be helpful to analyze theindustry attractiveness from the competitive point of view. It covers the threats of newentrants in to the market vis--vis it also takes into consideration the present rivalryamong the existing organized and unorganized ceramic tiles player which are highlyfragmented. The another point of view of the porters diamond model is takes in toconsideration of Bargaining power of buyers as well suppliers in the

ceramic tileindustry. At the end 5th point of model is treats from the substitute products such asmarble and stone.S. K. School of Business Management, PATAN. P a g e | LXII

63. NOTE : 1 = Low 3= Moderate and 5=High 1. Threats For New Entrants : Table:8Sr. No Factor weight Rates Total1 The existence of barriers to entry 0.15 4 0.62 Economies of product differences 0.15 2 0.33 Brand equity 0.1 4 0.44 Capital requirements 0.1 4 0.46 Access to distribution 0.2 4 0.87 Customer loyalty to established 0.1 2 0.2 brands8 Absolute cost 0.1 4 0.49 Industry profitability 0.1 3 0.3 TOTAL: 1 3.4 Interpretation: From the above factors it can be said that the threats of new entrance in the market of ceramic industry is 3.4 which is slightly higher than the moderate. The presence scenario of the industry tells that the big company such as Somany Ceramics and Kajaria Ceramics are increasing their market share by acquisition of the small units and due to high cost have prevented new entrance for next two year no new entries are coming in the markets. 2. Bargaining Power of Buyers: Table:9Sr. No Factor weight Rates Total1 Switching cost of buyer 0.1 4 0.42 Size of purchase 0.05 3 0.153 No of buyer 0.15 3 0.454 Information Availability 0.15 2 0.3S. K. School of Business Management, PATAN. P a g e |LXIII

64. 5 Quality Buying 0.1 3 0.36 Capacity to backward integration 0.05 2 0.17 Emergency of buying 0.15 2 0.38 Pricing 0.1 3 0.39 Availability of substitute products 0.15 4 0.6 TOTAL: 1 2.9 Interpretation: From the above factors we can conclude that the bargaining power of buyer are near to moderate. The present scenario of buyers demand is changing relatively big size tiles are now in fashion as customers are making now their home look aesthetics and giving it a luxurious and the per capita consumption of ceramic tile in India is low and boom in housing market has boosted the demand for ceramic tiles. 3. Bargaining Power of Suppliers : Table:10 Sr. No Factor weight Rates Total 1 Suppliers Switching cost 0.2 4 0.8 2 Impact of inputs on cost 0.1 4 0.4 3 Strength of distribution channel 0.2 5 1 4 Supplier competition 0.15 4 0.6 5 Presence of substitute inputs 0.2 4 0.8 6 Labor unions 0.15 2 0.3 TOTAL: 1 3.9 Interpretation: From the above details we can conclude that the bargaining power are neat to high. Because of their shortage of the raw such as Feldspar & Quartzs are being exported to the other countries as well as raw material cost of such as Zirconium and Titanium are rising and by this way the overall bargaining power of supplier is higher in the industry.S. K. School of Business Management, PATAN. P a g e |LXIV

65. 4. Threats from Substitute Product : Table:11 Sr. No Factor weight Rates Total 1 Buyer propensity to substitute 0.15 4 0.6 2 Relative price performance of 0.1 3 0.3 substitute 3 Buyer switching costs 0.2 3 0.6 4 product differentiation 0.2 3 0.6 5 Presence of substitute products 0.2 5 1 6 Product Quality 0.15 4 0.6 TOTAL: 1 3.7 Interpretation From the above factors we can conclude that the threats of substitute product is moderate to high, but the ceramic tiles are man maid and easy to lay and maintain. They come in various textures and patterns which natural products such as marbles and stones, granite fails to provide. Natural product require the lot of treatment like cutting, polishing and laying etc.. The process is time consuming and it takes 15 days marble to set, where as tiles take only 48 hours. In the long run there might be scarcity of natural resources. 5. Rivals from Existing Players : Table:12Sr. No Factor weight Rates Total1 Competitive advantage 0.2 4 0.82 Competition between online and 0.1 2 0.2 offline companies3 Level of advertising expense 0.15 3 0.45S. K. School of Business Management, PATAN. P a g e | LXV

66. 4 Powerful competitive strategy 0.2 4 0.85 Research and development 0.15 4 0.66 Product Differentiation 0.2 4 0.8 TOTAL: 1 3.65 Interpretation: From the above factors we can conclude that the rivalry among the

existing firms is moderate to high. As per present scenario the big companies such as Orient Ceramics has merged with Bell Ceramics Ltd., another big player H&R Johnson (I) Ltd. Has merged with Prisam Cements Ltd., Asian Tile has merged with Asian Granito (I) ltd. And companies like Somany Tiles and Kajaria Tiles are acquiring the small units to increase their market presence. The industry has very few such as 16 Organized players and rest of the industry is fragmented and unorganized industry in inda.5.5 OPPORTUNITIES AND THREATS ANALYSIS:5.5.1 Opportunities:S. K. School of Business Management, PATAN. P a g e |LXVI

67. Tile, Ceramic & Sanitary ware Industry to grow 20% in short run inIndiaIndias rank improved from fifth in 2006 to third in 2009 among the top ceramicmanufacturing countries. The output has been growing at 15% annually over the pastfew years, thus outpacing global growth of 6% per annum. The growth was led by theemergence of tiles as a durable, costeffective and convenient flooring solution overnatural stone. The size of the Indian tile industry is estimated at Rs 14,000 crore witha total capacity of 490million sq meter (MSM). The global production of ceramic andvitrified tiles was 8,515 MSM growing at an annual rate of 6%. A similar trend waswitnessed in terms of global consumption. China is the largest consumer while

Asiacommands 62% of the total global demand.The Indian ceramic industry is equally divided into the branded and unbrandedsegments. The unbranded segment comprises small players concentrated in Gujarat.The branded segment has been gaining market share owing to rapid capacity additionand shift to valueadded products, which explains the 20% growth of the top 10players as against the industry average of 10%. Correspondingly, the market shareincreased from 32% in 2005-06 to about 40% in 2010-11. Revenues of top 11companies aggregated Rs 5,500 crore in 2010-11, up 32% from previous year whileprofits jumped 80% to Rs 220 crore. The growth potential appears bright as the percapita consumption in India is a mere 0.42 sq. m while the world average is threetimes higher at 1.20 sq. m and China topping at 2.26 sq. m.Table: 13S. K. School of Business Management, PATAN. P a g e |LXVII

68. Source: www.infrawindow.comCeramic tile as a product segment has grown to a sizeable chunk today at 340Millions Square meters production per annum. However, the potential seems to begreat, particularly as the housing sector, retail, IT & BPO sectors have beenwitnessing an unprecedented boom in recent times. The ceramic tiles sector has beenclocking a robust growth of 12-15% consistently over the last few

years. Today, Indiafigures in the top 5 countries in the world manufacturing ceramic tiles. In the short run, the expansion of ceramic tile industry hinges upon thedevelopment of real estate sector. With a number of high-end luxury residentialcomplexes lined up for development, the industry is poised to grow by 15-20% in thenext five years, with the last year seeing a growth of almost 25%. The key drivers for the ceramic tiles in India are the boom in housing sectorcoupled by government policies fuelling strong growth in housing sector. The retailboom in the Indian economy has also influenced the demand for higher end products.Overall the bullish growth estimates in the Indian economy has significantlyinfluenced the growth of the Indian Ceramic tile industry. Both, traditional methods of manufacturing (tunnel) and the latest single fastfiring methods are deployed in manufacturing. Some of the latest trends inmanufacturing methods can be seen in India.Urbanites prefer tiled floors, rural folks catching up quickly Over 25% of urban houses have mosaic / floor tiles as predominant flooringmaterial, whereas the same material accounts for just 4% of rural houses. Between2001 and 2011, 13.75 million new houses were built with tiled floors, including 10.30million in urban areas. Overall, 10.6% of all houses in India have tile flooring. Ruralfolks still prefer mud flooring, but are

catching up faster in covering their floors withmosaic tiles. The rate of increase in tiled floor houses in rural area was at 6.5% fasterS. K. School of Business Management, PATAN. P a g e |LXVIII

69. than the 5.5% in urban centres. Rural added just 3.42 million tiled floor houses duringthe decade.Newage homebuyers in urban luxury spaces are spending a significant amount on theaesthetics of kitchens and bathrooms, prompting makers of ceramics tiles and sanitaryware to expand their luxury offerings.Global Ceramic Tiles Market to Reach 92.78 Billion Square Feet by2015, According to a New Report by Global Industry Analysts, Inc.GIA announces the release of a comprehensive global report on Ceramic Tilesmarket. In light of the anticipated economy recovery in the medium term and theensuing resurgence in construction activity, coupled with effervescent productinnovations, world ceramic tiles market is projected to reach 92.78 billion square feetby 2015.Ceramic tiles are essential materials used in the construction industry. Widely used ininterior and exterior architectures, ceramic tiles represent a highly variable marketdependent on factors, such as economic conditions, growth in GDP, consumerpurchasing power and the overall health of the domestic housing and constructionindustry.The world economic slowdown triggered sharp declines in housing

starts indeveloped regions, such as, the United States, and Europe, which not surprisinglyimpacted the ceramic titles market. Rising levels of unemployment, reduction inhousehold wealth, and discretionary spends, falling consumer confidence, lack ofcredit availability, and budgetary constrains have driven down construction andrenovation activities both in the residential and commercial construction sectors.In the post recession period, re-emergence of growth driving market fundamentals andrefreshing technological innovations are expected to kindle consumer interest and reenergize demand patterns. Registering a CAGR of around 3.05% over the analysisperiod, Asia-Pacific represents the fastest growing market for ceramic tiles.S. K. School of Business Management, PATAN. P a g e |LXIX

