Growing Indian Ceramic Industry Analysis

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Executive Summary

Ceramic industry in India is about 100 years old. Over the years, the industry has
been modernizing through new innovations in product profile, quality and design
to emerge as a modern, world-class industry, ready to take on global competition.
With increase in population, a changing life style, better cost of living etc, there is
high growth potential for this sector. With the growth in the housing sector the
demand of ceramic is expected to increase. Also more emphasis has been given to
infrastructure and construction which will increase demand for ceramic. The Indian
ceramic industry is growing at 15% which is higher than global growth rate of
11%. India is considered to be third largest producer and consumer of ceramic
products.
In this report, the study of overall picture of ceramic industry, its growth potential
and overall attractiveness will be done. The analysis of various economic, political
and technological, governmental factors affecting the industry and the major issues
faced by the company and the reason behind huge debt condition of the industry
will be found out. I will try to find out the export opportunities and market of
ceramic companies. The fuel cost of ceramic companies is also rising so steps
which can be taken to reduce fuel cost will be found out.
The ceramic industry is under huge financial stress. Some of the ceramic industries
are running in huge debt and restructuring of loans is considered. The different
credit options used by ceramic companies for funding through bank and what
changes would they would like conditions and terms of credit would be studied.
So the report would provide strategic analysis of ceramic industry which can be
helpful to banks for making certain credit decision for ceramic companies.

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Objective:
1. To find out overall attractiveness and growth potential of ceramic industry.
2. To find out various economic, governmental, political and technological factors
affecting the industry and difficulties faced by ceramic industries.
3. To find out the current trends and developments in the industry and future of
industry
4. To find out opportunities and threats faced by the industry
5. To find out ways of reducing fuel cost of ceramic production.
6. To study reasons for financial stress in ceramic industry.
7. To study Export market of ceramics and its opportunities and ways of becoming
competitive with overseas manufacturers.
Type of Research:
The research is descriptive as the study has been completed based on the data
collected from the internet and secondary sources like news, magazines, database
of sbi , reports etc.
It is also analytical in nature as the data collected from questionnaire is analyzed
and necessary findings and conclusion is derived based on the data from collected
from questionnaire.
Sampling: The sampling units for the study would be the ceramic companies and
the state bank of India staff. The companies will be contacted and data would be
obtained regarding growth prospectus, the need of finance of company etc using
online questionnaire.
Necessary information will also be obtained from staff members of state bank of
India regarding ceramic company potential and growth prospectus. As staff
members are dealing with ceramic clients, so they can have better insight about the
industry and problem faced by it.

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Methodology:
Necessary data is being collected using the secondary sources like the internet,
reports and databases at sbi. The data containing news relating to the industry and
the major trend in the industry has also been gathered.
Data has also been collected using the primary source using questionnaire as a tool
for obtaining data .The discussions and interview with staff members of sbi is also
used for obtaining necessary information.
The data collected from questionnaire is analyzed using excel and other software.
The necessary recommendation and conclusion is arrived at using findings and
analysis of collected data .The limitations of the study is also stated and necessary
annexure i.e. Questionnaire used to obtain information is also attached.

Ceramics:
Ceramic is a refractory, inorganic and non metallic material. Ceramics can be
divided into two classes. 1) Traditional ceramics 2) advance ceramics
1) Traditional ceramics: Traditional ceramics include clay products, silicate glass,
And Cement etc.

2) Advanced ceramics: They consists of carbides (sic), pure oxides(AL2O3),
Nitrides (si3n3), non silicate glasses etc. They are used in
Aerospace industry as space shuttle tiles, automobile
as pressure sensors, joint replacement in medical field,
Insulators and resistors in computer etc.

Ceramics offer many advantages compared to other materials. They are harder and
stiffer than steel, more heat and corrosion resistant than metals and their alloys, and
their raw materials are both plentiful and inexpensive. The use of traditional and
advanced ceramics is believed to be increased in the years to come.

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Ceramic Industry Introduction
Ceramic Industry in India is more than 100 years old. Indian ceramic industry
emerged in 1950. It comprises mainly of ceramic tiles, sanitary ware, tableware
and more recent the technical ceramics etc. Ceramic products are manufactured
both in the large and small-scale sector. State-of-the-art ceramic goods are being
manufactured in the country and the technology adopted by the organized sector
within Indian ceramic Industry is of international standard. A major change that
took over ceramic tiles industry was the introduction of vitrified and porcelain
tiles. These entrant tiles are said to be the future tiles which account for 50% of
total tile sales by value in this country.
Highlights of industry:
Ceramic Tiles today have been used increasingly for interior decorations and home
improvement.
The Indian tile industry, despite an overall slowdown of the economy continues to
grow at a healthy 15% per annum. Investments in the last 5 years have aggregated
over Rs. 5000 crores.
The overall size of the Indian ceramic tile industry is approximately Rs 18,000
crores (FY1c2). The production during 2011-12 stood at approx. 600 million ores
meters.
The use of ceramics in crockery, sanitary ware is also on increasing pace and is
also beneficial for ceramic industry.
The Indian tile industry is divided into organized and unorganized sector. The
organized sector comprises of approximately 14 players. The current size of the
organized sector is about Rs 7,200 Crores. The unorganized sector accounts for
nearly 60% 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.
With proper planning and better quality control our exports (presently
insignificant) contribution can significantly increase.

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Background:
Apart from their decorative looks, Ceramic Tiles are primarily hygiene products. It
is used in bathrooms and kitchens in average Indian households to medical centers,
labs, governments, schools, public conveniences, shopping malls and numerous
other centers; which dot our day to day life. Popular housing projects are
increasingly switching over to Ceramic Tiles moving away from the traditional use
mosaic and even granite or marble, owing to several factors viz. Ease in laying
ability, versatility, low price and hygiene.
Concentration of ceramic industries in India:
There is concentration of ceramic industries in Morbi, Thangadh, Himmatnagar,
Wankaner, Sabarkantha etc. There are some ceramic units in south Indian states
like Andhra Pradesh, Karnataka also. The major concentration of ceramic
industries is in Gujarat state. The Morbi region of Gujarat accounts for 70% of the
total ceramic production of India.
Morbi: Morbi is a bustling town of Rajkot district (Saurashtra). Just before 10
years Morbi was seen as a remote place of Gujarat with limited resources. Today,
it caters to the 8% of the world's ceramic requirement. Major products of this
ceramic city are wall tiles, floor tiles, polished porcelain tiles, sanitary ware and
mosaic tiles. The leading manufacturers of Morbi are Vrundavan ceramics, Oreva,
Argil tiles, Excel ceramics, Face ceramics, Simpolo and Eros sanitaryware.The
quality of the Morbi's ceramic products is becoming comparable to that of
international standards. Some of these products are also qualifying stringent
European norms. This ceramic cluster is categorized as unorganized sector with
many of the family owned companies. But it is surely a good place to source the
requirements of ceramics. Morbi's products are considered as medium range
products. The reason behind Morbi ceramic success is the availability of red soil
(fire clay) which is raw material for ceramic industry. Fuel gas is supplied from
Porbandar.
The vicinity of the city with major ports (such as Kandla and Mundra) also lowers
down the transportation costs and thus helps exporters of ceramics from the region.
The region will surely be one of Asias key driving forces over the next 10 years.

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AML for Antique Marbonite Pvt. Ltd., Morbi, Gujarat
AGL for Asian Granito (India) Ltd., Sabarkantha, Gujarat
CGT for Coral Gold Tiles Pvt. Ltd., Morbi, Gujarat
CGL for Coral Granito Pvt. Ltd., Morbi, Gujarat
CTL Cengres Tiles Ltd., Dist. Mehsana, Gujarat
ECL for Euro Ceramics Ltd., Kutch, Gujarat
GCL for Gokul Ceramics Pvt. Ltd., Rajkot, Gujarat
HRJ for H & R Johnson(India) A Division of Prism Cement Ltd.,
KCL for Kajaria Ceramics Ltd., Sikandrabad-UP, Gailpur-Rajasthan, Morbi-Gujarat
MCL for Murudeshwar Ceramics Ltd., Karaikal-Pondicherry, Hubli, Bangalore-Karnataka,
OGL for Oracle Granito Ltd., Sabarkantha, Gujarat
OCL for Orient Ceramics & Industries Ltd., Sikandrabad, UP
OVL for Jaxx Vitrified Pvt. Ltd. (Formerly Ozzy Vitrified Pvt. Ltd.), Morbi, Gujarat
RAK for R.A.K Ceramics India Pvt. Ltd., Samalkot, AP
RGL for Regent Granito (India) Ltd., Himatnagar, Gujarat
SGL for Senso Granito Pvt. Ltd., Rajkot, Gujarat
SCP for Sentini Cermica Pvt. Ltd., Krishna, AP
SIC for Silica Ceramics (P) Ltd., West Godavari, AP
SCL for Somany Ceramics Ltd., Bahadurgarh-Haryana, Kadi-Gujarat
SVP for Simpolo Vitrified Pvt. Ltd., Morbi, Gujarat
SJT for Spectrum Johnson Tiles Pvt. Ltd., Rajkot, Gujarat
STL for Sunshine Tile Co. Pvt. Ltd., Rajkot, Gujarat

