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Content

Topic

Page No.

Cover page-

Content page-

Candidate declaration-

Acknowledgement

Chap-I-

5-6

Preface&Scope of the study

Objective of the study

Chap-II-

6-17

Global Tiles Industry

6-7

Global Sanitary Industry

About Indian Ceramic tiles Industry

8-15

Industry Statistics

16-17

Export-Import Scenario

17

Chap-III-

17-26

Research Methodology&Findings

17-25

Limitations

25-26

Chap-IV-

26-39

About OCIL

26-29

Financial Analysis &Recommendation

30-36

Demand Drivers

37

SWOT Analysis

38

Distribution System

38

Ceramic Marketing

38-39

Chap-V

39-41

Other Recommendations

39
1

Risk & Concerns

40

Conclusion

40-41

References

41

Chapter I
Preface
The word "Ceramic" has originated from the Greek word, "Keramos", which means
pottery. It also relates to an ancient Sanskrit word whose root meaning is to burn, but
it is predominantly used to indicate "burnt stuff". Almost 10,000 years later, with the
establishment of settled communities, tiles were manufactured in Mesopotamia and
India. The first instance of functional pottery vessels being used for storing water and
food is thought to be around 9,000 or 10,000 BC. Clay bricks were also made around the
same time.
The ceramics industry in India came into existence about a century ago and has
matured over time to form a industrial base. From traditional pottery making, the
industry has evolved to find its place in the market for sophisticated insulators,
electronic and electrical items. Over the years, the industry has been modernising
through new innovations in product profile, quality and design to emerge as a modern,
world-class industry, ready to take on global competition.
Though there are a number of large companies in the ceramics sector, small and medium
enterprises (SMEs) account for more than 50 per cent of the total market in India,
offering a wide range of articles including crockery, art ware, sanitary ware, ceramic
tiles, refractory and stoneware pipes among others. Most of the players are grouped
together in clusters.
Over the last two decades, the technical ceramics segment has recorded an impressive
growth propelled by the demand for high-alumina ceramics, cuttings tools and structural
ceramics from the industry. Overall, the Indian ceramics industry has emerged as a
major manufacturer and supplier in the global market.

Scope Of The Study

Ceramic tile comes under Building Material Industry. Over the years, Indian Building
Material Industry poised to grow at a fast pace of almost 16%/annum due to boom in
real estate and construction industry. Increase in income levels and availability of a
range of financing options for housing is enabling rapid growth in housing
construction.
In India, particularly in NCR region, growth rate of building material industry is at very
high and constantly growing. By this project finding, we have been trying to catch the
opportunities and demand of various tile making organisations for their commercial and
residential needs in Ghaziabad and Meerut region.
Also as marble prices begin to pinch purses in these times of meltdown, tiles are making
deeper inroads into urban homes. And they are getting more designer makeovers to suit
market demands.

Objective Of The Study


Our soul objective of this report confines with these facts

To know the nitty-gritty of Ceramic tile industry as much possible

Determine the market size and potential of all the organise and unorganised
players

A comparative analysis among some major players of tiles industry , especially in


Ghaziabad and Meerut region in terms of Quality, Brand Equity, Price and
Customer Service.

Further scope and opportunity analysis.

Chapter-II
Global Tiles Industry

There are three major regions in the world, namely, Asia, Latin America and European
Union (EU), that produce and export ceramic tiles in bulk. In 2008, they had jointly
produced more than 87% of the global output. World production of ceramic tiles was
7565 million sq.mt. in 2008.China was the largest producer with a total production of
2200 million sq.mt. Spain and Italy were the 2 nd and 3rd largest producers with
production of 635 million sq.mt. and 589 million sq.mt. respectively. India ranks at 5 th
position with production of 270 million sq.mt., which is around 2.5% of global
production.
The ratio between consumption and production has been stable at around 94 per
cent. Ceramic tile production has been increasing at a cumulative rate of close to 6 per
cent. Asia is the most signifcant region by production, as well as consumption,
accounting for more than 50 per cent of both. China is the leading country in the
production of ceramic tiles with a share of 33 per cent at a total production of 2,200
million square metres, followed by Spain and Italy. Europe accounts for 30 per cent
and USA accounts for 14 per cent of the total global production of ceramic tiles. In
terms of consumption the pattern remains similar, with Asia accounting for 51
per cent, Europe for 26 per cent and USA accounting for 18 per cent of the total
global ceramic tile consumption.
4

Global Sanitaryware Industry


The global sanitary ware industry is estimated to be 187 million pieces and
growing at about 7 per cent Y-o-Y. The main sanitaryware producing countries in
the world are China, Italy, Mexico, Brazil and Spain, which together account for
about 35 per cent of global production India, with a size of 6.7 million pieces,
accounts for about 3.3 per cent of global production. Penetration of sanitaryware in
India-about 30 per cent, is much lower than even neighbouring Asian countries,
indicating signifcant growth potential for this sector in the Indian market. The Indian
sanitaryware market has been growing at about 10 per cent a year, as compared to the
global average growth of about 7 per cent.