70. Sustainability and style factors have continued to influence ceramic tiles industry. Forinstance, most manufacturers from Italy, as well as those from other countries such asSpain, France, Germany, Japan, and others have demonstrated significant interest andmade major investments in sustainable production of ceramic tiles to meet the evertightening environmental standards and regulations. .The industry has a positive outlook mainly because of booming construction activitiesand low interest rate on housing loans (source: exim bank

study). The study reportsthat in recent years, Indian ceramic industry has witnessed encouraging trends indomestic demand, powered by sustained rise in housing construction and boominghospitality industry.The industry has also laid greater thrust on cost control measures, capacity expansion,exploration of newer markets and introduction of newer designs. The study reportsthat all these measures are expected to facilitate better growth in the industrysrevenues and profitability in future.The future outlook of the industry also seems to be positive because of the thrust onadvanced ceramics, which have high potential in global markets. These products findapplication in electronics, automotive and aerospace industries. The global market foradvanced ceramics is growing and countries like Japan and USA dominate thissegment. The study reports that in recent years Indian producers are also focusing onadvanced ceramic products, which is a positive sign for the future of this industry.Prospect of ceramic industry heavily depends on construction activities. In India, theconstruction sector is expected to do well mainly due to the fiscal incentives given tothe infrastructure development.The housing sector is also expected to grow because of the low interest rates onhousing loans. The future outlook of the industry also seems to be positive because ofthe thrust on advanced

ceramics, which has high potential in global markets. Theseproducts find application in electronics automotive and aerospace industries. Theglobal market for advanced ceramics is growing and countries like Japan and USAdominate this segment. Of late, Indian ceramic industry is focusing on advancedceramic products to step up exports. The thrust on advanced ceramics, along with theS. K. School of Business Management, PATAN. P a g e | LXX

71. booming construction activities, is expected to usher in a bright prospect for theceramic industry in India. ICCTAS asked government to include ceramic tiles industry inpriority sector list under Natural Gas Utilization Policy and Allocation of Natural Gas, headded.Growth in the domestic construction industry is driving demand for ceramicsConstruction industry in India has been experiencing rapid growth over the past fewyears, driven primarily by real estate construction. This, in turn, is driven by demandfor housing and retail construction. It is estimated that real estate construction in Indiawill grow from US$ 99 billion in 2005 to US$ 112 billion by 2008. This will drivesustained demand in ceramics both tiles and sanitaryware, as these are essentialinputs for any real estate construction. Hence both these sectors offer attractivegrowth opportunities for existing players, as wellas potential entrants. The

increase in imports and domestic capacity indicates thatdemand is likely to match or exceed domestic supply in the short to medium termOther opportunitiesRising population: The Indian population is expected to grow at a CAGR of 1.2%during 2010-2020. According to McKinsey, 590 million people (twice the size of theUS population) will be urbanized by 2030Burgeoning middle-class: The size of the upper middle-class household group isexpected to grow from 58 million in 2010 to 110 million by 2020 (40% of the totalnational households from 24% in 2010). This segment is adopting international trendsmuch faster than expected and consumption is moving beyond big centers to smallercitiesLow per capita consumption: India`s per capita tiles consumption is merely 0.46 mnsq m while the world average is three times that at 1.20 mn sq m; China`s average ismore than five times higher at 2.26 mn sq mGrowing urbanization: According to reports, India has 42 cities with more than amillion population, which is expected to rise to 68 by 2030, which will propel ceramictiles consumptionS. K. School of Business Management, PATAN. P a g e |LXXI

72. Affordable housing: Affordable housing demand is expected to grow at a CAGR of13% in 2011-2013 (Source: RNCOS Research). According to reports, India willwitness a demand of 3.94 million units during 2011-

15Nuclear families: India`s dependency ratio has declined from 58% in 2005 to 55.06%in 2010 and is expected to drop to 52% by 2015. This reduction will increase housingand related product demandCommercial real estate: The Indian commercial space is expected to grow 20-22%over the next five years, expected to reach 243.5 mn sq ft; demand for malls and otherretail space is estimated to reach 57 mn sq ft and 112.57 mn sq ft, respectively in2011-15Retail sector growth: The annual demand for retail space is expected to remain at 10-20 mn sq ft with strong growth coming out of Tier-I and II cities, catalysed byconsumerism and organised annual retail growth of 25-30%Hospitality: India`s tourism industry is expected to grow from USD 67.2 billion in2010 to USD 262.7 billion in 2021. India has over 200,000 hotel rooms across variouscategories and is still facing a shortfall of over 100,000 rooms (Source: FHRAI)Aviation sector: There is increasing passenger traffic (CAGR of 18.8%) and cargo(CAGR 11.4%) in India. The AAI is mobilising Rs. 50 billion for airportinfrastructure to develop 15 airports. Better airspace management will require aninvestment of about Rs. 67,500 crore in the Twelfth Five Year Plan in the sector,enhancing opportunities for tile manufacturersWith improvement in technology and its availability, Vitrified & Ceramic tiles arenow made in

different sizes, shades and textures thus providing a variety of choice tothe discerning customers.The Concept of owning a house has got off well in the minds and life style of every middleclass families. With required finance being made easily available by Bank and other FinanceInstitution and with easy repayment system owning a house becomes a necessity and apriority in investment.S. K. School of Business Management, PATAN. P a g e |LXXII

73. A study made by the locally based tiles association show that no new entities arecoming for the next two years since setting up of a vitrified tiles plant normally takesone and half years to two years. This would help to correct the supply demandscenarios for ceramic products which includes vitrified tiles also.With the government three years back imposing antidumping duty on Chinese importsfor another five years coupled with increasing awareness of the advantages of thevitrified tiles over traditional marbles and tiles; the bright opportunities for productdomestically.The GST is expected to be rolled out from the next fiscal and will replace a plethoraof state levies and central levies with a one tax. This would help create a nationalmarket.The overall growth in GDP clocked 6.5% to 7% in 2011-12 as against 8% in the lastfinancial year. The construction industry is expected to grow proportionally to thegrowth

of the country which can be in the range of 7 to 8% annually. Further,infrastructure creation being a national priority, the segment is poised for robustgrowth. As the products of ceramic industry find application in both the segments, itis expected that the improvement in the Indian economy will definitely result inaccelerated demand for ceramic industry products.Besides, nowadays there are marked improvements in the domestic consumption ofceramic products because of reduced imports due to foreign exchange fluctuations.1. The Urban growthi. Increase in earning family members:The dependency ratio among Indian families declined from 58% in 2005 to 55% in2010 and is expected to decline to 52% in 2015 and 49% in 2020 (Source: ENAM).ii. India gets younger:In India, the working age declined sharply, providing high disposable incomes. Closeto 65% of Indians between 20-60 years are working, leading to higher disposableS. K. School of Business Management, PATAN. P a g e |LXXIII

74. incomes and lifestyle aspirations. Among BRIC nations, India is expected to remainthe youngest with its working-age population estimated to rise to 70% of the totaldemographic by 2030 - the largest in the world. Some estimates suggest that Indiawill see 70 million new entrants into its workforce over five yearsiii. Increasing earnings and disposable income:The salary

of the average Indian grew 12.6% in 2011, higher than most other globalnations. India`s per capita income is estimated to rise 14.3% to Rs. 60,972 in 201112(Source: Deccan Herald). In line with economic growth, estimates suggest that PFCEis expected to scale from US$790 billion in 2010 to US$3.6 trillion by 2020 (Source:ENAM)2. Semi-urban marketsi. Bharat Nirman: The Build India government initiative expects to build world-classinfrastructure across rural land areas.ii. Preferred locations: Increasing corporates are shifting focus to Tier-II and III cities,accounting for over 61% of the total job creation in India in 2010-11. The IT/ITeSsector is expected to add 14 million direct and 55 million indirect job opportunitiespan-India (Source: ENAM)3. Housing demand growthi. Population growth: India`s population rose to 1.21 billion in the last 10 years, anincrease by 181 million; overall growth is pegged at 1.76% in 2011, which willcatalyse residential demand.ii. Urbanisation: India is the fastest urbanising country; UN estimates that 40% ofIndia`s population will be living in urban areas by 2030 (Source: Forbes India). Risingdisposable income (FY08-11 CAGR of ~15%), growing middle-class and increasingurbanisation (currently ~30% of the population) will boost the demand for improvedflooring solutions and value-added

productsS. K. School of Business Management, PATAN. P a g e |LXXIV

75. 5.5.2 ThreatsIt has been observed that dumping of tiles from China is the biggest problem of theindustry. An anti-dumping investigation concluded in 2003 has also confirmed thisproblem and levied anti-dumping duty of US $ 8.28 per sq.mt on vitrified ceramictiles imported from China. Despite the levy of anti-dumping duty, China accountedfor over 42% share (0.7 million sq.mt.) in total imports of unglazed ceramic tiles byIndia (1.7 million sq.mt.) in 2003-04. The unit price of Chinese unglazed ceramicproducts stood at US $ 3.1 per sq.mt. as compared to the world average of US $ 3.8per sq.mt. in 2003-04. The exim bank study is of the view that such dumping isdrastically reducing profit margin of domestic producersImports and the unorganized tile sector are the major threat to the Indian tile market.Freight, power and gas are the key cost-related issues impacting the industry.Copying of Tile designs is also a threat for the business resulting in undue loss to theCompany.The slowdown in allied industries cardinally forestalls the growth of the ceramicindustry. The competition offered by the unorganized players, who comprise of 50%of the total industry is a major impediment as well. The ever increasing operatingcosts, supply of natural gas and its prices, availability and procurement of rawmaterials

whose prices again tend to be volatile, foreign exchange risks, gaps inworking capital cycles and availability of skilled labour for ensuring quality of theoutput are the menacing aspects affecting the industry..For some time now, Indian ceramic tile manufacturers are besieged with the problemof low margin and falling profitability. According to industry sources, one of thereasons behind this scenario is the dumping of vitrified tiles into Indian market bycountries such as China, Indonesia, Sri Lanka, Malaysia and UAE. It is estimated thatduring the year 2003-04, nearly Rs. 100 crore worth of imported tiles were dumped inIndia. Dumping has become a major issue with Chinas entry into the BangkokAgreement, which was developed with a view to promote free trade among SouthEast Asian countries. Entry of China in to the Bangkok Agreement would result inS. K. School of Business Management, PATAN. P a g e |LXXV

76. large import from China, as under this agreement Chinese goods would attract a dutyof 10% as against 15% duty on import from other countries. A recent industryestimate suggests that in the present year the value of dumping from China mightincrease to Rs. 300 crores. This is expected to reduce the price of ceramic tiles to agreat extent and therefore dwindle the profitability of domestic producers further.Feldspar &