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Clusters of ceramic industry:

The Naroda Centre of CGCRI set up in 1977 is situated in
Ahmedabad in Gujarat State. The Centre caters to the needs of the ceramic
industries in Gujarat and neighboring States, manufacturing traditional ceramics
such as ceramic floor & wall tiles, vitrified & porcelain tiles, sanitary ware,
stone ware, table ware & decorating wares, LT insulators, high tech ceramics,
refractorys, industries manufacturing ceramic raw materials such as china clay,
ball clay etc.
A cluster is sectoral and geographical concentration of enterprises
employing similar process scale of operation and producing similar products but
faced with common opportunities and threats. There are four major force ceramic
clusters in Gujarat. They are as under.
1 Ahmedabad Cluster
2 Himmatnagar Cluster
3 Thangarh Cluster
4 Morbi-Wankaner clusters
Role of ceramics in economy:
Ceramic sector makes an important contribution to the economy, housing
sector, export earnings and employment of India. With the growth in the housing
sector the demand of ceramics is expected to increase considering the
competitiveness of Indian tiles in the international market. The potential is huge
considering the present per capita consumption (0.50 square meters per person) of
ceramic tiles in Indian comparison to over 2 square meters per person for countries
like China, Brazil and Malaysia.

.

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Overall Picture Of The Industry:
Ceramic industry has become a grand and huge company over the years. The
Indian ceramic industry has a production capacity of 680 million square meters
annually. The main product segments are the Wall tile, Floor tile, Vitrified tile and
Industrial tile segments. The market shares (in value terms) are 20%, 23% 50%,
and respectively for Wall, Floor, Vitrified, and Industrial tiles.

The tiles are available in a wide variety of designs, textures and surface effects.
They cater to tastes as varied from rustics to contemporary marble designs in super
glossy mirror finishes. The ceramic tiles industry in India has followed similar
trends internationally which have been characterized by excess capacities and
falling margins. Countries like Malaysia, 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
while exporting to USA and Germany. A major change that took over the ceramic
tiles industry, was the introduction of vitrified and porcelain tiles. These new
entrant product types are said to be the tiles of the future.
These new products and the conventional wall & floor tiles have together made the
organized industry grow to a formidable Rs. 7,200 crores industry. This coupled
with a spate of expansions by many players make the industry look very promising
in the future. The Indian Industry has developed an export market although at the
lower end. Indian exports are rising at an accelerating growth annually. The top-
end of the global export market is presently dominated by China (36.8%) and Italy
(15.1%).

20
23
50
6
market share
wall tile
floor tile
vitrifies tile
industrial tile

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Ceramic Tile Industry Statistics
1. World production: 9515 Million sq.mt
2. India's Share: 600 Million sq.mt.
3. World ranking (in production): 3
4. Per capita consumption: 0.50 sq.mt.
5. Global Industry Growth Rate: 11%
6.
Growth Rate (India Domestic
Market):
15%
7.
National Player's Turnover
(India):
Rs 7200 crores
A). Glazed Wall Tile share: 20%
B). Glazed Floor Tile share: 23%
C). Vitrified Tile share: 50%
D). Industrial Tile Share: 7%
8. Regional Player's Turnover: Rs 10800 crores
9. National Sector:

A). Share of Production: 40%
B). No. Of units: 14
10. Regional Sector:
A). Share of Production: 60%
B). No. Of units:
200 (approx) (70% based in Gujarat
region)
11. Job Potential: 50,000 direct & 500,000 indirect
12. Investments in last 5 years: Rs 5000 crores

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Scenario of Ceramic Industry:

The Ceramic Tile Market in India is showing remarkable growth owing to
the booming real estate sector along with the rising disposable income of the
consumers. Consumers are becoming style conscious and this aesthetic sense of the
consumers is leading to its increased consumption. Moreover, the user industries of
ceramic tiles are also growing steadily due to its price competitiveness compared
to marble leading to its increased demand from these sectors.

1. Ceramic tiles:
Indian tile industry is 681 MSM as of March 2013. Industry size is estimated
to be Rs 19500 Crores as of March 2013. The industry has been growing at a
CAGR of 13 14% per annum in last 4 5 years. The growth of the unorganized
sector which accounted for 60% of total production bears testimony of the
attractive returns from the industry. The organized sector accounted for 40% of
total production. Industry ranks in the top 3 in terms of production in the world.
Market share of India has risen from a little over 2.7% to 5.6% in terms of ceramic
Tile production.

2. Sanitaryware:
The sanitary ware industry in India is clearly divided into two sectors, the
organized and unorganized sectors. In the former, Hind ware is market leader with
two factory locations followed by Roca which has 4 plants in India. Other large
players in this industry are Kohler, Cera, and Duravit. With a total number of nine
units, production capacity totals
150000 Million TPA, the actual production, however, stands at around 125000
Million TPA. In the unorganized sector around 250 companies produce basic
sanitary ware under various brand names. Their production capacity totals 500 000
Million TPA, although actual annual production reaches 400 000 Million TPA.
They are concentrated in Gujarat because of
Availability of cheap raw materials and low overheads and hence sell their
products in the domestic market cheaper than the products of the organized sector.
The industry has been growing by about 15-18% over the last two years.

3. Tableware:
India is exporting bone china tableware to all the European countries
including UK, Canada, Australia and Egypt etc. At present production capacity of
bone china tableware in India is 200 MTPD and nearly 25% of total production is
exported. New bone china units in India are using latest technology and equipment
and even old stoneware industry has come up a long way.

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Major Players In Ceramic Industry Of India

Name of company Name of brand Market share
Kajaria ceramics Kajaria 14.9
H & R Johnson Marbonite 10.2
Somany ceramics Somany 7.3
Asian grantino Asian 7
Murudshwar ceramics Naveen 4.1

Other players like SPL having brand name of gravity and Somany and companies
like Spartek , Regency , Bell ceramics ,Vrundavan are also doing good and having
good presence in Indian market.

Apart from organized players there are many unorgorganized players of ceramic
industry in Morbi, Wankaner , Himmatnagar etc. Morbi, the most promising
ceramic tiles manufacturing hub of India, is a city located in Saurashtra region of
Gujarat.

14.9
14.3
10.2
7.3
7
6.2
4.9
4.8
4.3
4.1
21.9
kajaria
hsic
h&r johnson
somany
asian grantino
nitco
orient ceramic
euro ceramic
bell ceramic
murudeshwar

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Boom in construction:

Construction industry is expected to grow at 15.5 % annually during the five year
2013-2017. This will led to increase in demand for ceramic products.

Mergers and acquisitions:

There is a global shut down and hence only large companies will be able to
expand their base. There is many mergers in the recent years like Asian tiles
merged with Asian Grantio.

Trends in the industry:

Most of the ceramic companies have understood the need for better distribution for
maintaining market share in the competitive market. The use of digital print
technology and move to vitrified tiles has been observed.

The use of promotions using exhibitions, print media, television, radio is also
important for maintain sales. Companies have started realizing the importance of
brand building.

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Regulatory /policy scenario:

1. Raw material: Feldspar and quartz are critical raw materials in the
manufacturing of ceramic tiles and sanitary ware. The global demand for these rare
minerals has been growing forcing the domestic industries to rely heavily on
imports of these inputs. The export of both raw materials has gone up substantially
and hence the Board of Indian Council of Ceramic Tiles and Sanitary ware
(ICCTAS) has already appealed to the government for ban on export of these raw
materials.

2. Fuel Prices: High fuel price, especially of natural gas, is a major challenge
faced by the ceramic industry, and has been one of the key reasons affecting the
profitability of the ceramic industry. It comprises of 35-40% of the total cost of
production of ceramics.

3. Dumping:
One of the major problems faced by the Indian tile manufacturers is dumping.
Cheap Imported vitrified tiles are being dumped by countries such as China. India
had levied an anti-dumping duty on import of vitrified tiles from China in 2003
based on the findings of anti-dumping cases.