INDIAN CERAMICS INDUSTRY


Ceramic Tiles
Indias ceramic tile industry emerged in the 1950s. Tiles form the most

significant part

of the Indian ceramics industry and consist of floor tiles (46 per cent), vitrified and
porcelain tiles (12 per cent) and wall tiles (42 per cent). The floor tiles segment is growing
faster as compared to wall tiles. Vitrifed and porcelain tiles are recent entrants into
the ceramic tile industry and have increased the size of the market considerably.
It is expected that this segment will capture the bulk of the market gradually,
replacing the conventional floor and wall tiles segment. These tiles are light and
have the added advantage of being offered in designer looks as compared to mosaic
tiles, which

are heavier and more expensive

to

transport. Both organised and

unorganised sectors play a key role in the manufacturing of ceramic tiles in India. The
per capita consumption of ceramic tiles in India is very less as compared to the other
countries in the world. It is as low as 0.15 sq.mtr per annum. This low per capita
consumption shows the likely demand that is going to arise in the future in India as
more and more development takes place. Ceramic Tiles are furnishing material apart
from being utility or hygiene products. Despite an overall slowdown of the economy this
sector continues to grow at a healthy 12 percent per annum. Growth of the unorganized
sector accounted for 44 percent of the total Production and the revenue earnings from
the organized sector accounted to over Rs150 crore. India ranks 7 th

in terms of

production in the world and the market share of India have risen from 1.7 percent to 2.7
percent in terms of ceramic tile production.

MARKET SIZE OF THE INDIAN CERAMIC INDUSTRY


The Indian ceramic tile industry is estimated at US$ 0.35 billion. It Comprises of wall
tiles, floor tiles and vitrified tiles. The per capita Consumption of ceramic tiles in India
is just 0.15 square metres per Annum, which is quite low as compared to developed
countries.

The industry has been experiencing increased demand, which, in recent years, has
matched the installed capacity. While capacity has also increased significantly, from
120 million tonnes in 2004, to 215 million tonnes in 2008, the demand has grown
nearly two and a half times in the same period, from 97 Million tonnes to 207 million
tonnes. Ceramic tiles are produced by organised, as well as unorganised players. The
share of production of organised players is around 55 per cent. The organised sector is
characterised by the existence of a few

large players, such as

H.

&

R.

Johnson,

Kajaria Ceramics, Bell Ceramics, SPL, Spartek and Murudeshwar Ceramics,OCIL and
Nitco.

ORGANISED PLAYERS

Some of the major players of Indian ceramics industry are-

o
o
o
o
o
o
o
o

Asian Granito (India) Ltd.


Euro Ceramics Pvt. Ltd.
H. & R. Johnson (India) Ltd.
Kajaria Ceramics Ltd.
Nitco Tiles Pvt.Ltd.
Orient Ceramics And Industries Ltd.
RAK Ceramics India Pvt. Ltd.
SPL Ltd.

PRESENT MARKET SHARE OF TILE PRODUCER COMPANIES IN


NORTHERN INDIA

A Brief Description of Major Players

Orient Ceramics Industries Ltd.


Headquartered at New Delhi, Orient was incorporated as a Public Limited Company
on 18th May 1977 for the manufacture of ceramic tiles with an installed capacity of
0.4 Million sq. mtrs. per annum which has now grown to 14 million sq. mtrs. per
annum.
Mr. Mahendra K. Daga currently heads Orient Ceramics as Chairman & Managing
Director with the credo of delivering products of sustained excellence and superior
quality.
Orients state of the art manufacturing unit at Sikandrabad (Bulandshar, U.P.) is
spread across 40 acres of land and conforms to the IS 13753-56:1993 of BIS, ISO
10545-1/17 & ISO 13006 specifications. Orient has also been accredited with the
10

ISO 9001:2000 certification for quality control management.


Since inception, OCIL has been scaling new heights and has evinced a steady growth
rate. OCILs commitment to excellence and quality has earned it a wide and diverse
customer base, which spreads across Europe, South East Asia, Middle East and the
SAARC countries.
It plans to diversify into importing and distributing other building material products.
This shall be accomplished through a strong network of over 800 dealers and 2500
sub-dealers spread all over the country.
The operative keywords are:

Quality
Durability

Aesthetic Appeal

Thus, it 'creates tiles with a distinct persona'.


OCIL is not just a tiles manufacturer but a company devoted to offer 'extraordinary
wall and floor solutions' to create and enliven exclusive designer homes and offices.

KAJARIA TILES:
It is the largest ceramic floor and wall tile manufacturer in the second most populous
country in the world. It is promoted by Mr. Ashok Kajaria and Kajaria Export Limited
(Group Company) in technical collaboration with Todagres,

S.A.,

Spain. It

commenced operation in 1988 in Sikandrabad, (Uttar Pradesh) with an annual


capacity of 1 MSM of floor tiles. It possesses an annual installed capacity of 21 MSM
across two facilities at Sikandrabad, (Uttar Pradesh) and Gailpur (Rajasthan). It has
been equipped with eight stock points, eight Kajaria World showrooms, 19 officescum-display centres and 7,000+ dealers and sub-dealers on a pan-India basis. It is
the most prominent Indian ceramic tile brand with a favourable recall. The largest
exporter of ceramic tiles in India. It has unmatched product offering (wall, floor,
vitrified, Spanish and Italian tiles). It has brand-enhancing customers like Unitech,
DLF, Parsvnath, Magarpatta, Sobha Developers, DSK, Mantri Group,Prestige Group,
Ansals, Hiranandani, Raheja Developers, Omaxe and EMAAR-MGF, among others.