Quartz are critical minerals which are used as key raw materials in themanufacturing of ceramic tiles & sanitary ware. These are rare minerals found in thesediments of the earth. Due to the globalization and new ventures, the requirement forFeldspar & Quartz has been on the rise over the last few years. ICCTAS to demandfor ban on export of Feldspar & Quartz from IndiaThe depletion of these critical raw materials will force domestic industries to relyheavily on imports of the input which will result in further escalation of input coststhereby making tiles & sanitary ware expensive for the end-user. Moreover, such aproposition will also impact the survival of a large section of ceramic tile & sanitaryware manufacturers forcing them to shut down. As a result, there will be loss ofemployment and a bad return on investments made locally.The annual production of Feldspar crossed 1 million tons in FY10 from a mere 4.6lakh tones in FY08. The overall exports of Feldspar from India accounted for nearly3.42 lakh tons during the year accounting for over 30% of the overall production ofFeldspar being exported out of the country. Such huge quantum of export of the rawmaterial, fearfully, could cause a rapid depletion of the natural resource for domesticindustrys consumption. This could create a panic scenario for key Indian sectors likeceramics tiles & sanitary ware which requires Feldspar as a critical raw

material intheir manufacturing processes.Similarly, the export of Quartz over the years has gone up substantially from 1.16lakh tons in FY08 to 2.05 lakh tons in FY11. Being a critical raw material for ceramictile & sanitary ware industry and to promote consumption of this critical raw materialfor domestic players.S. K. School of Business Management, PATAN. P a g e |LXXVI

77. Another major problem of the industry is the rising cost of manufacturing due toincrease in prices of raw materials such as zirconium and titanium. The recentpetroleum price hike has also affected the industry, though in an indirect manner.Because of the substantial bulk of the material, transportation of ceramic tiles accruesvery high freight element. Rise in petroleum prices increase this transportation costsubstantially. However, this could not be passed on to the consumers due to stiffcompetition from China, UAE and some East Asian countries and this has reduced themargin.industry only, it is imperative that the export of this mineral is banned by theIndian government.In case of Feldspar, the ceramic industry accounts for 84% of its domesticconsumption. In the ceramic tile & sanitaryware industry, Feldspar is the second mostimportant ingredient after clay. Feldspar does not have a strict melting point, since itmelts

gradually over a range of temperatures. Feldspars are used as fluxing agents toform a glassy phase at low temperatures and as a source of alkalis and alumina inglazes. They improve the strength, toughness, and durability of the ceramic body, andcement the crystalline phase of other ingredients, softening, melting and wetting otherbatch constituents.The ceramics sector account for largest consumption of total Quartz output in India.Undersupply of Quartz as a result of its depletion has already caused a steady rise inits prices and is causing major uncertainties in long term strategies. Quartzexceptional qualities makes it a must-use in the manufacture of ceramic tiles.Ceramic tiles makers may be forced to go slow on up to Rs 3,000 crore investmentsthat have been planned for next 3-4 years due to lack of government support for theirinfrastructure requirements, industry body ICCTAS.Seeking priority sector status so that tiles makers can avail of benefits to reduce inputcosts, which is about 40 per cent of sales, Indian Council of Ceramic Tiles andSanitaryware (ICCTAS) said margins of the companies are being affected due to highproductions costs.S. K. School of Business Management, PATAN. P a g e |LXXVII

78. In the next 3-4 years, Rs 2,000-3,000 crore investment will be in the ceramic tilessector for upgradation of technology, expanding existing and

setting up new plants.The sector is going through a rough phase as high input costs are affecting themargins of the producers.Energy accounts for nearly 40 per cent of input costs for the ceramic tiles industryand it has made manufacturing in India very expensive compared to neighbouringnations..Lack of natural gas facility and arrangements for natural gas facilities as well asrising cost of the gas facilities keeping profitability low. The industry is requesting thegovernment to allocate LNG from the KG basin to manufacturers in Andhra Pradeshat a rate equivalent to imported natural gas..With an expanding market and increase in demand due to multi various applications,the chances of new entrants coming in to the field cannot be avoided which is turn ismaking the market highly competitive.The market demands new design and varieties of tile.Further two major element of cost of power and fuel are governed by the Governmentis consistent supply at reasonable rate are extremely important for the growth of thisindustry. Both price and supply of two major element of cost which is governed bythe Government thus creating certain amount of uncertainty. Pricing and extendedcredit are the other factors of concern.The ceramics industry is a highly energy intensive sector. Petroleum and raw materialproducts together form the most critical

component in the production of the industry.Higher input costs due to the cascading effect of inflation vis-a-vis manufacturingsector may contribute to shrinking of margins.The ceramic industry has been modernizing continuously, by newer innovations inproduct design, quality etc. However, in order to make the Ceramic IndustryS. K. School of Business Management, PATAN. P a g e |LXXVIII

79. domestically and globally competitive, initiatives in the national and internationallevel for constant technological and quality up gradations must emerge.The ceramic industry is suffering from labour issues and non-availability of skilledman power and to overcome this automation needs to be done for which capitalinfusion is needed.(case of rgency ceramics labour unrest) However, the increasinginterest rate environment can put pressure on margin and cash flows in addition todeferring corporate capex plans.Exports and imports of tiles are risingApart from domestic demand, exports of ceramic tiles from India have also beenincreasing. From a level of RS 40.5 cr in 2004-05, exports of ceramic tiles from Indiahave gone up to Rs 59.1 cr,in 2008-09 but imports of the products are higher than theexports which is a great concern of ceramic tiles industry. 400 366.6 348.3 350 313 300 283.4 250 200 188.2 Exports Imports 150 110.2 100 59.1 40.5 49.1

49.4 50 39.9 40.1 0 0 2004-05 2005-06 2006-07 200708 2008-09 2009-10Source: CMIE Graph 11 : Import and Export of Tiles In India The prices of the Morbi based ceramic products have hiked prices by 12%with gas and other raw material prices rising continuously at the time rising coupledS. K. School of Business Management, PATAN. P a g e |LXXIX

80. with lower demand plaguing the industry and the rise in RM prices had added furtherwoes. (source: BS_08_June_2012)5.6 PEST ANALYSIS: PEST analyses can be helpful at the starting point to know what environmental influences have been particularly impotant in present and the extend to which there are changes occurring which may any of these more or less significant in the future industry. It mainly covers the Political Factors, Economical Factors, Social Factors and Technological Factors. 1. Political Factor : NOTE : 1=Unfavorable & 5= Favorable Table:14Particulars Weights Rates Totalecological or environmental issues 0.10 2 0.20current legislation home market 0.10 2 0.20regulatory bodies and processes 0.10 2 0.20government policies 0.20 2 0.40government term and change 0.10 2 0.20trading policies 0.10 3 0.30funding, grants and initiatives 0.10 4 0.40home market lobbying or pressure 0.10 3 0.30groupsinternational pressure groups 0.10 4

0.40TOTAL 1.00 2.60Interpretation:S. K. School of Business Management, PATAN. P a g e |LXXX

81. From the above data we can conclude that political factors are moderately unfavorableto the industry as the present governments export import polices regarding dumpingproduction from China to India. There environment protection law are not favoringthe industry and the pressure from the players such as RAK Ceramics and Chineseplayers are increasing 2. Economical Factor : Table:15 Particulars weights Rates Total home economy situation 0.10 4 0.40 home economy trends 0.10 4 0.40 overseas economies and trends 0.05 4 0.20 general taxation issues 0.10 4 0.40 taxation specific to product or services 0.10 4 0.40 seasonality or weather issues 0.10 2 0.20 market and trade cycles 0.10 2 0.20 market routes and distribution trends 0.10 2 0.20 client or end-user drivers 0.10 2 0.20 interest and exchange rates 0.10 3 0.30 international trade or monetary issues 0.05 3 0.15 TOTAL 1.00 3.05Interpretation:From the above data we can conclude that the Economical condition in to the countryis moderately favorable to the ceramic tiles industry. As Indian economy is growing ataround 5 to 6 percentage. The interest rates are favorable, the employment in theeconomy is increasing and disposable income of the customer is increasing

andenergy availability is increasing but at the higher cost. 3. Social Factor : Table:16 Particulars weights Rates Total lifestyle trends 0.10 4 0.40 demographics changes 0.10 4 0.40S. K. School of Business Management, PATAN. P a g e |LXXXI

82. consumer attitudes and opinions 0.10 4 0.40media views 0.10 3 0.30consumer buying patterns 0.10 4 0.40fashion and role models 0.10 4 0.40buying access and trends 0.10 4 0.40ethnic or religious factors 0.10 3 0.30advertising and publicity 0.10 3 0.30ethical issues 0.10 3 0.30TOTAL 1.00 3.60 Interpretation: From the above data we can conclude that the social condition of the Indian population is more near to favorable as their need and the trends are changing. The demand for housing is increasing. The standard of living in metro cities and semi urban areas and rural area is increasing, which is positive sign for India ceramic tile industry. 4. Technological Factors : Table:17Particulars weights Rates Totalcompeting technology development 0.10 3 0.30research funding 0.10 2 0.20associated or dependent 0.10 2 0.20replacement technology or solutions 0.10 2 0.20maturity of technology 0.10 3 0.30information and communications 0.10 4 0.40consumer buying mechanisms or technology 0.10 4 0.40technology legislation 0.05 3 0.15innovation potential 0.10 3 0.30technology access, licensing,

patents 0.10 3 0.30intellectual property issues 0.05 3 0.15TOTAL 1.00 2.90 Interpretation:S. K. School of Business Management, PATAN. P a g e |LXXXII

83. From the above data we can conclude that the technological factors are moderately unfavorable to the ceramic tiles industry. The manufacturing process used in Indian ceramic tile industry is highly energy driven as well as the cost of fuel and gas is increasing from the cost point of view. The digital printing is the new technology introduce into the Indian ceramic tile industry. Other Technology such as Nano Techology, Waterjet Techology are also becoming favorite and being adopted by the Indian players. Cladding is the also making its presence in India.5.7 INDUSTRY LIFE CYCLE:Every industry passes through different stages in its life time. The stages can beidentified as follows. 1. Pioneering stage( Introduction) 2. Expansion Stage(Growth) 3. Stagnation Stage(Maturity) 4. Decay Stage( Decline)The feature of different stages can be as per following table. Table:19Particulars Pioneering Expansion Stagnation Decay Stage Stage Stage StageSales Low sales Rapidly rising Pick sales Declining salesCost High Cost Per Average Cost Low Cost Per Low Cost Per Customer Customer CustomerProfits Negative Rising High Profits Declining ProfitsCustomers Innovators Early Adaptors Middle