4. Quality and scale economies
The ceramic tiles industry is dominated by unorganized players with a market
share of approximately 60%. The major ceramic cluster is Morbi in Gujarat which
still uses obsolete technologies for production and printing, except for few
organized players.

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SWOT analysis of ceramic industry:
Strengths:
1. There are many experienced and old ceramic industries in India.
2. There are many skilled people working in this industry.
3. The industries are having huge capacity of production.
4. Strong relationship with vendors is there in the industry.
5. The management team is committed and capable in the field.
Weakness:

1. The industries in India are operating under high operating costs as compared to
companies in china
2. There are huge idle capacities therefore fixed cost per unit is higher.
3. The working conditions for staff are not satisfactory. There need to be adequate
safety provisions to be kept in the industry.
4. There are conflicts going on between the management and the union.
5. New technologies result in loss of job and learning of new skills. There is lag in
technologies adopted in foreign countries and in India.
6. High fragmentation of the industry with few large players and a number of
Small and medium size units facing the problems of poor economies of scale
And squeezing margins
7. Substitutes of ceramics like terracotta tiles and PVC floorings which are
Capturing the markets in some areas
Opportunities:

1. The construction and housing boom to increase demand for ceramic product.
2. The hotels and tourism industry is also given huge emphasis thereby increasing
demand for ceramic tiles.
3. There is increase in the living standards and disposable income of people so better
opportunities for ceramic maybe developed.
4. Growing urbanization can also increase demand for ceramic tiles.
5. There is constant increase in the population of India therefore demand for housing
and in turn ceramic will going to rise.
6. The concept of nuclear families and increase in aviation and hospitality industry
will increase demand for ceramics.
7. The government has decreased excise duty on ceramics from 15% to 10%

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Threats:

1. The dumping of ceramic tiles by China is the major problem. Although anti
dumping duties are applied on it still Chinese products are cheaper.
2. The increasing cost of raw materials like electricity, natural gas etc used in
production of ceramic is also threat.
3. There is some slowdown in real estate business which may affect ceramic
4. Industry.
5. Feldspar and quartz which are important minerals used in the production of
ceramic tiles are exported and there is increase in the demand of these products.
6. There has been decrease in demand of Morbi tiles and increasing cost of operating
it
7. Many environmental clearances and problems are associated with it.

Difficulties faced by Indian ceramic industry:
The profit margin of Indian ceramic companies is continuously shrinking. The
major reason behind shrinking of profit margin is dumping and anomalous custom
duty structure in India. The different factors posing difficulties on ceramic
companies are discussed below:

1. Dumping of Chinese products: With a total import value worth over $497 million
(mn), China leads the countries importing ceramic products into India thereby
accounting for a share of over 64 per cent followed by Germany (over seven per
cent share) and France (four per cent share). The rate of growth for import of
Chinese ceramics into India has substantially increased from just about eight per
cent till a few years ago to over 42 per cent." The shortage of ceramic tiles'
production has provided a readily available market for Chinese industry thereby
leaving little room for ceramic exports from India

Solution:
1. The prevailing anomalies pertaining to Basic Customs Duty on import of
ceramic tiles from China and raw materials imported from abroad need to be
corrected to prevent dumping of tiles from China.
2. Also Chinese ceramic products are cheaper in quality and cost, so India can put
emphasis on better quality product and built technology for superior quality
product. This can help in moving decision from cost to quality of product.
3. The company can go for expansion therefore leading to achieving economies of
scale and reducing the overall cost of production of ceramic products.

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2. Rising fuel and cost of manufacturing:
Fuel costs comprises of 30 -40% of the total input costs of ceramic products. The
supply of power and gas is through government. Freight, supply of power and gas
remain other key cost-related issues impacting Indian ceramics sector. Besides, rise
in raw material costs together with soaring fuel prices are other major problems
faced by the industry.

Ceramics manufacturers are not able to pass on the rise in input costs to the
consumers owing to the emerging competition from Chinese ceramic imports
which further hurts their profitability and has even lead to closure of certain
ceramic units unable to bear rising production costs," highlights the ASSOCHAM
study. The costs related to raw material, power and fuel rose by about 23-28 per
cent during the 2011-12.

Ceramic units used coal as source of fuel but because of pollution related problems
the high court had passed law stating use of natural gas as fuel which led to
increase in price of the product.

GSPC Gas Company Limited, a group company of state government-owned
Gujarat State Petroleum Corporation (GSPC), is finding it difficult to meet the
increased PNG demand. Presently, the GSPC Gas is supplying PNG at Rs 37.40
per standard cubic meter (SCM). With the addition of value added tax, per SCM
gas costs around Rs 40 to industry houses. Ceramic industry sources say compared
to PNG, coal gas is much cheaper.

Solution:
1. The demand of PNG (piped natural gas) is more than its supply. The GSPC Gas
has decided to start rationing of PNG. The company has informed around 170 units
that they would get PNG by turn
2. The alternative and pollution free sources of fuel must be developed. So there
must be increase in R &D expenditure to develop better and less pollutative source
of energy.
3. Procedures must be adapted to reduce per unit fuel consumption and improve fuel
efficient methods of production.
4. The government must depend for fuel supply on more countries so as to ensure
consistent supply of fuel.
5. The company can enter into contract with ONGC and other gas providers for
getting quantity discount and low cost of energy.

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3. Rising raw material cost:
Consistent availability and supply of raw materials with optimal pricing are
crucial for growth and profitability of Indian ceramics industry. The industry is
facing problem of inconsistent and non uniform quality of raw material along with
increasing cost of raw materials. There has been huge exports of Feldspar and
Quartz which are important raw material for production of ceramic , which may
result in increase in price of these components in future due to shortage. There has
been increase in price of raw materials like zirconium and titanium.

Solution:
1. Adoption of backward integration model to secure flow of raw materials and
investments in exploration of mines considering as consumption rises, the cost of
raw material would eventually increase.
2. The Board of Indian Council of Ceramic Tiles & Sanitary ware is planning to
appeal to the Government for a ban on the export of two minerals Feldspar &
Quartz from India. Feldspar & Quartz are critical minerals which are used as key
raw materials in the manufacturing of ceramic tiles & sanitary ware.
3. There can be cheap import of certain raw materials required in production of
ceramic products.

4. Rising production costs and shrinking margin:
The cost of ceramic production is increasing because of rise in cost of fuels and
other necessary raw materials required in production of ceramic products. Also, the
units are not able to pass increasing cost to the consumers because of low price of
Chinese products which results in shrinking of profitability and margin of ceramic
companies.

Solution:
1. There must be expansion of production facilities to achieve economies of scale and
thus reducing the cost of production of ceramic tiles.
2. The decision of consumers must be moved from price to quality. The companies
should adopt better and latest technologies like digital technology, nano technology
etc which will result in better quality of product.
3. The company should understand benefits of brand building as good brand can
charge high price.

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5. Increase in transportation cost:
There has been continuous increase in the price of petroleum products. The rise in
transportation costs leads to rise in price to the final customer.

Solution:
1. The factory location should be appropriate so as to minimize distance of factory
from market and raw material sources.
2. The country should depend on more number of countries for its import of
petroleum and other fuel products.
3. The vehicles using alternate source of energy should be encouraged and
government should grant subsidies for research projects for developing alternative
sources of energy.

6. Rising finance cost:
Rising finance costs have been adversely impacting tile
Industry. The companies which saw interest costs rising more than 50% in 2012
are Asian Grantio Tiles, Cera sanitary ware, Kajaria etc
Solution:
1. The company should reduce its external source of borrowing rely more on
equity
2. The leverage ratio of the company should maintain so as to reduce finance and
borrowing cost.
3. Different sources of finance should be properly analyzed and best Source
should be selected so as to reduce cost and risk.

7. Low per capita consumption in India:
The per capita consumption of ceramic tiles is low in India. It is only 0.50 tiles in
India as against 2.46 tile consumption in China. Consumption of tiles is high in
Brazil, U.A.E. etc

Solution:
The per capita consumption in India is about to increase with Growing disposable
people and standard of living of people.

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Global Scenario of Ceramic Industry
During the period from 2001 to 2011, total ceramics trade grew at a CAGR
of 7.56%, from US$ 39.6 billion to US$ 87.9 billion. During the period exports
increased from US$ 19.8 billion to US$ 44.6 billion (CAGR of 7.74%), while
imports increased from US$ 19.9 billion to US$ 43.2 billion (CAGR of
7.38%).China is the largest trader of ceramics in the world, with total trade of US$
14.7 billion during 2011, followed by US and Germany, Italy with total trade of
US$ 7.4 billion, US$ 7.0 billion and US$ 6.18 billion, respectively.