ASIAN TILES:
This company is the result of the dreams of three entrepreneurs, materialized with
the grassroots of passion, experience & dynamism With starting a quest for
11

excellence a decade ago, today


Asian tiles have blazed a trail in the tile industry. With humble beginning in the field
of floor tiles, today it has expanded till the horizon, covering almost each of the
aspects of the industry. Supported by vast man power along with mind power, Asian
Tiles possesses the strength of over 3000 business associates spread across the
nation. Asian is all set to reach the goal of supplying world class product, through a
network of 18 depots with display centres & ultra modern plant in the ceramic zone
of Sabarkantha, Gujarat, spread over an area of 2, 30,000 Sq. Mtr. and production
capacity of two plants is 32300 Sq. Mtr. Per day of tile. Asian has become India's
leading wall tile manufacturer in large format size, with the biggest size of 300 X 900
mm, where we provide wall tiles of white body similar to European tiles, with the
promise of extremely accurate size control, to add brightness and depth to the glaze.

H & R JOHNSONS:
H. & R. Johnson (India) Limited is India's No. 1 tile company

offering a wide range

of wall and floor tile products across various segments v.i.z. Wall, Floor, Vitrified,
Exterior and Industrial. The company also has diversified interests in sanitary ware
and bathroom accessories. With a vast portfolio comprising of 5 well-known brands
in India (Johnson, Marbonite, Porselano, Endura & Milano) the company provides the
most innovative products of international standards that is coupled with the best of
pre and after sales service.

EURO CERAMICS:
Part of Euro Group Integral part of the Decorative industry in India.
Promoters:
Mr. Nenshi Shah: Mr. Talakshi Nandu : Mr. Kumar Shah : Mr Paresh Shah
Current Business Profile:
Vitrified Ceramic Tiles

79,971 MTPA.

Aluminium Extruded Sections


Calcareous Tiles

Sanitary ware

1800 MTPA

45,000 MTPA
11,000 MTPA
12

Trading in Wall Tiles through a 100% subsidiary

Technology:
SACMI (For Vitrified Tiles & Sanitary ware)
Quality focus:
Vitrified Tiles

ISO
13006.
Applied
Consumer
Florida, U.S.A. VJTI, Mumbai

Manufacturing facilities :

Services

Inc.

ISO 9001:2000 certified

NITCO TILES:
A foundation laid on innovation. Since 1953.Going beyond the ordinary and leading
by example is a common tradition practised at Nitco. No wonder, the company is
renowned and revered for its revolutionary concepts, pioneering endeavours and
premium products in the construction industry for over five decades.Today, with its
rich repertoire in offering unique Floor Tiles, Mosaico, Wall Tiles and Marble, Nitco
has gone to become the most preferred name and the ideal choice of millions of
house-holds and the real estate fraternity. An avant-garde at the core, the company
has continued to pioneer ground breaking innovations in all its offerings. Ceramic
Tiles, Vitrified Tiles, Pavers, Imported Marble, Engineered Marble, Intarsiasplendours of inlay marble and Mosaico- artistic creations in mosaic rendered in
stone, ceramic and marble, for instance. Winning 13 Capexil awards for innovation
and design is the perfect testament to all of its achievements.

SOMANY TILES:
In the Indian tiles sector, Somany has achieved a clear leadership position by
wholeheartedly adopting forward thinking and an innovative and futuristic approach.
Whether ceramic glazed tiles, vitrified tiles, sanitary ware or porcelain floor tiles,
Somany prides itself in being at the very forefront of style and quality. From raw
material imported from Italy and Spain, to the constant endeavor to be the first to
introduce new products in India, Somany has been, and will always strive to be a
dynamic leader in its field.
It began as a vision of things to come, and is today a trail-blazer that others follow. In
1969 Shri H L Somany incorporated a company called Somany Pilkington's, which
later became Somany Ceramics Ltd. It was the power of a dream and the zeal to
excel, that drove Shri H L Somany to forge a path of unparalleled success for this
13