Laggards MajorityCompetitors Few Growing Stable Number Declining Numbers Beginning To DeclineAnalysis of ceramic tiles industryS. K. School of Business Management, PATAN. P a g e |LXXXIII

84. Sales: The sales of the industry are showing rising trend from Rs 3136.6 cr in 2004 to Rs 11754.8 cr in 2010. But after it is declining afterwards to RS 9850.2 cr in 2012. So from the sales trend it can be concluded that sales are rising but in recent year it is decreasing due to rising raw material and production cost. Table: 20Year 2012 2011 2010 2009 2008 2007 2006 2005 2004Sales industry 9850.2 10288.6 11754.8 10549.7 6779.3 5279.6 4213.2 4002.1 3136.6trend (Base 314.04 328.02 374.76 336.34 216.14 168.32 134.32 127.59 100.00year:2004) Source : www.aceanalyzer.zom Trend SALES (Base year:2004) 400.00 374.76 350.00 336.34 300.00 314.04 328.02 trend (Base 250.00 year:2004) 200.00 216.14 168.32 150.00 134.32 127.59 100.00 100.00 50.00 0.00 2012 2011 2010 2009 2008 2007 2006 2005 2004 Graph 12 : Sales Trend of Ceramic tiles Industry Profits The PAT of the industry are showing rising trend from Rs 148 cr in 2004 to Rs 468.4 cr in 2011. But after it is declining afterwards to RS 169.2 cr in 2012. So from the profit trend it can be concluded that profits are rising but in recent year it is decreasing due to rising raw material and production

cost. Table: 20 S. K. School of Business Management, PATAN. P a g e | LXXXIV

85. Year 2012 2011 2010 2009 2008 2007 2006 2005 2004Profit After Tax 169.2 468.4 313.4 282.6 287.3 287.5 225.5 199.8 148trend (Base 114.32 316.49 211.76 190.95 194.12 194.26 152.36 135.00 100.00year:2004) Source: www.aceanlyzer.com Trend PAT (Base year:2004) 350.00 300.00 316.49 250.00 200.00 211.76 trend (Base 190.95 194.12 194.26 150.00 152.36 135.00 year:2004) 100.00 114.32 100.00 50.00 0.00 2012 2011 2010 2009 2008 2007 2006 2005 2004 Graph 13 : Trend of PAT of Industry Costs From the below table and graph it can be concluded that costs in ceramic industry is rising from Rs2458 cr in 2004 to RS 8425.1 cr in 2011. After ward it has decreased to Rs 8186.3 cr in year 2012. Table: 21Year 2012 2011 2010 2009 2008 2007 2006 2005 2004Total costs 8186.3 8428.1 9771.3 8992.1 5564.6 4254.8 3376.3 3206.6 2458trend (Base 333.05 342.88 397.53 365.83 226.39 173.10 137.36 130.46 100.00year:2004) Source: www.aceanlyzer.com S. K. School of Business Management, PATAN. P a g e | LXXXV

86. Trend Costs (Base year:2004) 500.00 400.00 397.53 365.83 333.05342.88 300.00 200.00 226.39 trend (Base year:2004) 173.10 137.36130.46 100.00

100.00 0.00 2012 2011 2010 2009 2008 2007 2006 2005 2004 Graph 14 : Trend of Cost of IndustryCustomers:In India, tiles give aesthetic look to the house. Today flooring has become animportant element of home aesthetic. People cannot compromise on the aesthetic part.Customer value the importance of flooring and ceramic material.Theme houses are made by people nowadays for example Haveli, palaces especiallypeople residing in metro cities, and semi urban cities. The kind of tiles gives a feeland keeping the various aesthetic ambience in mind.We can can say customer are changing their choices towards big size tiles andproducts specifications are changing as per the demands. Other demands are alsogrowing from hospitality, health care, constructions and air ports.CompetitorsThe Indian tile industry is divided into organized and unorganized sector. Theorganized sector comprises of approximately 14 players. The current size of theorganized sector is about Rs. 7,200 Crores. The unorganized sector accounts fornearly 60% of the total industry bearing testimony of the growth potential of thissector.S. K. School of Business Management, PATAN. P a g e |LXXXVI

87. Only few organized players prevail in the market, the industry has fragmentedplayers. only big players are able to be profitable in the market because of the

risingcosts in to the market , big companies such as Somany ceramics and Asian Granitoare acquiring stakes into small companies to increasing their market presence.ConclusionFrom the above discussion it can be concluded that, the sales are though showingsluggish ternd in present but it has potential to rise in future, so as the efforts can bemade to reduce the costs of the industry. Profits are also going to show positive signsin future. There is also going to be growing demand in the future and no ofcompetitors are also few and highly fragmented. So industry is somewhere betweenpioneering to expansion stage, more close to expansion stage. CHAPTER - 6 Competitors AnalysisS. K. School of Business Management, PATAN. P a g e |LXXXVII

88. 6.1 COMPETITORS ANALYSIS: To analyze the competitors strengths and weaknesses we have allotted marks to the top players as per their key success factors. Marks are allotted from zero to nine where zero indicates low performance of the success factors and nine indicates best performance of that particular key success factor. The following table contains the marks allotted to the different competitors as per their strength in the industry. Table: 22 Competitors Comparision H&R Asian Orient Kajaria Somany Key success Johnson Granito Nitco Ceramics weight Ceramics Ceramics

factor (India) India Ltd. & Inds. Ltd. Ltd. Ltd. Ltd. Ltd.Quality/product 0.10 0.50 0.40 0.50 0.50 0.60 0.40performancImage 0.10 0.80 0.70 0.60 0.60 0.70 0.40Manufacturing 0.10 0.80 0.80 0.80 0.70 0.60 0.50capabilitiesTechnological 0.05 0.30 0.30 0.30 0.30 0.3 0.30 S. K. School of Business Management, PATAN. P a g e | LXXXVIII

89. skillsDealer network 0.05 0.45 0.30 0.35 0.35 0.40 0.20New productinnovation 0.05 0.20 0.15 0.35 0.30 0.30 0.10capabilitiesFinancial 0.10 0.80 0.70 0.70 0.80 0.60 0.30ResourcesRelative cost 0.30 1.80 1.80 1.80 1.80 1.80 1.80positionCustomerservice 0.15 0.90 0.75 0.75 0.90 1.05 0.60capabilitiesTOTAL 1.00 6.55 5.9 6.15 6.25 6.35 4.6 9 Cell Matrix of competitors 7 Kajaria Ceramics Ltd. 6 Product Quality 5 H & R Johnson (India) Ltd. [Merged] 4 Somany Ceramics Ltd. 3 2 Asian Granito India Ltd. 1 0 Nitco Ltd. 0 2 4 6 8 other KSF Orient Ceramics & Inds. Ltd. Graph 15 : 9 Cell Matrix of the Major Competitors Interpretation: From the above data it can be interrelated that the all the companies very close to each other in marks. As per analysis kajaria ceramics stands first from the list at 6.55 marks out of 9. Than second is Nitco Ltd. At 6.35 marks out of 9 whereas Asian granite india Ltd. Stands third with 6.25 marks and last is Orient Bell ceramics Ltd. Stands last

at 4.6 marks out of 9. S. K. School of Business Management, PATAN. P a g e | LXXXIX

90. S. K. School of Business Management, PATAN. P a g e | XC

91. 6.2 FINANCIAL ANALYSIS : COST BREAKS 6.2.1 Raw Materials consumed percentage of PBITD Table: 23Company 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003Industry 411.2 348.7 330.7 335.8 289.2 284.1 259.5 279.6 203.1 197.3Kajaria 348.0 361.1 313.4 426.0 326.1 406.7 217.2 169.4 185.4 173.5Prism 740.3 452.1 231.6 31.6 20.6 14.8 25.9 32.5 29.0 64.0Somany 686.0 615.4 483.2 464.0 339.3 344.4 294.2 319.4 314.2 294.1Asian 481.1 362.6 330.6 190.9 86.2 113.4 135.1 135.2 70.4 114.6Orient Bell 442.6 516.0 294.4 244.8 354.8 203.1 196.1 231.2 179.7 145.9Nitco 726.7 564.3 1054.4 500.1 459.8 438.3 384.6 507.9 320.1 257.2Regency - - 1615.1 - 2227.3 252.8 205.3 187.5 113.3 93.0 1108.6 9790.9 2995.7Euro 362.9 103.1 309.6 190.7 96.0 91.2 113.4 590.6 277.6 231.6Murudeshwar 121.7 84.6 90.7 78.1 67.7 81.6 73.4 76.9 68.2 69.0 1200.0 1000.0 Industry Kajaria 800.0 Prism 600.0 Somany Asian 400.0 Orient Bell Nitco 200.0 Murudeshwar 0.0 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 Graph 16 : RM Consumption on PBITD Interpretation: To analyze the

raw material cost we have taken RM cost as a % of PBIDT( Profit Before Interest Depreciation and Tax), from the graph we can say that the industry RM cost is higher as compare to their PBIDT. All the big players has try to maintain the RM cost well below the industry line. Some of the lowest RM cost keepers where Nitco, Murudeshwar and Asian Granito (I) Ltd. S. K. School of Business Management, PATAN. P a g e | XCI

92. 6.2.2 Power & Fuel Cost Percentage of PBITD Table: 24company 2003 2004 2005 2006 2007 2008 2009 2012Industry 88 93 83 84 89 104 105 120Kajaria 96 105 87 90 135 96 110 97Prism 376 211 156 132 57 60 103 267Somany 208 194 157 118 123 114 152 148Asian 0 0 0 0 104 103 141 166Orient Bell 121 194 102 90 89 172 142 221Nitco 74 102 92 52 35 33 38 46Murudeshwar 85 89 69 71 68 53 64 72 400 350 Industry 300 Kajaria 250 Prism 200 Somany Asian 150 Orient Bell 100 Nitco 50 Murudeshwar 0 2003 2004 2005 2006 2007 2008 2009 2012 Graph 17: Power and Fuel Cost on PBIDTInterpretation:From the above graph it can be said that the Power and Fuel cost in Prism Ltd andOrient Bell Ltd. Is higher than the industry for past three year. Only Kajaria, Nitcoand Murudeshwar have maintain the Power and Fuel cost less than the industry ratio.The major concern in the industry is power and fuel cost for the production. Onlythree players have obtained

fuel at lower than the industry ratio thus, controlled theiroverall cost.S. K. School of Business Management, PATAN. P a g e | XCII