The major production of ceramic is from the continent of Asia. It accounts for
more than 50% of the world production of ceramics.

China is the largest producer of ceramic tiles in the world. India has
increased its capabilities of producing ceramics and has become the third largest
producer of ceramic tiles in the world

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Indigenous companies have faced several problems because of dumping of
ceramic products by China. Indonesia, Sri Lanka, Malaysia .and U.A.E. also
indulge in dumping ceramic products. The India has also signed Bangkok
agreement according to which India will have free trade with china but this can be
proved harmful for the indigenous ceramic companies. As far as India is
concerned, it majorly exports to Saudi Arabia, U.K. and U.A.E.
Top 10 Manufacturing Countries 2012:
China leads the other countries in the ceramic production. India is at 3 rd position
producing 550 million sq. Meters per year. Earlier in 2008 it was on the 8th
position.

Consumption of ceramic tiles:

The consumption of ceramic tiles is highest in Asia. It comprises 66.1 % of
consumption of ceramics by the whole world.

The breakdown in consumption by geographical area is very similar to
that of production .In Asia, the consumption grew at 4.4% in the year 2012. Global
per capita consumption of tile is given in figure
4200
753
550
400 387 375 366 287 245 220
TOP 10 MANUFACTURING
COMPANY

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Top 10 Consuming Countries (2012)
China is both the largest producer and consumer of ceramic product. India is on
3
rd
position.

0
1000
2000
3000
4000
TOP 10 CONSUMPTION COUNTRIES
Series1
Thus, Indias consumption of ceramic tiles is more than its production so India has
to rely on import of ceramic products from abroad. However the dependence of
India from foreign market can be reduced by increasing domestic production.

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Top 10 exporting countries:

China is the largest exporter of ceramic products. It exported 705 million sq. Mtrs
in a 2012. India is not among the top exporter of ceramic products.

Top 10 importing countries:

U.S.A. is the largest importer of ceramic products. In 2012, it imported 130 million
sq. Meters of ceramic tiles. Saudi Arabia is the next largest importer of ceramic
products

.

Major international players of ceramic industry include:

Name of company Place of origin
RAK U.A.E
Siam cement group Thailand
Nankai China
705
289
248
84
57 54 52 42 32 32
TOP 10 EXPORTING COUNTRIES(2012)
0
50
100
150
TOP 10 IMPORTING COUNTRIES
Series1

23 | P a g e

Indias ceramic production:
There has been increase in capacity of ceramic production in India. In 2008, India
was able to produce less than 400 million square meters annually, while in 2013, its
capacity increased to 681 million square meters.

India ceramic export market :
As a foreign exchange earner or a global player, Indian Tile industry has captured
the attention of the world in the ceramic tiles segment. The Indian Industry has
developed an export market although at the lower end. In volume it constitutes less
than half a percent of the global market. (Presently India does not figure in the list
of major exporting countries). But this reality could change as Indian exports are
rising at an accelerating growth annually. The top-end of the global export market is
presently dominated by China (36.8%) and Italy (15.1%). From a global perspective
India face stiff competition from the much more cost efficient Chinese and
Brazilian products. The Indian industry is also miles behind producing the quality
goods that Spain and Italy do have and has to almost exclusively rely on imports for
high quality goods.

380 380
525
550
600
681
0
100
200
300
400
500
600
700
800
2008 2009 2010 2011 2012 2013
production(million square metres)
production

24 | P a g e

Import and export of India:
India exported ceramic products worth over a total of $435 million in 2012 which
is way below the total imports of over $734 million. However, there is a slight ray
of hope in favour of Indian ceramics industry considering that growth of exports
outpaced the import rate by a margin of about six per cent, the analysis noted.
Indias imports of ceramics grew at a CAGR of about 13 per cent during the course
of past six years (2007-12) while exports grew at about 19 per cent.

As evident from the graph, Indian exports are continuously increasing from period
of 2007. The exports are further expected to grow at 18.5%.
Export composition:
The major ceramic products which are exported are:
1.sanitaryware
2.ceramic tiles & vitrified tiles
3.crockery items & other household articles
4.ornamental ceramic tiles

25 | P a g e

Major importers of ceramic products from India:

Saudi Arabia, Kuwait and U.A.E are among the largest importer of ceramic
products from India .
However, in terms of growth, Nepal has clocked the highest growth rate of about
60 per cent in imports of Indian ceramic products followed by Iran (41 per cent),
Turkey (32 per cent), Saudi Arabia (27 per cent) and USA (19 per cent).
Opportunities in the export market
U.S.A, Germany and France are potential markets for glazed ceramic tiles and
unglazed ceramic tiles.
1. With the economic slowdowns in Europe threatening local industry, coupled with
Yuan's appreciation and the Rupee's depreciation, we have an opportunity to
establish Indian products in the international market at competitive rates.
2. Global tiles market has witnessed ups and downs in the last few years due to
2009 crisis. However, the global tiles market has shown an upward trend since 2010
with the major demand coming from emerging economies. The increased demand
for ceramics in emerging markets like Ukraine, Russia ,Nigeria etc may be
attributable to rapid economic growth and greater public and private sector
investment in these countries.
55.84
12.29
7.81
7.11
4.14
2.88
2.6
7.33
exports
saudi arabia
kuwait
U.A.E
poland
taiwan
qatar
oman

26 | P a g e

3. The growing real estate market in countries such as Brazil, India, China and
Indonesia has led to the demand for tiles. During 2011, India was the 20th largest
ceramic trading nation in the world and accounted for a share of around 1% in total
ceramics trade. During the period, from 2001 to 2011, Indias ceramics trade
increased from US$ 143 million to US$ 984 million at a CAGR of 23.4%.
4. The demand of ceramic products depends on countrys construction activity. So
we can target countries with heavy infrastructural development.
5. Ceramics are imperishable products and require less hassle so it is plus point for
exporting of products.
6. Recently many customers from Brazil have visited Morbi to source right partners
to buy ceramic & porcelain tiles. Though Brazil is also producer of ceramic tiles
they were till date depending on China for PORCELAIN Tiles. But currently there
was lot of buzz around regarding Brazil imposing anti-dumping duty on Chinese
made tiles.
7 Next five years will offer good opportunities for Indian sanitary ware companies
to export their products to Saudi Arabia. From India the leading exporters of
Sanitary ware to KSA are CERA, Somany and Kajaria. Increasing number of
individuals in high income group fuels the demand of higher end luxury sanitary
wares in Saudi Arabia.
8. Advance ceramics offers tremendous potential in global markets because of its
applications in automotive, electronics and aviation. The demand for advance
ceramics is increasing specially by U.S.A and Japan.
Strategies adopted by Indian companies:
1. Somany ceramics which is Delhi based manufacturer of floor tiles entered into
strategic partnership with Kaleseramilk, a Turkey based manufacturer to market its
product in middle east.
2. Nitco tiles have opened its exclusive showrooms in Qatar, Lebanon and some
other Arabian countries.
3. Merchant exporters are chosen to market their products .Maharani exporter is
largest exporter of ceramic products from India which is based in Delhi.

27 | P a g e

How to compete with overseas manufacturers:
A comprehensive project has been taken by CAPEXIL (chemical and other
products export promotion council) in order to push export of Indian ceramic and
related products to markets such as U.S., Mexico, and U.K etc.

1.Learn new trend & technologies & innovative products:
Indian companies need to update their knowledge and learn about new trends and
technologies. This can be achieved by spending heavy amount of money on R&D
and learn new methods and technologies of producing ceramic products.

Also, company can import new technologies from abroad for improving the quality
of ceramic products. Also, companies can participate in certain exhibitions like
Cersaie, Cevisama to learn about new trends and happenings in the market.

The ceramic sector of India needs to develop innovative product lines to improve
export performance of Indian ceramics.

2.Global exposure:

It is necessarily to have global exposure in order to sell products. Many ceramic
companies from morbid participate in THE BIG 5 SHOW and similar other
exhibitions to get exposure to big middle east and African countries.

3.capacity expansion:

It is expected that capacity expansion will help domestic players to reap economies
of scale This can help them to price their product more competitively in domestic
as well as international market.

All major players including Kajaria ceramics, H& R Johnson, Murudeshwar
Ceramics and Regency ceramics have made substantial investment in capacity
expansion.

4.Proper sales network:

Though Indian ceramic industry is facing pricing war from Chinese products,
Indian ceramic price is still low in premium markets like Europe, Canada and U.S.,
but we are lacking in effective sales network. So companies need to develop better
and effective sales network. Co-operative partnership between suppliers, dealers,
distributors, employees and the major customers must become a priority.