company.
The dynamic leadership team in Somany not only spans three generations of able
leaders, it also brings together their staggering breadth of experience and wisdom.
With Shri H L Somany at the helm as Founder, Shri Shreekant Somany as the CMD
and Shri Abhishek Somany as the JMD, the company is heading towards an exciting
phase of expansion and growth. This core leadership team along with a large team of
highly dedicated and talented people is continuously working towards creating more
value for all stakeholders. Their commitment to excel in every sphere and to fuel
growth in the core as well as new sectors has truly created a powerful vitality within
the company, both in mind and spirit.
In 1971 the very first unit of Somany started production in Kassar, Haryana. Since
then Somany has reached and surpassed many milestones setting-up of second
unit in 1981, buyout of all equity shares by Somany's Indian promoters in 1994;
achieving Government recognition for its R&D Department in 1996 (a first in the tiles
industry); getting ISO 9002 certification in 1998; achieving ISO 14001 for
environment friendly facilities, in 1999; ventured in retailing in 2007, joint venture
with Keraben under brand name Synergy, got patent for VC technology-a first ever
in Indian Ceramics industry and incorporation of HL Somany group.
Somany Global flagship retail showrooms are currently located in Delhi, Gurgaon,
Ludhiana and Mumbai, Pune and Indore. Many other retail showrooms are about to
be opened in leading centres. These showrooms cater to high-end customers and
offer imported tiles as well as exclusive Aquaware brand sanitary ware. A large
network of Somany display centers are also spread across the country.
A wide cutting-edge array of designs and material make up the inspiring Somany
range of tiles. Somany strives to bring its customers floor, wall, vitrified, ceramic,
porcelain and innovative tiles that are the very latest in the world. Somany prides
itself in the sheer variety of design and finish, and constantly looks to bring new and
trend-setting ideas into the tile industry. The futuristic patented VC Shield range of
tiles from Somany, are the world's most durable floor tiles. Created using the
breakthrough, 'Veilcraft technology', that creates a special layer on the tiles that keep
them free from abrasion, scratches and stains, these tiles retain the original glaze
and finish for years. No wonder then, that these tiles comprehensively outperform
ordinary ceramic tiles including PEI grade 5 tiles.
Venturing into the burgeoning sanitary ware sector, Somany has already made major
in-roads into this market. With its range of high quality products and offerings under
the brand name of Aquaware, Somany is focusing on creating a niche for itself in this
sector, by bringing in and adopting the latest in design, concept and technology.
In the endeavor to bring the very best to customers, we source our raw material from
as far as Italy, Spain, and China besides Rajasthan, Uttar Pradesh, Madhya Pradesh
14

and other major centers in the country.


Somany has a production capacity of 15.7 million sq mt per annum from its Haryana
and Gujarat units. It has always focused on acquiring and leveraging the latest
technologies and know-how. A commitment to bring to life new ideas and design
innovations is driven by the huge amounts of funds invested in research and
development. This has borne fruit in the form of Somany's achievement of
establishing the very first Government Recognized In-house Research & Development
Centre.
Somany has also brought in some ground-breaking technologies into the Indian
market. Their highly advanced Rotocolour Machine has the capacity to decorate
ceramic tiles with glazes, using a serigraphic decorating system that employs silicon
cylinders. This integrated system that optimizes decoration of tiles enables any kind
of random design and also a marble effect. A truly trend-setting achievement, it has
helped Somany to set new industry benchmarks in quality and production standards
for ceramic tiles.
Another exceptional technological advantage has been achieved with Somany's new
Laser Guided Vehicle system. This cutting-edge material transportation system has
automated the movement of ceramic materials in the production system. The Laser
Guided Vehicle facilitates optimal and accurate handling, thereby minimizing
rejection of in-process materials during the production of tiles. All of this is a result
of Somany's commitment to bring the best and the latest to its valued stakeholders
and customers in India.

INDUSTRY STATISTICS:
1.
2.

World production:

6900 Million sq.mt.

India's Share:

340 Million sq.mt..


15

3.
4.
5.
6.
7.

World ranking (in production):

Per capita consumption:

0.30 sq.mt.

Global Industry Growth Rate:

6%

Growth Rate (India Domestic Market):

15%

Organized industry turnover (India):

Rs 3000 crores

Glazed Wall Tile share:

40%

Glazed Floor Tile share:

46%

Unglazed Vitrified Tile share:8%


Glazed Porcelain Tile Share: 6%
Unorganised Industry Turnover

Rs 3500 crores

Glazed Wall Tile share:

57%

Glazed Floor Tile share:

35%

Unglazed Vitrified Tile share:6%


Glazed Porcelain Tile Share: 2%
8.
9.

10.

Investments in last 5 years:

Rs 2000 crores

Organized sector:
Share of Production:

56%

No. of units:

16

Revenue (excise duty):

Rs 300 crores

Unorganized sector:
Share of Production:

44%
200 (approx..) (70% based in

No. of units:

Gujarat region)

Revenue (excise duty):


16

Rs 350 crores per annum or

less
11.

Job Potential:

50,000 direct
500,000 indirect

Export & Import Scenario


Apart from domestic demand, exports of ceramic tiles from India have also
been increasing. From a level of US$ 33.3 million in 2001-02, exports of ceramic
tiles from India have gone up to US$ 58.5 million in 2006-07, at a CAGR of 12
per cent. India exports tiles to other parts of Asia, Africa and West Europe. The other
main exports of ceramic products consist of chemical porcelain and insulators,
handicraft artware and stoneware crockery. Imports of tiles have gone up rapidly
in recent years, to almost match the level of exports. From around US$ 8.3
million in 2001-02, imports have gone up to nearly US$ 55 million in 2006-07, at a
CAGR of 46 per cent. Rising imports indicate the rapid growth in domestic demand
for tiles, due to boom in real estate construction.