93. 6.2.3 Employee Cost Percentage of PBITD Table: 25 company 2003 200 200 200 2007 200 2009 2010 2011 2012 4 5 6 8 Industry 42.99 43.6 42.4 41.7 46.4 51.0 58.67 58.63 56.21 69.19 4 2 1 8 1 Kajaria 27.76 28.8 26.8 29.6 49.2 49.2 59.27 52.10 51.08 51.67 9 1 6 4 7 Prism 51.50 25.9 19.4 13.5 6.99 10.0 14.51 25.47 50.41 82.7 4 8 9 8 6 Somany 45.19 64.8 73.0 62.9 73.2 74.9 76.30 72.60 75.5 83.3 2 0 5 2 5 3 0 Asian 15.21 7.41 18.5 14.9 15.8 17.4 30.74 42.28 43.05 46.03 2 0 4 1 Orient Bell 34.96 46.7 53.4 52.3 52.8 91.1 82.84 81.65 131.3 111.1 0 9 3 6 7 4 5 Nitco 37.25 46.7 46.5 32.4 24.4 29.9 37.32 109.3 45.33 54.01 6 8 3 8 2 1 Murudeshw 14.92 14.1 17.5 17.5 18.2 17.6 24.68 38.29 28.07 39.26 ar 7 2 3 1 4 140.00 120.00 Industry 100.00 Kajaria Prism 80.00 Somany 60.00 Asian Orient Bell 40.00 Nitco 20.00 Murudeshwar 0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Graph 18 : Employee Cost % on PBIDTInterpretation:For employee cost analysis we have taken employee cost as a % of PBIDT, From the abovegraph it can be seen that the three companies Prism Cement, Somany, and Orient Bellcompanies employee cost are exceeding the industy line where as Asian, Nitco, Murudeswarand Kajaria

have maintained the average below the industry line. S. K. School of Business Management, PATAN. P a g e | XCIII

94. 6.2.4 Manufacturing Expenses Percentage of PBITD Table: 26 company 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Industry 67.61 70.15 66.61 66.21 53.71 63.28 76.77 77.25 55.84 59.24 Kajaria 15.42 18.62 17.16 15.17 23.78 17.23 16.17 14.68 13.67 18.77 Prism 151.77 79.86 64.17 44.61 17.56 21.33 43.53 38.50 83.58 149.68 Somany 100.42 95.65 84.03 81.89 94.59 93.95 105.88 76.90 30.24 29.76 Asian 107.67 103.70 183.33 190.73 76.73 72.87 67.52 84.70 96.31 92.92 Orient Bell 42.28 56.85 68.37 59.50 53.71 95.05 68.41 66.60 87.46 83.44 Nitco 21.57 19.78 18.15 12.50 9.67 8.89 11.09 29.90 25.09 34.59 Murudeshwar 46.62 49.49 39.34 29.99 27.83 24.26 25.67 32.54 23.48 33.66 250.00 200.00 Industry Kajaria 150.00 Prism Somany 100.00 Asian Orient Bell Nitco 50.00 Murudeshwar 0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Graph 19 : Manufacturing Cost % on PBIDTInterpretation:From the above graph we can say that total manufacturing expenses in Prism Cement, Asiantile and Orient bell is higher than the industry average where as Nitco, Murudeswar andKajaria have been able to keep the % below the industry line. S. K.

School of Business Management, PATAN. P a g e | XCIV

95. 6.2.5 Interest as percentage of PBITD Table: 27Company 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Industry 62.85 36.23 31.57 30.27 26.70 36.75 44.02 42.03 30.97 41.31Kajaria 50.81 39.65 23.86 21.03 43.75 51.11 55.77 36.94 20.27 23.48Prism 131.34 44.20 24.47 13.65 1.77 0.97 2.09 10.47 30.40 63.23Somany 76.15 75.49 64.26 49.58 46.15 46.00 39.45 25.31 25.64 27.99Asian 11.28 12.96 13.58 13.58 14.11 12.63 21.07 20.20 23.00 30.53Orient Bell 39.02 29.44 26.05 23.30 16.29 42.40 34.08 22.27 35.90 44.10Nitco 42.81 34.53 35.62 30.80 11.51 16.83 31.34 56.37 35.99 86.90Murudeshwar 45.22 29.98 28.60 25.67 23.53 30.07 52.88 75.60 43.18 55.90 140.00 120.00 Industry 100.00 Kajaria Prism 80.00 Somany 60.00 Asian 40.00 Orient Bell Nitco 20.00 Murudeshwar 0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Graph 20 : Interest Cost % on PBIDT Interpretation: To analyze the Interest expenses into the industry we have taken interest expenses as a % of PBDIT from the graph it can be seen that the Orient bell, Murudeshwar, Prism and Asian Granitos interest expenses are growing and well above the industry line. Where as the Kajaria, Nitco and Somany have been

able to keep it below the industry line. S. K. School of Business Management, PATAN. P a g e | XCV

96. 6.3 PROFIT AFTER TAX ANALYSIS PAT Table: 28 company 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Industry 121.2 148 199.8 225.5 287.5 287.3 282.6 313.4 468.4 169.2 Kajaria 13.2 14.9 31 36.2 9 18.9 12.3 52.7 84.9 99.1 Prism -40.7 -7.2 32.8 73.5 235.9 282.6 132.7 368.9 134.1 -36.8 Somany -5 -2.1 2.2 4 3 5.1 12 30.1 32.8 30.4 Asian 1.9 2.5 9.5 19.4 24.7 33.4 34.5 28 28.1 22.2 Orient Bell 3.5 2.4 4.3 5.6 13.7 3.1 8.8 17 13.7 16.5 Nitco 8 6.9 9.1 25.7 44.5 64.2 34.4 -12.8 36.8 -68 Murudeshwar 5 13.8 20 30.6 34.8 33.6 0.2 -22.5 7.4 4.6 500 400 Industry Kajaria 300 Prism Somany 200 Asian Orient Bell 100 Nitco 0 Murudeshwar 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 -100 Graph 21 : Trend of PAT of IndustryInterpretation:From the above data we can say that the profit of the Prism Ltd. & Nitco Ltd is rapidlydeclining. Where as Kajarias profit is growing from past three years, where as Asian, Somanyand Orient bells profits are stagnantly growing for past 3-4 years. S. K. School of Business Management, PATAN. P a g e | XCVI

97. 6.4 KEY FINANCIAL HIGHLIGHTS OF TOP PLAYERS IN INDUSTRY:Companies snap shotsBelow

are the some of the financial highlights of the top players of the Indian Ceramic TileIndustry. 1) Kajaria Ceramics Ltd Financial high lights (Rs in Million) Table: 29 Year End 201203 201103 201003 200903 Equity Paid Up 147.17 147.17 147.17 147.17 Reserve 2671.8 2078.44 1746.23 1473.51 Total Debts 772.22 1002.08 2628.28 3251.67 Net_Block 7233.28 6999.89 5435.46 5014.92 Net Sales 13127.87 9532.78 7355.36 6648.83 PBIDT (Excl OI) 2005.81 1483.92 1149.27 829.81 PAT 807.15 606.62 358.52 88.99 Dividend(%) 125 100 50 10 EPS 10.97 8.24 4.87 1.21 Book Value 38.31 30.25 25.73 22.02 2) Somany Ceramics Ltd Financial high lights (Rs in Million) Table: 30 Year End 201203 201103 201003 200903 Equity Paid Up 68.99 68.99 68.99 68.99 Reserve 1171.15 955.71 749.5 569.17 Total Debts 833.38 829.15 1622.3 1372.53 Net_Block 3831.16 3499.19 2907.97 2778 Net Sales 8732.33 7143.29 5369.45 4420.89 PBIDT (Excl OI) 736.67 668.79 554.06 419.53 PAT 247.52 234.28 204.55 87.39 Dividend(%) 40 35 30 15 EPS 7.18 6.79 29.65 12.67 Book Value 35.95 29.7 118.63 92.5 3) Asian Granito India Ltd Financial high lights (Rs in Million) Table: 31 Year End 201203 201103 201003 200903 Equity Paid Up 210.61 210.61 210.61 210.61 Reserve 2185.23 2029.17 1852.79 1687.04 Total Debts 468.45 533.36 1371.18 1095.14 Net_Block 2726.81 2556.02 2345.18 1904.91

Net Sales 6237.95 4803.7 4063.8 3329.34 PBIDT (Excl OI) 667.3 580.88 471.76 540.42 PAT 180.54 200.94 190.39 250.14 Dividend(%) 10 10 10 S. K. School of Business Management, PATAN. P a g e | XCVII

98. EPS 8.57 9.54 9.04 11.88 Book Value 113.76 106.35 95.47 87.494) Orient Bell Ltd Financial high lights (Rs in Million) Table: 32 Year End 201203 201103 Equity Paid Up 105.3 105.3 Reserve 1556.53 1064.21 Total Debts 981.58 754.8 Net_Block 5223.97 3793.57 Net Sales 5462.75 3338.38 PBIDT (Excl OI) 497.03 300.95 PAT 134.53 126.08 Dividend(%) 15 20 EPS 12.78 11.97 Book Value 96.36 48.265) Nitco Ltd Financial high lights (Rs in Million) Table: 33 Year End 201203 201103 201003 200903 Equity Paid Up 326 321.24 321.24 321.24 Reserve 4474.75 5029.21 4772.6 4859.67 Total Debts 3142.23 3024.31 4554.97 2911.27 Net_Block 8891.29 6792.19 4669.01 4420.34 Net Sales 9374.96 7123.33 4491.04 6661.46 PBIDT (Excl OI) 864.37 780.41 277.72 752.3 PAT -554.46 263.04 -87.07 249.68 Dividend(%) 5 10 EPS -17.01 8.19 -2.71 7.77 Book Value 147.26 166.56 158.57 161.286) Regency Ceramic Ltd Financial high lights (Rs in Million) Table: 34 Year End 201203 201103 201003 200903 Equity Paid Up 264.42 264.42 264.42 135.97 Reserve -308.46 -70.67 83.72 187.06 Total Debts 820.41 908.62 1312.53 1373.15 Net_Block 2145.97 2157.6 2174.92 2147.66