28 | P a g e

5.Alternate source of fuel:

The companies should develop alternative source of fuel as fuel prices are rising
constantly and it contributes about 30- 40 % of the price of ceramic production.

6.Focus on advanced ceramics:

Advanced ceramics products find use in electronics, automotive and aerospace
industries. Thus new and expanding opportunities of use of ceramic must be
explored.

7 .Product range:

The Indian companies should understand the cultural diversity and satisfy their
demands of varying designs, price points, quality and style effectively in order to
attain success.

8.Import of quality raw material:

The quality of indigenous clay used for ceramic is not much export oriented. So
company can import better quality of raw materials from the foreign countries in
order to improve quality of the product.

9.Branding:

Having a strong brand is more critical to ceramic tiles and sanitary ware industries
as they are addressing individual customers. Players like H&R Johnson, Kajaria etc
are investing substantially in advertising and brand building.

29 | P a g e

Fuel /gas cost of ceramics:

Fuel or gas cost constitutes the major cost in the production of ceramics. Also,
there are many environmental issues associated with the type of fuel source used
and its pollution emissions. The drying and firing process of ceramic production use
much of electrical energy.

Problems:

Most of units in Morbi were using coal as source of energy but due to pollution
problems, high court put ban on use of coal in ceramic production.
1. The facility of piped natural gas (PNG) was provided to Morbi and other units by
public sector organization named Gujarat State petroleum corporation (GSPC) and
Oil and natural gas commission. (ONGC). But there has been almost 40% increase
in price of gas given by these organizations and also there has been irregularity
regarding the supply of fuels by this organization.

Thus, there has been increase in cost of producing ceramics because of increase in
ceramic prices. So companies need to take steps for reducing the fuel cost of
operating.

There are two ways of reducing fuel cost:

1. Decrease in per unit fuel consumption of ceramic products.
2. Decrease in cost of obtaining fuel

Let us discuss them in detail:

1. Decrease in per unit fuel consumption: The Company can reduce per capita
consumption of fuel by using cost effective methods. Energy conservation efforts
can be classified into three:

a) Good housekeeping:
b)
c) The elimination of minor waste, review of operation standards in production line,
more efficient management, improvement in employee s cost consciousness etc can
be made.
e.g. unnecessary lighting of electrical lamps and idle operation of motor, repair of
steam leakage , reinforcement of heat insulations etc.

30 | P a g e

b)equipment improvement:

Waste heat recovery equipment and gas pressure recovery equipment in
combustion furnaces may be helpful.
There must be use of new and advanced equipment spreading less pollution.

c) Process improvement:

Technological development can be helpful in improving the production process.
This is nothing but modernization of the process aimed at energy conservation, high
quality, higher added value, improved product and manpower yield.

Suggestions:

1. The easiest way of energy conservation for using fuel without investment is to
reduce air ratio.
2. The faster the kiln car pushing speed, the less fuel will be consumed in tunnel
kiln, thereby continue to energy conservation.
3. The shape of the kiln also affects energy consumption.

2. Decrease in per unit price of fuel:

1. The company can go for specific contracts with the fuel proving organizations to
reduce their per unit cost.
2. Alternate, cheaper and environmentally friendly sources like wind energy etc must
be explored to become cost effective.

31 | P a g e

Future outlook:
1. Boom in construction:
2.
3. The construction industry which is having major linkages with building material
segment has been growing at 15 to 20% mainly on strength of manufacturing
activities, industrial growth ,and heightened investment especially by government in
infrastructure and real estate. Thus, ceramic industry is expected to grow in future
and has positive future outlook.

Untapped rural areas:

while the demand for tiles is driven by construction, realty, housing and
infrastructure sector, it is expected that expanding construction activities in largely
untapped rural areas are also expected to provide a huge thrust to to construction
building material market so ceramic industry is expected to grow in future.

Besides rising disposable income and growing middle class and increased
urbanization, etc. It is expected that Indias per consumption of ceramic tiles will
have healthy growth in period ahead.

While Indian growth story continues in spite of inflationary pressures, indications
are that the long term scenario for the ceramic industry in general and tiles segment
in particular will remain healthy.

32 | P a g e

Financial stress in the ceramic industry
Kajaria ceramics financial results:
Profit & Loss account of Kajaria Ceramics ------------------- in Rs. Cr. -------------------
Income mar13 mar12

Sales Turnover 1,707.26 1,401.76

Excise Duty 119.06 92.49

Net Sales 1,588.20 1,309.27

Other Income 0.39 -8.64

Stock Adjustments 4.91 15.47

Total Income 1,593.50 1,316.10

Expenditure

Raw Materials 898.97 724.93

Power & Fuel Cost 232.72 193.78

Employee Cost 122.13 103.66

Other Manufacturing Expenses 8.00 3.31

Selling and Admin Expenses 0.00 85.33

Miscellaneous Expenses 109.80 11.70

Preoperative Exp Capitalised 0.00 0.00

Total Expenses 1,371.62 1,122.71

Mar '13 Mar '12

12 mths 12 mths

Operating Profit 221.49 202.03

PBDIT 221.88 193.39

Interest 35.48 39.21

PBDT 186.40 154.18

Depreciation 38.36 37.08

Other Written Off 0.00 0.00

Profit Before Tax 148.04 117.10

Extra-ordinary items -2.12 -0.96

PBT (Post Extra-ord Items) 145.92 116.14

Tax 45.37 35.44

Reported Net Profit 100.55 80.72

Total Value Addition 472.65 397.77

Preference Dividend 0.00 0.00

Equity Dividend 22.08 18.40

Corporate Dividend Tax 3.58 2.98

Per share data (annualised)

Shares in issue (lakhs) 735.84 735.84

Earning Per Share (Rs) 13.66 10.97

33 | P a g e

Explanation:
1. There is increase in sales turnover of Kajaria from Rs 1400 crores to Rs 1700 crores. So there
is approximately 21 % increase in sales turnover of company.2. There is increase in profit(pbt)
of kajaria in year 2013 as compared to last year. There is approximately 30%increase in
reported profit of the company.3.But the miscellaneous expenses of company has increased
drastically so company has to take note of it and try to reduce it so as to increase profitability.
Balance Sheet of Kajaria Ceramics ------------------- in Rs. Cr. -------------------
Sources Of Funds mar13 Mar12
Total Share Capital 14.72 14.72
Equity Share Capital 14.72 14.72
Share Application Money 0.00 0.00
Preference Share Capital 0.00 0.00
Reserves 342.07 267.18
Revaluation Reserves 0.00 0.00
Networth 356.79 281.90
Secured Loans 150.45 174.80
Unsecured Loans 20.00 0.00
Total Debt 170.45 174.80
Total Liabilities 527.24 456.70
Application Of Funds

Gross Block 749.85 722.95
Less: Accum. Depreciation 285.14 253.89
Net Block 464.71 469.06
Capital Work in Progress 6.85 1.76
Investments 37.16 12.35
Inventories 176.53 175.78
Sundry Debtors 136.58 141.01
Cash and Bank Balance 2.79 5.49
Total Current Assets 315.90 322.28
Loans and Advances 61.35 53.70
Fixed Deposits 0.00 0.41
Total CA, Loans & Advances 377.25 376.39
Deffered Credit 0.00 0.00
Current Liabilities 316.35 321.68
Provisions 42.37 81.19
Total CL & Provisions 358.72 402.87
Net Current Assets 18.53 -26.48
Total Assets 527.25 456.69
Contingent Liabilities 50.99 20.25
Book Value (Rs) 48.49 38.31

34 | P a g e

Explanation: 1.There is increase in total net worth from Rs 281.9 crores to Rs 356.79 crors. It
shows that company has earned profits this year which are transferred to reserves thereby
increasing total net worth of company.
2. All other items of balance sheet are approximately same as the last year. The company has
taken Rs 20 crores unsecured loan.
3. There is almost 5 times increase in work in progress of the company.4.But the contingent
liabilities of the company is more than 2 times as compared to last year while the company has
reduced provision as compared to last year.
Financial ratios:
1. Current ratio: the current ratio of company stood at 0.62. It is same as last year. Though
current ratio is below the standard of 1.33 , still there is no negative deviation in ratio so it can be
considered acceptable.
2. Debt equity ratio(tol/tnw): the debt equity ratio of company has reduced from 0.62 to 0.48. the
company is paying loans installments and thereby reducing debt of the company. There is no
change in equity of the company so change in this ratio is due to change in debt.
3. Interest cover: it means the ability of company to pay interest from the earnings of company. If
it is higher, than company is more efficient in paying interest. The interest cover ratio has
increased from 4.6 to 5.25 in this year which is on positive side.
4. Fixed assets turnover ratio: The fixed-asset turnover ratio measures a company's ability to
generate net sales from fixed-asset investments - specifically property, plant and equipment
(PP&E) . There is increase in fixed assets turnover ratio of company from 1.81 to 2.12 which is
on positive side.
5. Operating profit margin: A ratio used to measure a company's pricing strategy and operating
efficiency. Operating margin is a measurement of what proportion of a company's revenue is left
over after paying for variable costs of production such as wages, raw materials, etc. The
operating profit margin of the company has decreased because of increase in raw material and
power and fuel costs.
6. Gross profit margin: A financial metric used to assess a firm's financial health by revealing the
proportion of money left over from revenues after accounting for the cost of goods sold. Gross
profit margin serves as the source for paying additional expenses and future savings. the gross
profit margin of the company has reduced to 11.59 from 12.53. The reason behind this is
increase in raw material cost and power and fuel cost.
7. Net profit margin: There is increase in the net profit margin from 6.16 to 6.31. it shows the
company has more revenues after paying for all factory , administrative and selling expenses.
the reason behind this is there is decrease in selling and distribution expenses as compared to the
last year.