CHAPTER-III
Research Methodology
Title:
17

To determine the perception about various tiles quality, brand equity, price and
customer service.

Title Justification:
Title is self-explanatory. The study mainly deals with the quality, brand awareness,
price analysis and above all customer experience about the various tile products and
categories.

Objective:

To determine the awareness level of different major tile players among the
architects.
To determine the customer awareness level, particularly for new users of tiles.
In depth study on the dealer network of various tiles manufacturers.

Significance of the study:


Significance for the industry:
This is a limited study which takes into consideration the responses of 20 architects,
25 dealers & 150 customers. This data can be explorated to take in the trends across
the industry. The significance for the industry lies in studying these trends that
emerge from the study. It is a rapidly changing and evolving sector. A study like this
can attempt to guide the future of the industry based on current trends.
Also the views of the architects and dealers would help in determining the future
strategies of the companies and add to the betterment of end user requirement.

Significance for the researcher:


To have a firsthand research experience about tiles industry. Various primary and
secondary data sources would help in shaping a good notion about the industry
trends and its future prospects. Also recommending measures to improve the present
scenario of a company would boost up the confidence of the researcher.

18

Research Design:
Type of Research: Exploratory and descriptive experimental research
Size of sample: 20 Architect, 25 dealers and 150 customers.
Area of study: Ghaziabad and Meerut City
Sampling procedure: Convenience Sampling
Method: The research is primarily both exploratory as well as descriptive in nature.
The sources of information are both primary & secondary.
A well-structured questionnaire was prepared and personal interviews were
conducted to come to the conclusion.

Brand Awareness Analysis:


BRAND AWARENESS RATING

MEAN RATING
19

INTERPRETATION:
According to the architects brand awareness, Kajaria Tiles is on the top followed by
Somany tiles, H.R.Johnsons Pvt. Ltd., Orient tiles and Nitco Tiles.

Quality Analysis:
Quality Rating

20

Quality Mean

INTERPRETATION:
According to the Architects, quality wise Kajaria Tiles is leading the market followed
by H.R.Johnson Pvt. Ltd., Somany Tiles, Orient Tiles and Nitco Tiles.

21

Dealers Network:
Dealers Network Rating

Dealers Networks Mean

INTERPRETATION:
According to Architects view, Kajaria ceramics has the widest dealers network in
the sample area followed by Orient Tiles, Somany Tiles, H.R.Johnson Pvt. Ltd, and
Nitco Tiles.

22

Overall Architects Choice:

INTERPRETATION:
Overall view of the Architects leads to this fact that the surveyed region is mostly
favoured by Kajaria Tiles Pvt. Ltd., followed by Somany Tiles Pvt. Ltd., Orient Tiles
Pvt. Ltd. And Nitco Tiles in the branded and organised ceramic tiles segment.
Customer Experience Study:
A total number of 100 customers (new user) being interviewed at various locations of
Ghaziabad and being asked to rate the above mentioned tile brands in terms of their
awareness and choice and usage.
The parameters are as follows:
1.
2.
3.
4.
5.
6.

Price
Durability and quality
Awareness
Response pace
Availability
Variety
23

Overall Customer Rating

Overall Customer Experience Mean

Interpretation:

24

The above mentioned graph shows a very tough competition among all the
major organised players. Kajaria tiles is ahead in terms of customer rating followed by
Orient Tiles, H.R.Johnson Ltd., Somany Tiles and Nitco Tiles.

Dealers Experience Study:


A total number of 25 dealers of various tiles manufactures had been
interviewed in Ghaziabad and Meerut Region on the basis of following parameters:

Brand availability in the store


Frequency of the inventory
Timely delivery
Special/urgent supply
Supply time
Representative relation
Cash/dealers discount
Frequency of taking dealers advice
Customers prerequisite specification needs, if any
Variety in quality and size of the tiles
Dealers ranking

Overall Dealers Experience Rating

25

Overall Dealers Experience Mean

Interpretation:
26

In terms of dealers study, Kajaria Tiles is the most sought after brand followed
by Somany Tiles,Orient Tiles, H.R.Johnson Ltd. And Nitco Tiles.

Limitations of the Study:


The sample size is very less, hence it does not imply for the complete
population.

There was lack of time and resources that prevented from carrying out an in
depth study.

The findings of the survey are based on the subjective opinion of the
respondents and there is no way of assessing truth of the statements.

There is some respondents bias which cannot be removed.

some amount of error exists in the data filling process because of the
following reasons:
Influence of others.
Misunderstanding of the concept.
Hurried filling of the questionnaire.
The research is confined to a certain parts of Ghaziabad and Meerut and
does not necessarily shows a pattern applicable to all of Country.
Some respondents were reluctant to divulge personal information which
can affect the validity of all responses.
In a rapidly changing industry, analysis on one day or in one segment can
change very quickly. The environmental changes are vital to be considered
27

in order to assimilate the findings.