Net Sales 1657.5 1920.47 1653.72 1577.45 PBIDT (Excl OI) -66.26 -7.6 36.25 -16.65 PAT -237.79 -154.39 -133.78 -148.31 Dividend(%) EPS -8.99 -5.84 -5.06 10.91 Book Value -1.67 7.33 13.14 23.54S. K. School of Business Management, PATAN. P a g e |XCVIII

99. 7) Murudeshwar Ceramic Ltd Financial high lights (Rs in Million) Table: 35 Year End 201203 201103 201003 200903 Equity Paid Up 368.69 350.29 175.27 175.27 Reserve 2622.41 2571.83 2343.85 2496.93 Total Debts 595.74 608.42 1754.31 1907.69 Net_Block 5359.17 5298.25 5206.92 5088.29 Net Sales 1790.71 1729.3 1299.23 1801 PBIDT (Excl OI) 421.53 529.58 342.9 517.14 PAT 37.71 52.96 -153.08 1.81 Dividend(%) 6 EPS 1.02 1.51 -8.73 0.1 Book Value 81.13 83.42 143.73 152.42S. K. School of Business Management, PATAN. P a g e |XCIX

100. 6.5 KEY RATIO OF THE MAJOR PLAYERS Table: 36Name of Asian Prism Somany Kajaria orient nitco Regency Euro AVERAGEthe Granito cements ceramics ceramics bell Ltd ceramics ceramicscompany India ceramicsPE 5.36 -85.12 5.23 15.52 4.3 0 0 1.36 6.66875PBV 0.4 -2.22 21.86 4.44 0.6 0.3 -1.8 0.25 2.97875ROE 7.79 -2.55 1.04 32 15.8 -10.9 -317.7 20.54 -31.7475DY 2.18 0.99 2.13 1.47 2.8 0 0 0 1.19625 Source: www.ace anyalyzer Asian .com PE 10 0 -10 -20

-30 Asian Granito India DY -40 PBV AVERAGE ROE Graph 22 : key ratios of Asian Granito 1. Asian Granito India Ltd. Current P/E ratio is 5.36 where as its Price to Book Value ratio is 0.4, Its Return on Equity is 7.79 Its Dividend yield is 2.18. S. K. School of Business Management, PATAN. P a g e | C

101. Prism cements PE 20 0 -20 -40 -60 -80 Prism cements DY -100 PBV AVERAGE ROE Graph 23 : key ratios of Prism Cement2. Prism Ltd. Current P/E ratio is -85.12 where as its Price to Book Value ratio is 21.86, Its Return on Equity is -2.25 Its Dividend yield is 0.99. Somany PE 30 20 10 0 -10 -20 -30 Somany ceramics DY -40 PBV AVERAGE ROEGraph 24 : key ratios of Somany Ceramics3. Somany Ceramics Ltd. Current P/E ratio is 5.23 where as its Price to Book Value ratio is 21.86, Its Return on Equity is 1.04 Its Dividend yield is 1.47. S. K. School of Business Management, PATAN. P a g e | CI

102. Kajaria PE 40 20 0 -20 Kajaria ceramics DY -40 PBV AVERAGE ROE Graph 25 : key ratios of Kajaria Ceramics4. Kajaria Ceramics Ltd. Current P/E ratio is 15.52 where as its Price to Book Value ratio is 4.44, Its Return on Equity is 32 Its Dividend yield is 2.8. Orient Bell PE 20 10 0 -10 -20 -30 orient bell ceramics DY -40 PBV AVERAGE ROE Graph 26 : key ratios of Asian

Orient Bell5. Orient Bell Ceramic Ltd. Current P/E ratio is 4.3 where as its Price to Book Value ratio is 0.6, Its Return on Equity is 15.8 Its Dividend yield is 0. S. K. School of Business Management, PATAN. P a g e | CII

103. Nitco Ltd. PE 10 0 -10 -20 -30 nitco Ltd DY -40 PBV AVERAGE ROE Graph 27 : key ratios of Nitco ltd6. Nitco Ltd. Current P/E ratio is 0 where as its Price to Book Value ratio is 0.3, Its Return on Equity is -10.9Its Dividend yield is 0. Regency PE 100 0 -100 -200 -300 Regency ceramics DY -400 PBV AVERAGE ROE Graph 28 : key ratios of Regency Ceramics7. Regency Ceramics Ltd. Current P/E ratio is 0 where as its Price to Book Value ratio is - 1.8, Its Return on Equity is 317.7 Its Dividend yield is 0. S. K. School of Business Management, PATAN. P a g e | CIII

104. Euro PE 30 20 10 0 -10 -20 -30 Euro ceramics DY -40 PBV AVERAGE ROE Graph 29 : key ratios of Asian Euro ceramics8. Euro Ceramics Ltd. Current P/E ratio is 1.36 where as its Price to Book Value ratio is 0.25, Its Return on Equity is 20.54 Its Dividend yield is 0. Table: 37 Company wise Trends in Sales: 2007-08 to 2009-10 Company wise Trends in Sales: 2007-08 to 2009-10 Company .Name 2007-08 2008-09 2009-10 Kajaria Ceramics 527.1 69.03 765.36 Prism Cement 381.37 Somany Ceramics 289.93 338.01 365.45 Asian Granito

India 196.38 324 351.24 Oriant Ceramic & Inds. 207.75 224.27 231.38 Nitco 146.33 150.49 184.71 Regency Ceramics 144.4 166.54 175.22 Euro Ceramics 202.16 187.72 165.82 Bell Ceramics 173.72 200.63 164.56 Munudeshwar Ceramics 216.15 176.05 136.37 Ajanta Manufacturing 236.4 138.81 134.46 Jalaram Ceramics 66.66 75.2 75.2 H & R Johnson (India) [merge] 490.9 443.04Source: CMIE S. K. School of Business Management, PATAN. P a g e | CIV

105. Table : 38 Trends in Market Shares : 2004-05 to 2009-10 Trends in Market Shares : 2004-05 to 2009-10 2004- 2005- 2006- 2007- 2008- 2009- 05 06 07 08 09 10Kajaria Ceramics 13.04 13.66 13.53 14.46 18.05 19.76Prism Cement 9.85Somany Ceramics 8.16 8.53 7.87 7.95 v 9.44Asian Granito India 2.78 4.34 5.04 5.39 8.47 9.07Oriant Ceramic & Inds. 5.16 5.50 5.91 5.70 5.86 5.97Nitco 4.20 3.83 3.66 4.01 3.94 4.77Regency Ceramics 6.89 6.07 4.88 3.96 4.36 4.52Euro Ceramics 4.13 4.38 5.67 5.55 4.91 4.28Bell Ceramics 7.10 6.78 7.45 4.77 5.25 4.25Munudeshwar Ceramics 7.61 7.63 7.45 5.93 4.60 3.52Ajanta Manufacturing 0.26 4.18 6.48 3.63 3.47Jalaram Ceramics 0.93 2.07 2.05 1.83 1.97 1.94Docolight Ceramics 0.74 1.38 1.36 1.51 1.76 1.92M B Industry 0.41 1.83Silica Ceramica Pvt. 1.22Restile Ceramics 0.57 0.48 0.75 0.93 1.03 0.98Delta Tiles 0.05 0.26 0.88 0.80Bisazza India Pvt. 1.19 1.44 1.31 2.84

2.60 0.71Nitco 0.61 0.69 0.71 0.63 0.56 0.60Italia Ceramics 0.90 1.04 0.70 0.72 0.72 0.24schablona India 0.14 0.18 0.20 0.40 0.55 0.19Anant Raj Inds. 1.01 0.87 1.04 0.73 0.45 0.17Andhra Polymers Pvt. 0.11 0.11 0.11 0.11 0.11 0.17Bell Granito Ceramica 3.97 2.88 2.27 0.58 0.18Boss Profiles 0.49 0.61 0.50 0.44 0.17Vineet UdyogH & R Johnson (India) [merge] 19.56 17.62 16.05 13.47 11.59Asian Tiles [merge] 0.66 1.11 0.86 1.14Rangoli Ceramics 0.13 0.07 0.09Gujarat Goldcoin Ceramics 1.66 0.97 0.80 0.07Total for the above companies 91.62 92.56 91.16 89.94 90.89 91.92Tatal for the sample companies 95.17 92.56 91.16 89.94 90.89 91.92Import 4.83 7.44 8.84 10.06 9.11 8.08Herfindahl Index of Concentration 0.09 0.08 0.07 0.07 0.08 0.08Source : CMIES. K. School of Business Management, PATAN. P a g e | CV

106. Table : 39 Company wise Trends in Sales: 2004-05 to 2009-10 Company wise Trends in Sales: 2004-05 to 2009-10 2004- 2005- 2006- 2007- 2008- 2009- 05 06 07 08 09 10Kajaria Ceramics 297.72 345.23 433.68 527.1 69.03 765.36Prism Cement 381.37Somany Ceramics 186.43 215.23 252.06 289.93 338.01 365.45Asian Granito India 63.53 109.65 161.64 196.38 324 351.24Oriant Ceramic & Inds. 117.88 138.9 189.25 207.75 224.27 231.38Nitco 96.01 96.75 117.17 146.33 150.49 184.71Regency Ceramics 157.38 153.46 156.43

144.4 166.54 175.22Euro Ceramics 94.25 110.59 155.6 202.16 187.72 165.82Bell Ceramics 162.21 171.2 181.82 173.72 200.63 164.56Munudeshwar Ceramics 173.75 192.68 238.63 216.15 176.05 136.37Ajanta Manufacturing 6.69 133 236.4 138.81 134.46Jalaram Ceramics 21.32 52.33 65.7 66.66 75.2 75.2Docolight Ceramics 16.99 34.86 43.5 55.18 67.39 74.34M B Industry 15.56 70.91Silica Ceramica Pvt. 0.09 52.38Restile Ceramics 12.94 12.22 24.14 33.85 39.57 37.87Delta Tiles 1.52 9.33 33.83 34.55Bisazza India Pvt. 27.23 36.47 41.83 103.68 99.58 30.85Ramco Ceramics 13.85 17.35 22.76 22.94 21.57 27.66Italia Ceramics 20.61 26.28 22.32 26.14 27.66 23.4schablona India 3.19 4.57 6.54 14.41 21.2 9.41Anant Raj Inds. 22.96 21.91 33.18 26.62 17.15 7.3Andhra Polymers Pvt. 2.55 2.82 3.46 4.1 4.11 6.72Bell Granito Ceramica 90.58 72.89 72.89 21.31 6.72 6.4Boss Profiles 11.1 15.34 16.02 16.02 6.4 0.03Vineet Udyog 0.03H & R Johnson (India) [merge] 446.68 445.24 514.38 490.9 443.04Asian Tiles [merge] 15.1 27.99 27.68 41.61Rangoli Ceramics 3.31 2.28 3.24Gujarat Goldcoin Ceramics 37.93 24.63 2.5 2.5Total for the above companies 2092.19 2338.87 2920.94 3278.81 3475.65 3560.24Tatal for the sample companies 2173.39 2338.87 2920.94 3278.82 3475.65 3560.24Number of sample companies 30 25 26 27 27 27Tatal Sales