35 | P a g e

8. Return on capital employed: A financial ratio that measures a company's profitability and the
efficiency with which its capital is employed.
.ROCE of the company has decreased in 2013 as compared to 2012. It was 36.27 % in 2012
while it has decreased to 35.38 in the current year. There is change in the capital employed of the
companys there is increase in the reserves and surplus of the company
9. Earning per share: There is increase in earnings per share from 10.97 to 13.66. This is on
positive side as the earnings of the company has shown positive trend.
H & R Johnson(Prism cement):
Profit & Loss account of Prism
Cement
------------------- in Rs. Cr. -------------------
Income mar13 mar'12

Sales Turnover 4,768.47 4,845.61


Net Sales 4,768.47 4,503.11


Stock Adjustments 23.83 33.49

Total Income 4,799.45 4,528.96

Expenditure

Raw Materials 2,231.69 2,175.78





Miscellaneous Expenses 1,291.46 113.82


Total Expenses 4,532.33 4,257.27

Operating Profit 259.97 279.33

PBDIT 267.12 271.69

Interest 190.31 170.40

PBDT 76.81 101.29



Profit Before Tax -82.99 -45.99

Extra-ordinary items 0.00 0.00

PBT (Post Extra-ord Items) -82.99 -45.99

Tax -23.51 -15.98

Reported Net Profit -59.48 -30.01

Total Value Addition 2,300.64 2,081.49




Per share data (annualised)

Shares in issue (lakhs) 5,033.57 5,033.57

Earning Per Share (Rs) -1.18 -0.60

36 | P a g e

Explanation: 1 There is 1%decrease in the sales turnover of the company in 2013 as compared to
last year. It is minor and thus acceptable. 2. There is decrease in profit of the company. The
company is actually incurring losses and there is almost double of the losses suffered by the
company. The reason is increase in raw material cost and power and fuel cost. The miscellaneous
expenses of company has increased drastically.3.The company has not declared any dividend in
this year because of the weak condition of the company.
Balance Sheet of Prism Cement ------------------- in Rs. Cr. -------------------

Mar '13 Mar '12

Sources of fund





Reserves 586.35 645.21


Networth 1,089.71 1,148.57

Secured Loans 1,149.52 854.49


Total Debt 1,281.52 1,038.95

Total Liabilities 2,371.23 2,187.52


Gross Block 3,181.61 2,932.62

Less: Accum. Depreciation 1,172.19 1,019.47

Net Block 2,009.42 1,913.15









Total CA, Loans & Advances 1,578.28 1,347.71


Current Liabilities 1,635.24 1,460.74


Total CL & Provisions 1,678.65 1,529.76

Net Current Assets -100.37 -182.05


Total Assets 2,371.23 2,187.52


Book Value (Rs) 21.65 22.82

37 | P a g e

Explanation: 1.There is reduction in the total net worth of a company as compared to last year.
The reason behind this is that the company is incurring losses in the current year so there is
decrease in reserves of the company. 2There is increase in the secured loans of the company
thereby increasing total outside liabilities. As a result of this, there is increase in the financial
cost as company needs to pay more dividend.3.There is increase in the fixed assets of the
company means the company has increased either its production capabilities or has incurred
research and development expense .4 The contingent liabilities of the company stands high and
is double as compared to last year..
Financial ratios:
1. Current ratio: There is decrease in the current ratio of the company in the year 2013 from
2012. The reason is increase in current liabilities of the company. The current ratio has shown
negative trend and the company is in financial stress.
2. Debt equity ratio(tol/tnw): There is increase in the debt equity ratio of the company from 0.9
to 1.18. This means the company is mainly financed by outside liabilities. The gearing ratio of
the company has changed in negative direction.
3. Interest cover: It means ability of the company to pay for interest from the earnings of the
company. The interest cover of the company was low at 0.84 and now it has decreased to 0.56 ,
this clearly shows that the company is not in good financial condition.
4. Fixed assets turnover ratio: A financial ratio of net sales to fixed assets. The fixed-asset
turnover ratio measures a company's ability to generate net sales from fixed-asset investments -
specifically property, plant and equipment (PP&E). The fixed asset turnover ratio of the
company has decreased from 1.55 to 1.51.
5. Operating profit margin: Operating margin is a measurement of what proportion of a
company's revenue is left over after paying for variable costs of production such as wages, raw
materials, etc. The operating margin of the company has decreased from 6.20 to 5.45 in the
current year.
6.Gross profit margin: : A financial metric used to assess a firm's financial health by revealing
the proportion of money left over from revenues after accounting for the cost of goods sold.
Gross profit margin serves as the source for paying additional expenses and future savings. The
gross profit margin of the company has decreased from 2.93 to 2.10 which is on negative side.
7. Net profit margin: The company is incurring losses and there is increase in the losses
suffered by the company. This is evident from fall of net profit margin from( -0.66) to (-
1.24). There is increase in the miscellaneous expenses of the company .
8. earning per share: there is decrease in the earnigs per share and increase in losses per share.
The loss incurred by company per share has increased from (-0.60) to (-1.18).

38 | P a g e

All the ratios indicate that the company is not in good financial condition. The
company has huge amounts of burden y in form of interest payments. The gearing ratio of the
company has also degraded as compared to last year.
3.Nitco ceramics
Profit & Loss account of Nitco ------------------- in Rs. Cr. -------------------
Income mar 13
Sales Turnover 770.28 959.71


Net Sales 770.28 937.50


Stock Adjustments -173.18 96.22

Total Income 597.81 999.61

Expenditure

Raw Materials 370.91 653.04







Total Expenses 637.45 947.28

Operating Profit -40.35 86.44

PBDIT -39.64 52.33

Interest 151.67 75.11

PBDT -191.31 -22.78



Profit Before Tax -231.34 -55.44

Extra-ordinary items 0.00 0.00

PBT (Post Extra-ord Items) -231.34 -55.44

Tax 0.00 0.00

Reported Net Profit --231.34 -55.45

Total Value Addition 266.54 294.24




Earning Per Share (Rs) -70.96 -17.01

39 | P a g e

Explanation:
1. The sales turnover of the company has decreased by approximately 20%as compared to 2012 in
2013.
2. The PBDIT( profit before depreciation ,interest and tax) is negative .i.e. te company is incurring
losses in this year.The financial condition of the company is not good.
Balance Sheet of Nitco ------------------- in Rs. Cr. -------------------
Sources Of Funds mar13 Mar12
Reserves 216.14 447.47
Networth 276.74 480.07
Secured Loans 1,162.83 580.45
Total Debt 1,162.83 580.45
Total Liabilities 1,439.57 1,060.52

Gross Block 900.40 889.13
Less: Accum. Depreciation 190.85 151.55
Net Block 709.55 737.58
Total CA, Loans & Advances 835.24 961.11
Current Liabilities 138.67 653.49
Total CL & Provisions 139.50 653.49
Net Current Assets 695.74 307.62
Total Assets 1,439.57 1,060.52