Chapter IV
ORIENT TILES

. (OCIL)

spearheaded by Mr. Mahendra K.Daga,


has earned a reputation of being the frontrunner in innovation in home dcor.
In line with the company's credo of sustained excellence and superior quality, we
constantly endeavour to provide customers with the finest ceramic floor and wall
tiles, through our exhaustive product range, innovative designs & sophisticated
colours. This endeavour is accomplished using a state-of-the-art environment
friendly manufacturing unit at Sikandrabad, UP. Here, the latest technology is
employed to manufacture products that adhere to international quality standards.
The patterns used ensure that the tiles crafted provide both aesthetic appeal and
durable functionality.
Such commitment to quality and product innovation has earned us a wide and
diverse customer base. Our clientele extends beyond house builders, architects, and
institutions in India to Europe, South East Asia, Middle East and the SAARC
countries.
We plan to diversify into importing and distributing other building material products.
This shall be accomplished through a strong network of over 800 dealers and 2500
sub-dealers spread all over the country.
The operative keywords are:

Quality
28

Durability

Aesthetic Appeal

Thus, we 'create tiles with a distinct persona'.


We are not just a tiles manufacturer but a company devoted to offer 'extraordinary
wall and floor solutions' to create and enliven exclusive designer homes and offices.

History of OCIL:
Headquartered at New Delhi, Orient was incorporated as a Public Limited Company
on 18th May 1977 for the manufacture of ceramic tiles with an installed capacity of
0.4 Million sq. mtrs. per annum which has now grown to 14 million sq. mtrs. per
annum.
Mr. Mahendra K. Daga currently heads Orient Ceramics as Chairman & Managing
Director with the credo of delivering products of sustained excellence and superior
quality.
Our state of the art manufacturing unit at Sikandrabad (Bulandshar, U.P.) is spread
across 40 acres of land and conforms to the IS 13753-56:1993 of BIS, ISO 105451/17 & ISO 13006 specifications. We have also been accredited with the ISO
9001:2000 certification for quality control management.
Since inception, OCIL has been scaling new heights and has evinced a steady growth
rate. Our commitment to excellence and quality has earned us a wide and diverse
customer base, which spreads across Europe, South East Asia, Middle East and the
SAARC countries.

Market Potential of OCIL


The industrys potential appears attractive, following the realty growth in the
housing, retail, IT and BPO sectors. The low per capita consumption projects a rising
demand for ceramic tiles in India as they are used for aesthetic, besides utility and
hygiene reasons. To capitalise on the latent demand, the industry players have
expanded their distribution networks significantly. Owing to the delicate nature of the
product, distribution and logistics costs form a substantial portion of the total costs
and the success of the distribution chain marked by delivery promptness, wellequipped dealer stocks and wide market reach is critical to the success of retail
sales.
Indian economy is poised to grow at 7-8 percent and with growing incomes and
urbanization, demand for houses is slated for growth. The increasing focus on rural
areas, by government and corporate, the demand for housing would also increase in
29

rural areas. The ceramic industry will also benefit from the above developments.
Increasing demand is just one part of the story the availability of Finance is the other
part. With the availability of loans at low interest rate and tax incentives have
enabled the people to buy houses and build up their own establishment. With the
increasing competition amongst both Banks and Housing Finance Companies the
people are avail of getting better financing options and that too at a cheaper rate. This
would further increase the demand for tiles.

THE WORLD OF ORIENT


Tiles Range:
Interior Range
Floor Tiles
29.5*29.5
30*30
39.5*39.5
40*40
49.5*49.5
60*60
60.5*60.5

Wall Tiles (in cm.)


14.8*14.8
20*20
20*30
20*40
29.5*59.5
60*60
60.5*60.5
30

Exterior Range
Floor Tiles (in cm.)
30*30
39.5*39.5
40*40
Wall Tiles (in cm.)

14.8*14.8
20*40

Price Analysis
The price of ceramic tiles depends on the various size and measurements of the tiles.
Although we have noticed that tile dealers are not ready to give price details fairly,
somehow we have managed to extract some of the tiles prices of various players.
the mostly used vitrified tile size for living room is 2 X 2, for kitchen and for toilet
people used to install ceramic tiles of 16 X 16 and 12 X 12. For dining they used to
stick with vitrified tiles of 2 X 2 size.
Now , in wall tiles segment, the general market price in Ghaziabad starts from
Rs.21/sqft,in floor it is Rs.22/sqft and in vitrified it is Rs.35/sqft.

31

Financial Overview of OCIL

32

33

FINANCIAL ANALYSIS AND RECOMMENDATIONS


After the analysis of profit & loss account and balance sheet of orient ceramics we
have got some financial analysis about the company and tried to give our
recommendations according to it.
We went for ratio analysis to find the actual financial condition of the company.
1. Liquidity ratios
34

2. Profitability ratios
3. Investors interests ratios

1. CURRENT RATIO- It is an indicator of the firms commitment to meet its short


term liabilities.
It is expressed as follows- current assets/current liabilities
From balance sheet=inventories+sundry debtors+cash+bank
Balances+short term loans & advances/
Current liabilities +provision
=423999406+404470339+6962801+149639658/
411841400+23653137
=2.26
RECOMMENDATIONS- An ideal current ratio is 2.this is just above 2 but a
company should maintain ratio between 1.5-2 so company should decrease it
some points as it is showing less efficient use of funds.
This is due to because of high dependence on long term sources of raising funds.
Long term liabilities are costlier than current liabilities therefore this will result in
considerably lowering down the profitability of the company.
In balance sheet of 31-03-2008 and 31-03-2007 we can also observe that long
term liabilities has grown up by 599525935 rs.to 942762466 rs.in 2008 by 57%
increased.