2173.39 2338.87 2920.94 3278.82 3475.65 3560.24Source : CMIES. K. School of Business Management, PATAN. P a g e | CVI

107. CHAPTER - 7 Findings And conclusionFINDINGS AND CONCLUSION :S. K. School of Business Management, PATAN. P a g e | CVII

As far as the product rang is concern large format tiles continous to gain the popularity, Skinny and Thinner tiles are also coming into the fashion and they are going to be future product, as well as wood like tiles for kitchen, 3D tiles without glass are now coming popular.S. K. School of Business Management, PATAN. P a g e |CVIII The key success factor of the Indian Ceramic Tile Industry are manufacturing process, new technologies, dealers network and promotional stores. Evolution of the digital printing technology is the latest trend in the market. The biggest boom of the using digital printing technology is that it enable the printing to be done on uneven surfaces. Waterjet and Nano Technology is also being adopted by the industry current year Housing Sector boom, low per capita consumption, commercial real estate, Airport modernization, Hospitality sector, Healthcare sector are going to drive the demand in near future. Indian Ceramic tiles Industry is to gain to advantage of the

construction and housing industry. High Cost of interest and other inputs have made small players inefficient to function, adnd gradually they are merging with big units such as Kajaria, Asian Granito, Somany etc. only big players have been able to fight against the rising cost of Manufacturing. Raw materials such as Feldspar and Quartz essentials to the industry should be stopped from being exported to the other countries to protect the interest of the domestic playesr. AntiDumping law are require to stop dumping of ceramic tiles from china into India, to protect the interest of Indian players. The present ceramic tiles is running at higher cost as raw material cost, interest cost, fuel and manufacturing cost are increasing, gas prices are one of the major issues in the industry. Indian ceramic tile industry need the infrastructural support to bring in better growth in terms of consistency and sustenance. Indian ceramic industry as its growing at faster rate than that of global rate, our manufacturing plants must be geared up to large Manufacturing units such as currently operating in China and Turkey to get advantage of economies of scale. 108.

All top organized players competiting cut throat with each other to gain the market share. Currently Kajaria is the market leader followed by Asian Granito and Somany Ceramics.S. K. School of Business

Management, PATAN. P a g e | CIX The industry is at growing stage and will be expanded into the future as far as Industry Life Cycle is concerned. Porters Competitive forces indicates industrial attractiveness to enter into the markets. Political, Legal, Social and Technological environment are moderately favorable to the enter into the industry. 109.

110. BibliographyS. K. School of Business Management, PATAN. P a g e | CX

111. BooksSecurity Analysis and Portfolio Management by Sudhundra Bhatt, 1st Edition, pages303 to 315Crafting and Executing Strategy, by Arthur A Thompson Jr., A J Strickland III, JohnA Gamble, Arun K jain, 14th Edition, Pages 47 to 77, 86 to 113,Exploring Corporate Strategy Text & Cases by Gerry Johnson & Kevan Scholes, 3rdEdition, Pages 75 to 106Marketing Management by Kotler, Keller, Koshy & Jha, 13th Edition, Pages 61 to 77,Competitive Advantage by Michael E. Porter, Pages 164 to 198, 201 to 226ReportsIndian Ceramic Industry: Perspective and Export Potential EXIM Bank ReseachMarch-2005Glass and Ceramic Market and Opportunities Indian Brand Equity Foundationwww.ibef.inCeramic World Review: Worlds Top Manufacturers 92/2011CMIE, Industry Market Size and Shares, April-2011CMIE, Industry

Financial Aggregates and Ratio June 2012Experts Interview ReadMr. Bhupendra Vyas, Director-Marketing, SimpoloMr. Prakash Guddad, Tile Industry Brand GuruMr. Vineet Mal, Director-Marketing, Vita GranitoMr. Ajit Singh, VP, Malwa Mirage Ceramics Pvt. Ltd.Mr. Kamlesh Patel, MD, Asian GranitoMr. Shrikant Somany, MD, Somany Ceramics LtdMr. Sudhir Malesha, CEO, RAK Ceramics IndiaMr. Alok Goel, CEO, Nitco Ltd.Personal InterviewMr. Aditya Vyas, Director, Swastik Ceracon Ltd.Mr. Shumant Patel, Marketing Manage, Revasa Granito Ltd.Mr. Manoj Upadhyay, Ex. Manager, Century Tiles Ltd.S. K. School of Business Management, PATAN. P a g e | CXI

112. Websites Links:http://newsletters.cii.in/newsletters/mailer/trade_tal k/pdf/Ceramics%20Industry%20in%20India.pdfhttp://ww w.designboom.com/history/tiles_history.html accessed on 12th November, 2012http://www.niir.org/profiles/profiles/ceramicceramic-products-industrial-ceramic-products-pipesfloor-roof-tiles-tableware-wall-tiles-sanitary-wareporcelain-stoneware-pottery-ceramic-wall-amp-floortiles-vitrified-tiles-decorative-tiles/z,,7d,0,a/index.html accessed on12th November, 2012http://www.ctasc.com/.docs/pg/332 accessed on 15th November, 2012http://www.ceicdata.com accessed

on 15th November, 2012http://www.ceramicsasia.net/En/main/shownews.as p?id=2344&cid=5 accessed on 25thNovember, 2012, 8:30pmhttps://www.morbiceramicindustry.com/indiancer amicindustry.pdf+site:www.morbiceramicindustry.com+i ndian+ceramic+industry&hl=en&pid=bl&srcid=ADGEESj xKEIhZLmNUW_RifxEXxOzbDe8KrKnwBnMK_DfL0H21dHesOFmx PN1AJqjvgIZENLLvbjq7tmRW4JGXed_qESz3bFTzgHR4wtX pi0Rl07GkhRbpdN_NnyWweSE0Jy1XXTmLm&sig=AHI EtbTcwz3FcV6RZLUoZSB4QOO3jctPJg accessed on 25thNovember, 2012, 09:30pmhttp://www.ceramicsdirectory.com/CERAMIC-INDUSTRY/Manufacturers/28-0-3002-0-0-EAGO-sanitary-ware-compay,-ltd.html accessed on 18th December, 2012, 9.00amhttp://www.prweb.com/releases/ceramic/tiles/prw eb4447044.htm accessed on 25thNovember, 2012, 1:35 pmhttp://www.infrawindow.com/reports-statistics/tileceramic-sanitaryware-industry-to-grow-20-in-short-runin-india_45/ accessed on 1st December , 2012 2:30pmhttp://www.infrawindow.com/reportsstatistics/ceramic-tile-and-sanitary-ware-industry-hit-byhuge-debt_109 accessed on 1st December , 2012 2:30pmhttp://www.infrawindow.com/reportsstatistics/ceramic-tiles-and-sanitaryware-bigger-the-

better_72 accessed on 1st December , 2012 2:30pmwww.infotile.com = publication -world production and Ceramic consumption of tilesaccessed on 15th December,2012, 2:30pmS. K. School of Business Management, PATAN. P a g e | CXII

113. www.icctas.com/new = Raw material export ban accessed on 15th December,2012, 2:30pmwww.aceanalyser.comwww.infrawindow.comNe wspaperThe Hindu Businessline, Firday april 20, 2012, ban on RM exportsBusiness Standard dated 07 Dec. 2012, Somany Cermic to pump 100crBusiness Standard dated 14 Sept. 2012, Ceramic tiles maker slow down Rs.3000crInvestmentBusiness Standard dated 08 Sept. 2012, SCL want ceramic to be priority sectorBusiness Standard dated 21 July 2012, GCU switching to coal gas fired furnishBusiness Standard dated 08 June 2012, Morbi Ceramic units hike prices by 12%Business Standard dated 30 Jan. 2012, Kajaria ceramics buys stake in JAXX VitrifiedBusiness Standard dated 10 Apri 2012, Somany Ceramics buy 26% in CommanderVitrifiedBusiness Standard dated 19 Apri 2012, Kajaria acquires stake in Vennar CeramicsBusiness Standard dated 28 Jan 2012, Labour unrest in RegencyBusiness Standard dated 30 Nov. 2011, Gas Price hikeBusiness Standard dated 31 Oct.