40 | P a g e

Explanation: 1.There is decrease in the total net worth of the company. The reason is losses
incurred in 2013 which led to decrease in the reserves and surplus of the company.
2. The unsecured loans of the company have almost doubled. This means that the company will
have high financial burden in form of interest payments and installments of the term loans.
3. There is increase in the current assets of the company , this is because of increase in the
debtors of the company which may be because the debtors are allowed more credit period.
4. There is increase in the contingent liabilities of the company in 2013 as compared to the
last year. This can pose threat if they become operational.
Financial ratios:
1. Current ratio :The current ratio of the company has improved from 1.47 to 4.46. This is
because the company has increased inventory and debtors and more credit is allowed to
debtors. But current ratio as high as 4.46 is also not useful.
2. .Debt equity ratio(tol/tnw): The debt equity ratio of the company has increased from 1.21
to 4.67. There is increase in the debt and outside liability of the company. This is clear
because the company has increased loan .
3. Interest cover: Interest cover means ability of the company to pay interest from its earnings.
The interest cover ratio of the company has moved from 0.72 to (-0.53). This is because the
company is incurring losses. So the company is not in position to pay for interest.
4. Fixed assets turnover ratio: The fixed-asset turnover ratio measures a company's ability to
generate net sales from fixed-asset investments - specifically property, plant and equipment
(PP&E). The fixed asset turnover ratio of the company has decreased from 1.05 to 0.86.
5. Operating margin(%):Operating margin is a measurement of what proportion of a
company's revenue is left over after paying for variable costs of production such as wages,
raw materials, etc The operating margin of the company is negative .i.e. (-5.22%).
6. Gross profit margin: A financial metric used to assess a firm's financial health by revealing
the proportion of money left over from revenues after accounting for the cost of goods sold.
Gross profit margin serves as the source for paying additional expenses and future savings.
The gross profit margin of the company has decreased ,it was 5.73 earlier and now it has
become (-10.43). Thus the company is not doing well.
7. Net profit margin: Net profit margin of the company has become (-30.00). This clearly
states that the company is incurring heavy net losses in proportion of its sales. The company is
not in sound financial position.
8. Earnings per share: The earning per share is (-70.91). This is very high and the company is
incurring heavy losses. This need to be corrected in the short span or else the investors will
lose confidence in the company.

41 | P a g e

Financial stress conclusion

1. Power and fuel comprises approximately 30 -35% of the operating cost of
ceramic. There is increase in power and fuel expenses of all companies.
2. Raw material also comprises 40-60% of the cost, there is increase in price of
raw materials.
3. There is increase in interest expenses in all the three companies.
4. The performance of debt equity ratio and current ratio is also not satisfactory.
5. Operating profit/ sales is decreasing in all three companies.
6. Also, the working cycle of ceramic industry is 8 to 10 months and thus there is
blockage of fund for quite a long period.
These are the main reason behind financial stress of the company.

42 | P a g e

Analysis and observation:
For the purpose of analysis of ceramic industry, I have prepared questionnaire to
site information from the companies dealing in ceramic industry. Companies like
Cengress Pvt limited, Regent Granito etc have helped in this survey. I have also
made Sabarmati gas limited who is one of the natural gas suppliers to these
ceramic companies fill the questionnaire as they are dealing with ceramic
customers and have knowledge about the industry. The presentation of
information obtained from ceramic industry is as follows:
1. The most important factor affecting the ceramic industry growth:

According to companys views, construction sector growth is the major reason
behind the demand of ceramics. 50% of the company believed that ceramic
industry growth will depend on construction sector growth. After construction
sector growth, urbanization growth and rising income level are other important
factors affecting ceramic industry growth. The factors like housing sector growth,
tourism industry growth and population growth have negligible impact on ceramic
industry growth.
Hence, for ceramic industry to grow , there is requirement of growth in
construction sector, urbanization growth etc

16.66
33.34
50
0 0 0
0
10
20
30
40
50
60
rising income
level
urbanization construction housing
sector
tourism,
hospitality
population
growth
factor affecting ceramic industry
percentage

43 | P a g e

2. Macro environmental factors that can pose threat on ceramic industry:

Rising fuel costs is major concern for the industry. 66.66% of people consider fuel
costs increase as a problem for the ceramic industry. Other than fuel costs,
dumping by china has always been problem for ceramic companies. Government
regulations regarding pollution etc also affect ceramic industry. The factors like
substitutes do not affect ceramic industry much because of better quality of
ceramic products.

Thus, government needs to support ceramic industries by reducing fuel costs.
The government should take steps against dumping of ceramic products by china
in order to protect the indigenous ceramic companies as ceramic is one of the most
important industry affecting economy of our country and also a good foreign
exchange earner for the economy.

66.66
16.66 16.66
0.02 0 0
0
10
20
30
40
50
60
70
rising fule
costs
dumping by
chian
government
regulations
substitutes competition raw material
cost
macro environmental factors posing threat
Column1

44 | P a g e

3. Substitute products that can affect ceramic industries:

As far as substitutes are considered, marbles and granite are the most important
substitutes affecting ceramic industry. More than 50% of company responded that
marble can be most important substitute product and hence strategies to negate the
benefits of marbles over ceramic must be made using factors like price, quality etc.
Nowadays, people have started preferring wooden and bamboo floorings etc which
can also affect ceramic industries.

Ceramic industries still have benefit over substitute products because of easy
availability and cheaper price compared to marble etc. Also ceramic tiles are
available in more designs and colours and they have ease of cleanliness and low
maintenance costs. Marbles are preferred by companies because of its cooling
effect in summer but the same works against it in winter

66.66
16.66 16.66
0.02 0
0
10
20
30
40
50
60
70
marbles,granite wooden and
bambbo
none recycled glass
fibre
mosaic tiles
Series 1
Series 1

45 | P a g e

4. Do you export ceramic products?

80% of the companies export ceramic products. Only 20% small industries do
not export ceramic products. Thus, companies have started becoming global and
serving foreign markets in order to reap benefits of economies of scale.

Hence ceramic companies can have great opportunities in export market.
Most of the companies are relying on foreign market to serve its products and
achieve economies of scale in its production. The companies are now increasing
their capacity utilization and serving foreign markets.

80
20
Column1
yes
no

46 | P a g e

5. Strategies adopted by companies to remain competitive in the export market:

Providing better quality is the major strategies adopted by ceramic companies in
order to export their product. Providing more product range with more variety and
better designs are also being used by companies. Companies now have understood
the impact of branding and better sales network as import driver affecting sales of
ceramic products.

Hence the companies is focusing on meeting foreign market demand by
bringing better quality products, more product range and good promotional and
marketing efforts. The companies are taking part in various ceramic exhibitions in
order to increase awareness of the companies.

42
29
14 14
1
0
5
10
15
20
25
30
35
40
45
better quality product
range
branding sales network low price partnership
Series 1
Series 1

47 | P a g e

6. Different measures of increasing profitability and reducing cost adopted by your
companies:

Fuel costs comprises of 30 to 40% of the cost of ceramic production. There has
been continuous increase in natural gas and other fuels being used by ceramic
industries. Increasing fuel costs has been major concern for the industries and
hence different measures are adopted by companies to reduce the fuel costs in
order to increase the profitability of the business. Apart from decrease in fuel costs,
better technology is another measure for increasing profitability of the business.
Better technology results in better quality of product at low cost and thus,
companies can gain more profit.

Thus, fuel costs have been major concern for ceramic companies and they
have been trying hard to decrease fuel costs by adopting better technology etc

40 40
16
4
0
0
5
10
15
20
25
30
35
40
45
decrease I fuel
cost
better
technology
modernization
and expansion
decrease in
finance cost
raw material
import
Series 1
Series 1

48 | P a g e

7. Techniques for reducing fuel costs adopted by your company:

Using alternate sources of fuel is major remedy of fuel costs increase. The fuels
like organic manure; solar energy etc can be utilized efficiency to reduce the costs
of ceramic industry. Process improvement can be helpful as better process will
result in less per unit consumption and better utilization of fuels. Better equipment
can also be helpful in reducing fuel costs.

This is the analysis and observations drawn from the information
collected from ceramic companies.

alternate sources
of fuel
56%
better technology
14%
process
improvement
28%
good housekeeping
2%
techniques for reducing fuel costs

49 | P a g e

Findings:
1. Construction sector, urbanization growth and rising income levels are most
important factors affecting the ceramic industry growth. Growth in housing,
tourism sector and population growth has less impact on ceramic industry growth.

2. Rising fuel costs has been major problem for the industry. Fuel costs comprises of
30 to 40 % of the cost of ceramic production and increasing in fuel costs has result
in eroding of margins of the company as companies are not able to pass increasing
costs to the consumers because of competition by the Chinese products.

3. Marbles can be the substitute posing threat on ceramic industries. Marbles have
cooling effect in summer and it is the major reason behind usage of marbles.
People also have started using wooden and bamboo flooring which can be threat
for ceramic companies.

4. Ceramic products have certain benefits over other substitutes like standardized
quality, more choices in terms of design, cheap price and ease of maintenance.
Because of its anti resistant properties, it is in use in aerospace industry,
telecommunications etc

5. Companies have started exporting ceramic products. Most of the companies rely
on foreign market to meet its production. Based on financial data, companies are
generally exporting 5 to 10 % of their production in the foreign market.