2. LIQUIDITY RATIO- (acid test ratio or quick ratio)


This ratio is the indicator of the short term solvency of the company.
It shows the comparison of inventory holds up.
We will not consider prepaid expenses and stocks in liquid assets.
Liquidity ratio- liquid asset/current liabilities
= 985072204-423999406/435494357
= 1.28
35

Recommendation-satisfactory ratio should be 1.so it is just above 1 so


company needs to reduce its inventory level as it blocks cash of the company.
3. DEBT EQUITY RATIO- the debt-equity ratio is determined to ascertain the
soundness of the long term financial policies of the company.
=long term debt/equity
=942762446/479817704
=2:1
So it can be said as satisfactory that company has 2/3 part debt and 1/3 part
as equity.

4.RETURN ON INVESTMENT/RETURN ON CAPITAL EMPLOYEDIT INDICATES THE PERCENTAGE OF RETURN ON THE TOTAL CAPITAL
EMPLOYED IN THE BUSINESS.
=operating profit/capital employed
=43685580/14939220722=2.92%(in2007-08)
And comparison with 2006-07
=173837365/1122303254=15%(2006-07)
In 2008 the ROI was very less and will called as totally unsatisfactory as your
operating cost is higher than to return.no one can dare to run a investment in
just 3% which is below than to the interest of banks saving account.
Company gave some reasons behind thisa. High operating cost due to high inflation.
b. The maximum projects that company undertook were in bulk discounted so
they increased the sales revenue but could not increase profit margin.
c. High competition from local players.

5.RETURN ON EQUITY SHARE HOLDERS FUND=PROFIT AFTER TAX/EQUITY SHARE HOLDERS FUND
=24873117/479817704
=5.1%(2008)
In compare to 2007-25%
So the return has been decreased by 80%.and it could not be said as satisfactory as
36

8-10% is easily available through in fixed deposits,bonds ,debentures so investors


will go away.
Recommendation-company needs to decrease its operating cost such as inventory
cost, manufacturing costs because this year they were having higher percentage in
operating costs.
6.GROSS PROFIT RATIO-this ratio is the relationship between gross profit and net
sales.
=gross profit/net sales
=net sales-cost of goods sold/net sales
=2145679729-(199560672+1829127984)/2145679729
=5.45%(poor)
Suggested reasonsa. The cost of goods sold has grown up without corresponding increase in the selling
price of goods.
b. There may be decrease in the selling price of the goods sold without corresponding
decrease in the cost pf goods sold.
We found out from the company sources that due to bulk discounted orders in 200708 which were got by dealing high competition resulted decrease in selling prices
without decreasing in the cost of goods.
7DIVIDEND PAYOUT RATIO=DIVIDEND PER SHARE/EARNING PER share
=.50/2.46
=20%

8. DIVIDEND YIELD RATIO=DIVIDEND PER SHARE/MARKET PRICE PER SHARE


=.50*100/30
=1.67%
37

On this ratio investors will not go for investing in company as they will get high yield
in other investments so company should consider shareholders benefits or try to
increase dividend yield.
9.EARNING PER SHARE- THE EPS HELPS IN DETERMINING THE MARKET PRICE
OF THE EQUITY SHARE OF THE COMPANY.
=PROFIT AFTER TAX/NO OF SHARES
COMPARISON
Euro ceramics=16(F.V.=10) 160%
KAJARIA=2.3(F.V.=2)115%
Orient=2.46(F.V.=10)24.6%
So in comparison with other company orient has got less EPS.so we can say that the
capital of shareholders is not being effectively used.
10. PRICE EARNING RATIO=MARKET PRICE PER SHARE/EARNING PER SHARE
EURO-2.5=40.05/EPS=16.02(F.V.=10)
KAJARIA-24.9=29.25/EPS=1.17(F.V.=2)
BELL-46=6.90/EPS=.15(F.V.=10)
ORIENT=16.9=30/EPS=1.79(F.V.=10)
P/E RATIO COMPARISONEURO<KAJARIA<ORIENT<BELL
This suggests that orient and bell are less par performing than to the euro and
kajaria, so they are over valued than to the kajaria and euro.