2011, High RM cost its profit marginS. K. School of Business Management, PATAN. P a g e |CXIII

114. AnnexureS. K. School of Business Management, PATAN. P a g e |CXIV

115. Financial Aggregates Ceramic ProductsParticulars 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2009-10Total Income 2985 3735 5008 4850 5105 5333 6131 Sales 2916 3696 4950 4754 5049 5255 6069 Income From Financial Services 14 19 31 42 18 30 25 Other Income 9 10 13 13 9 14 13 Prior Period For Extra Ordinary Income 46 11 12 41 39 43 25Change In Stock 120 84 200 106 93 128 113Total Expenses 3009 3704 5037 4740 5117 5376 6069 Raw Materials Stores And Spares 787 897 1199 1165 1310 1344 1342 Power Fuel And Water Charges 462 572 727 709 817 827 844 Compensation To Employee 224 247 338 361 401 450 477 Selling And Dist. Expenses 287 356 481 384 388 433 447 Other Oper Exps Os Indl Enterprise 3 3 4 5 21 7 23 Other Oper Exps Of Non Fin ServiceEnterprise 1 1 1 1 Interest Pais 151 160 195 201 224 239 204 Depreciation 172 190 226 223 234 266 249 Amortization 5 4 6 5 12 4 4Pbdita Net Of P&E&Oi&Fi 465 559 712 701 669 621 704Pat Net Of P&E 70 114 193 182 68 48 163Forex Earning 179 155 206 173 162 167 127Forex Spending 399 498 732 724 889 591

816Liabilities 129 Net Worth 948 7 1899 2224 2149 2292 2381 Paid Up Equity Capital 353 382 480 516 541 616 623 Reserve & Fund 574 869 1381 1635 1522 1672 1814 Borrowing 1823 2175 2580 2530 2963 2983 2511 S. K. School of Business Management, PATAN. P a g e | CXV

116. Defered Tax Liabilities 297 316 340 274 261 272 261 Current Liability And Provision 798 1195 1332 1148 1126 1377 1642 Sundry Creditors 452 716 871 669 736 861 1070Assets Gross Fixed Assets 3391 3975 4567 4351 4643 4972 4878 Net Fixes Assets 2136 2613 2987 2819 3119 3220 3099 Investment 160 217 215 213 169 215 160 Deffered Tax Assets 74 66 60 47 51 61 67 Cash & Bank Balance 87 194 275 170 140 183 183 Inventories 764 902 1214 1201 1206 1386 1595 Rm Package And Stores 261 312 405 367 372 393 393 Finished & Semi Finished Goods 503 590 808 834 834 954 1005 Recievables 434 542 728 825 884 884 896 Sundry Debtors 405 536 720 812 853 855 868 Bills Receivables Loan & Advances 262 320 449 586 654 742 663 Expense Paid In Advance 65 102 131 126 120 166 192Total Assets & Liability 4012 5067 6205 6231 6550 6973 6883Count 37 43 50 52 51 54 48 Source : CMIE S. K. School of Business Management, PATAN. P a g e | CXVI

117. ANALYSIS OF PORTERS FIVE FORCES: THREAT OF NEW ENTRANTS:Sr. Factor weight Low 1 2 Moderate 4 High 5 Total 3No1 The existence of barriers to entry 0.152 Economies of product differences 0.153 Brand equity 0.104 Capital requirements 0.106 Access to distribution 0.207 Customer loyalty to established brands 0.108 Absolute cost 0.109 Industry profitability 0.10 TOTAL: 1 BARGAINING POWER OF BUYERS: Sr. Factor weight Low 1 2 Moderate 4 High 5 Total No 3 1 Switching cost of buyer 0.10 2 Size of purchase 0.05 3 No of buyer 0.15 4 Information Availability 0.15 5 Quality Buying 0.10 6 Capacity to backward integration 0.05 7 Emergency of buying 0.15 8 Pricing 0.10 9 Availability of substitute products 0.15 TOTAL: 1 BARGAINING POWER OF SUPPLIERS: Sr. Factor Weight Low 1 2 Moderate 4 High 5 Total No 3 1 Suppliers Switching cost 0.20 S. K. School of Business Management, PATAN. P a g e | CXVII

118. 2 Impact of inputs on cost 0.103 Strength of distribution channel 0.204 Supplier competition 0.155 Presence of substitute inputs 0.206 Labor unions 0.15 TOTAL: 1 THREAT OF SUBSTITUTE PRODUCTS: Sr. Factor weight Low 1 2 Moderate 4 High Total 3 No 5 1 Buyer propensity to substitute 0.15 2 Relative price performance of substitute 0.10 3 Buyer switching costs 0.20 4 product differentiation 0.20 5 Presence of

substitute products 0.20 6 Product Quality 0.15 TOTAL: 1 RIVALRY AMONG EXISTING COMPETITORS: q Factor weigh Low 1 2 Moderat 4 High 5 Total t e3 1 Competitive advantage 0.20 2 Competition between online and offline 0.10 companies 3 Level of advertising expense 0.15 4 Powerful competitive strategy 0.20 5 Research and development 0.15 6 Product Differentiation 0.20 TOTAL: 1 S. K. School of Business Management, PATAN. P a g e | CXVIII

119. Key success weight Kajaria HSI H&R Somany Asian Nitco Orient Euro Bell Ceramics L Ltd. Johnson Ceramics Granito Ltd. Ceramics Ceramics Ceramicsfactor Ltd. (India) Ltd. India & Inds. Ltd. Ltd. Kajaria Ltd. Ltd. Ltd. Ceramics [Merged] Ltd. Quality/ 0.10productperformanceImage 0.10Manufacturing 0.10capabilitiesTechnological 0.05skillsDealer 0.05networkNew product 0.05innovationcapabilitiesFinancial 0.10ResourcesRelative cost 0.30positionCustomer 0.15servicecapabilitiestotal 1 Rating scale 0=very weak, 9= very strong Pest analysis Political issues Particulars weights 1 2 3 4 5 ecological or environmental issues current legislation home market regulatory bodies and processes government policies government term and change trading policies funding, grants and initiatives home market lobbying or pressure groups international

pressure groups 1=favorable, 5= unfavorable S. K. School of Business Management, PATAN. P a g e | CXIX

120. Economic conditionsParticulars weights 1 2 3 4 5home economy situationhome economy trendsoverseas economies and trendsgeneral taxation issuestaxation specific to product or servicesseasonality or weather issuesmarket and trade cyclesmarket routes and distribution trendsclient or end-user driversinterest and exchange ratesinternational trade or monetary issuesSocial trendsParticulars weights 1 2 3 4 5lifestyle trendsdemographics changesconsumer attitudes and opinionsmedia viewsconsumer buying patternsfashion and role modelsbuying access and trendsethnic or religious factorsadvertising and publicityethical issuesTechnological issuesParticulars weights 1 2 3 4 5competing technology developmentresearch fundingassociated or dependentreplacement technology or solutionsmaturity of technologyinformation and communicationsconsumer buying mechanisms or technologytechnology legislationinnovation potentialtechnology access, licensing, patentsintellectual property issuesS. K. School of Business Management, PATAN. P a g e | CXX

121. Balance sheet & Profit & Loss Account of Ceramic IndustryYear End Y2012 Y2011 Y2010 Y2009 Y2008 Y2007 Y2006 Y2005SOURCES OF FUNDSShare Capital 422 516 844 661 520 421 398 344Share warrants & Outstandings 11 26 38 28 53 23 28 10Reserve 3302 3377 3848 3304 2801 2028 1274 911Shareholders Funds 3734 3919 4730 3993 3374 2472 1700 1266Secured Loans 1556 1518 3703 3343 2599 2013 1542 1395Unsecured Loans 286 339 1104 817 622 517 473 298Total Debts 1842 1857 4807 4160 3221 2530 2015 1693Total Liabilities 5576 5775 9536 8153 6595 5002 3715 2959Net_Block 6360 6138 8227 6503 5095 3997 3550 2989Less: Accumulated Depreciation 2055 1944 2597 2008 1591 1318 1207 1049Less: Impairment of Assets 0 0 0 0 0 2 2 2Lease Adjustment A/c 0 0 0 0 0 0 0 0Capital Work in Progress 503 237 333 668 462 485 202 138Pre-operative Expenses pending 0 0 1 0 0 1 0 0Assets in transit 0 0 0 0 0 2 0 0Investments 802 780 535 391 318 231 235 91Current Assets, Loans &AdvancesInventories 2031 2103 2433 1879 1545 1232 940 777Sundry Debtors (Debotrs) 1261 1314 1495 1317 1105 783 652 495Cash and Bank 275 242 325 379 426 372 169 107Other Current Assets 46 130 112 83 35 23 36 39Loans and Advances 530 692 1177 1094 781 531 382 232Total Current Assets 4142 4481 5543 4752 3893 2941 2177

1649Less : Current Liabilities and S. K. School of Business Management, PATAN. P a g e | CXXI

122. ProvisionsCurrent Liabilities 3657 3349 1876 1642 1160 961 929 607Provisions 257 273 328 239 181 152 108 67Total Current Liabilities 3914 3622 2204 1882 1341 1113 1037 674Net Current Assets 228 859 3338 2871 2551 1828 1140 975Miscellaneous Expenses not writtenoff 0 0 13 17 22 20 11 3Deferred Tax Assets / Liabilities -262 -296 -315 -289 -262 -241 -214 -186Total Assets 5576 5775 9536 8153 6595 5002 3715 2959Contingent Liabilities 905 825 659 563 590 411 499 341 S. K. School of Business Management, PATAN. P a g e | CXXII

123. Year End 9012 2012 2011 2010 2009 2008 2007 2006 2005No Of Companies 101 25 57 95 93 56 49 47 47Gross Sales 11358 7830 7334 8170 7646 5796 4505 3660 3102Less: Excise 626 451 367 367 274 260 215 175 153Net Sales 10731 7378 6965 7802 7370 5534 4288 3484 2949EXPENDITURE :Increase/Decrease in Stock -234 -154 -126 -219 -101 -117 -232 -85 -118Raw Materials Consumed 4928 3579 3339 3345 2865 2248 1870 1429 1295Power & Fuel Cost 1475 1043 820 1089 897 805 588 460 387Employee Cost 803 596 539 593 501 396 306 230 197Other Manufacturing Expenses 903 506 535 781 654 491 353 365

309General and AdministrationExpenses 537 246 256 414 876 263 217 164 100Selling and Distribution Expenses 839 595 574 672 641 587 478 329 281Miscellaneous Expenses 144 71 70 115 184 85 50 42 35Less: Pre-operative ExpensesCapitalised 0 0 0 0 0 0 0 0 0Total Expenditure 9396 6482 6007 6790 6517 4757 3630 2933 2485PBIDT (Excl OI) 1336 896 958 1011 854 777 658 551 463Other Income 207 63 69 169 166 102 53 56 33Operating Profit 1543 959 1027 1180 1020 879 710 607 497Interest 555 351 297 425 376 286 176 167 146PBDT 988 608 731 756 644 594 535 440 350Depreciation 454 283 279 399 303 235 189 169 146Profit Before Taxation &Exceptional Items 534 325 451 357 341 359 346 271 204Exceptional Income / Expenses -31 -31 6 0 -13 4 0 2 -2Profit Before Tax 503 294 458 356 328 363 346 274 202Provision for Tax 201 132 123 138 123 117 101 78 47PAT 302 162 334 218 205 246 245 196 155Appropriations 1391 1075 1179 1092 1103 777 585 413 241Dividend(%) 1995 506 1505 5829 5859 668 466 303 392 S. K. School of Business Management, PATAN. P a g e | CXXIII

124. EPS 27716 83 22479 19632 23431 4972 316 165 247Book Value 188614 1581 145209 162577 153840 28956 6178 3413 3219 Source: www.aceanalyser.com S. K. School of Business Management, PATAN. P a g e | CXXIV