38

Demand drivers: The demand for value-added tiles (large-format) outpaced that of
the plainer variants, thanks to two important realities: rising incomes and growing
urbanisation, catalysing housing demand.
Growing affluence: The average Indians per capita income increased from Rs.
11,672 in 2003-04 to Rs. 24,321 in 2007-08, and is estimated at Rs. 31,448 by 2010.
Annual household incomes between Rs. 90,000 and Rs. 2,00,000 increased from
41.3 million in 2001-02 to 53.3 million in 2005-06, and are expected to rise to 75.3
million by 2010.Families with Rs. 2,01,000 to Rs. 10,00,000 annual income grew
from 10.7 million in 2001-02 to 16.4 million in 2005-06, and is expected to reach
28.5 million by 2010. More surprisingly, families whose annual income is above Rs.
10,00,000 grew from a mere 0.8 million in 2001-02 to 1.7 million in 2005-06, and is
expected to be 3.8 million by 2010. Interestingly, a majority of this affluent class will
stay in cities and create an income pool comparable with the major US cities by 2015
(Source: India Infoline).
Increasing urban demand: The urban population (28% of the total Indian
population) grew 2.77%, higher than the overall population growth of 2.3%. Going
forward, the overall population will grow at 1.5%, while the urban population will
maintain a 2.27% growth till 2010. As a result, urban population is expected to touch
590 million by 2030 [Source:IBEF], leading to a robust housing demand of over 24.3
million dwelling units in urban India by 2015 (Source: Housing Skyline of India
2007-08).

2008 Sales

Employees:

2,145,679,729
(Year Ending Jan 2009).

750

39

SWOT ANALYSIS:

Distribution System:

Ceramic Marketing:
The 4Ps of ceramic marketing are like different levers that can be used in different
degrees to achieve the same objective.
40

Product There is a wide range of designs and sizes to choose from. Introduction of
two new categories-i.e., Vitrified and Concept tiles.
Price The price range is very vast. Due to capacity expansion supply is increased
so price is lowered down by 35%. Moreover price war from china has also lowered
down prices.
Promotion Advertising is done in leading Construction magazines and interior
design journals. Taking part in international exhibitions is routine.
Place Wide distribution network in and outside state. Products delivered within
feasible timeline of order.

CHAPTER-V
RECOMMENDATIONS:
MARKETING:

Should adopt the widest distribution network model to deliver products to the
end user in quickest and most effective way. It would also accelerate the sales.
It may include company owned showrooms, franchises, multi-product dealers
and sub-dealers.
Distribution network should be clearly segregated towards specific product
segments.
May introduce three dimensional catalogue visual experiences to its customers
and also give customer a chance to design product in their own way of choice
(customized design specification).
Setting up exclusive showrooms for special products instead of keeping with
with the regular range. As example, the upcoming product ORVIT-a product in
high glaze tiles segment should have an exclusive place to showcase. It would
add to the exclusive ambience of the product.
More introduction of matching wall and floor tiles.
To grow its institutional business, the company should organize more
interactions with architects, developers and government agencies at its dealer
outlets. This would serve a dual purpose: it would enable the company to
acquire an insight into evolving preferences of some of the most prominent and
trend- influencing architects; on the other hand, it helped the company cater to
their evolving preferences.

BRAND:
41

More focus on packaging and product merchandising.


It may introduce a specific dedicated team to look after the overall brand equity.
They will ensure that all showrooms and dealer display centres were in sync
with the Orient profile. Also they will look after the external packing material
which creates an eye on look-and-feel, resulting in a holistic branding
approach.
More focus on Research and design-development activities to achieve the cost
and product design leadership.

Risks and Concerns:


Some of the key risks affecting the Company are explained below:
1. The instability in the fuel prices due to continuous increase in energy prices in
the international market has significantly put pressure on margins.
2. Due to withdrawal of certain export concession by China and the general increase
in freight has increased the landing cost of certain raw materials.
3. After the imposition of anti dumping duty on Vitrified tile, dumping is taking
place in glazed wall and floor tiles which has put pressure on the domestic tile
manufacturers. The amount of anti dumping duty was significantly reduced in
April 08 by the Govt. However, it is still prohibitive enough. Therefore, only a few
of the Chinese companies who were exempted from anti dumping duty are
supplying to companies in India.
4.

To retain skilled professionals is also a cause for concern. However, best HR


practices are in place to retain the talent and reduce the attrition.

5. Due to high inflation and tightening of credit by RBI, finance costs may be
adversely affected in the coming year.

Conclusion:
42

The prospect and the future of ceramic tiles lies not only in northern region but it
spread across the country. I would like to produce some of the evidences aligning
with this and with this I would like to conclude my project

A report, published in June 2008, stated that the growth in demand for
ceramic products has been further strengthened by the boom in the Indian real
estate sector, which is registering 30 per cent growth per annum, for the last
few years. The growth in the hospitality industry and the advent of new malls,
commercial complexes and multiplexes also lend support to the growth
prospects of this industry.

The low per-capita consumption of ceramic tiles in India, which is currently


around 0.5 sq. m per person as compared to 2.0 sq. m per person in countries,
like Malaysia, Brazil and China, offers huge growth potential.

The industry can reap the benefit of its low cost of production, which is 25-30
per cent lower compared to the US and Europe, primarily owing to labour
costs. Production of ceramics through conversion from coal-fired to gas/oil
fired- furnaces is likely to enhance fuel efficiency and reduce cost as well as
ensure better quality and reduction of environmental pollution.

Reduction in threshold limit under Zero Duty Export Promotion Capital Goods
(EPCG) Scheme would also help accelerate the modernisation process in
ceramics industry.

References:
For secondary data

www.icctas.com

Company websites

Annual reports

Previous summer training projects

Magazines, web-articles and catalogues

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For primary data-

Questionnaire

Supervisors advice and information

44