6. The companies have adopted various strategies like better quality products, more
designs and product range and better marketing techniques in order to remain
competitive in the export market.

7. Fuel costs have been major cost component of ceramic tiles and companies are
taking various steps like using better technology, process and equipment
improvement etc to reduce the rising fuel costs of ceramic operation.

50 | P a g e

8. The companies are in financial stress since some years. The reason behind
financial stress is increase in fuel and finance costs of the operation. The
companies are not able to pass increasing operating costs to the consumers because
of intense competition from Chinese products. There has been increase in
transportation costs of the company also. Every year company is required to incur
heavy costs in research and development to bring better technology and equipment
of producing ceramics.

9. The ceramic companies need to rely on outside financing options like banks for
operation. The ceramic companies use various sources of credit like working
capital loan, cash credit, letter of credit, bank guarantee, term loan etc available
from banks for meeting its requirement.

10. I have contacted ceramic companies being dealt by sbi and found that they want
certain concessions like competitive and low interest rates, longer period of credit,
low demand of collateral etc from the bank. They feel that bank can help ceramic
industries by reducing finance costs as ceramic companies are good source of
income for banks. Banks have been earning crores of rupees by providing different
credit facilities to the ceramic companies.

51 | P a g e

Conclusion:

1. Ceramic industries are facing difficulties of dumping by China, rising fuel costs,
stricter governmental regulations relating to the environment etc. the companies
are also facing difficulties from small and unorganized players as they are getting
cost benefits because of taxation costs etc.

2. There seems a great export opportunity of ceramic products from India because of
devaluation of rupee. As a result of these, exports from India will become cheaper.
There has been increase in demand of ceramic products by emerging economies so
they can be good export destinations for Indian ceramic products. Also countries
like U.S.A, Saudi Arabia and other Arab countries are having high ceramic
consumption but they are not producing much to satisfy their domestic demand so
they rely on import from other countries. Thus, there seems great opportunity for
export of ceramic products from India.

To remain competitive in the export market, the companies are adopting strategies
like better quality products, more product range, better marketing efforts through
branding and effective sales network. The companies are participating in
exhibitions etc.

3. The company is at present in financial stress. This is because of rising fuel costs,
increase in finance and transportation costs of operating business. The company is
also not able to pass increasing costs to the consumers because of competition from
China and other unorganized and small players. The efficiency ratios of the
company are degrading on year on year basic. The liquidity and solvency ratios of
the ceramic companies are not satisfactory. Many large companies like NITCO, H
& R Johnson, Kajaria etc are in financial stress. There has been degradation of
ratings of many ceramic companies by rating agencies over last few years because
of weak financial position of the ceramic companies.

52 | P a g e

4. Fuel costs have been major concern for ceramics as they constitute about 30 to 40
% of the ceramic operating costs. The techniques like better technology, alternate
sources of fuel, process and equipment improvement etc are adopted by companies
to reduce fuel costs of the business.

5. The future of ceramic industry seems promising because ceramic industry is
dependent on construction, urbanization growth, housing demand etc for its
growth. There has been 10 to 15% growth annually in construction sector. Also,
rising income levels lead to increase in demand for ceramic products. There has
been 11% growth in disposable income of people in India. Also, urbanization
results in more housing demands thereby leading to increase in demand of ceramic
products.

Because of anti stain and anti corrosive and heat resistant capabilities, there has
been increase in use of advance ceramics. The advance ceramics have use in many
sectors like telecommunications, aerospace industry etc thus; there seems increase
n demand and growth of ceramic products. The banks should support ceramic
companies as there seem great opportunities for ceramics in future and also
ceramic companies are great source of income for banks and banks earn crores of
rupees through ceramic companies.

53 | P a g e

Limitations

1. The sample size has been small due to constraints of resources, time and
cost. Also, many ceramic companies were not giving prompt reply,
thereby resulting in small sample size. The companies of Gujarat are
only contacted for obtaining information so this can be a limitation.

2. The results are based on information given by companies and any
biasness on part of companies and subjectivity can affect this research.

3. There have been changes in laws and other environmental regulations,
finance costs etc thus changes in status and situation of the industry and
other macro environmental factors can result into inefficiency of the
report.

4. The data has been collected through using secondary sources like
internet etc. Any limitations in the secondary data and accuracy of
secondary data sources can also affect research.

54 | P a g e

Ceramic industry research questionnaire

1. Name of the company
2. The overall expected Indian ceramic industry growth rate is 15%. According to you, which of the
following is most important factor for achieving expected growth rate?
Housing sector construction sector
Tourism or hospitality sector rising income levels
Urbanization growth population growth
Any other, please specify
3. Which of macro environmental factors can pose threat on your business?
Stricter government regulations substitute goods
Existing players in market environmental laws
I increasing raw material cost fuel costs
Dumping by china any other, please specify
4 .Which substitute products can affect ceramic industry adversely?
Wooden and bamboo flooring mosaic tiles

Marbles, granite and other metals recycled glass fibre

5. What are the advantages of using ceramic over substitutes? Based on our survey, consumer said that
they consider cooling effect of marbles in summer as important factor behind purchasing marble, how
company can take to mitigate this risk?

6. Do you export ceramic products?
Yes No
7. If yes, what are strategies adopted by your company for remaining competitive in the export market?
Low price better quality
Product range better sales network

55 | P a g e

Partnership any other, please specify
8. If you do not export your products, what are reasons for not exporting?

9 .Which mechanisms are adopted by you for increasing profit and growth of company?
Promotion through websites, papers taking part in exhibitions
Expansion and modernization technology upgradation
Cost cutting measures any other, please specify
10. What different measures of cost cutting are adopted by your company?
Better technology import of raw materials at cheaper price
Decrease in finance costs decrease in fuel cost
11. What techniques for reducing fuel cost are adopted by your company?
Better equipment good housekeeping
Process improvement alternate source of fuel
12. Rank the different options of funding given by bank to ceramic industry according to their
importance:
Working capital loan term loan
Cash credit letter of credit
Bank guarantee other, please specify
13. What changes in terms of credit offered by bank would you want bank to do. Please specify in bullet
points.
1.
2.
3
4

56 | P a g e

Ratings of ceramic companies by some top rating agencies
NAME OF
COMPANY
LONG
TERM
SHORT
TERM
RATIONALE Name of agency

KAJARIA
CERAMICS
LIMITED
A A1
The upgrade of ratings takes into account
the improvement in the operational and
financial profile of KCL in 9 months FY 2013
as reflected in a healthy growth in revenues
in its core business of ceramic tiles and
stable margins despite substantial increase
in raw material and fuel costs.
ICRA
R.A.K
CERAMICS
A- A2+
The ratings continue to reflect RAK Ceramics
established market position in the vitrified
tiles and sanitary-ware segment in India,
and the strong support that it receives from
its parent, RAK UAE.
These rating strengths are partially offset by
the companys susceptibility to adverse
movements in input prices and to intense
competition.
CRISIL
SOMANY
CERAMICS
PRIVATE
LIMITED
A- A2+
The ratings reflect SCLs established market
position as the third largest player in the
domestic tiles industry, backed by its
established brand name and distribution
network. The ratings also factor in the
companys diversified geographical and
customer base and its healthy financial risk
profile, marked by its efficient working
capital management and asset-light model.
SCLs exposure to intense competition from
organized and unorganized players in the
tiles segment and the vulnerability of SCLs
operating margin to fluctuations in raw
material prices.
CRISIL
SOMANY
CERAMICS
LIMITED
BBB+ A2
SCLs strong brand and established market
position in the domestic tiles market in the
Northern & Southern region, which coupled
with healthy demand growth for tiles has
resulted in a healthy top-line growth in the
last five years
ICRA
SIMS
CERAMIC
PRIVATE
LIMITED
BBB A2
rating factors in the benefits that the group
derives from its established market position
in the domestic tiles industry, backed by
wide distribution network, and its promoters
extensive industry experience.
These rating strengths are partially offset
by the groups vulnerability to cyclicality in
the end-user industry and increasing
competition as well as the susceptibility of
its operating margin to raw material price
volatility.
CRISIL
ORIENT
CERAMICS
BBB A2
The ratings assigned factor in the companys
experienced management with significant
track record in the tile manufacturing
business, its established position in the
domestic market in the northern region and
its increasing focus on premium tiles
segment.
ICRA
M.M.
CERAMICS
BBB- A3
The ratings take into account the experience
of the promoters in trading of ferrous and
non-ferrous scrap and metals for nearly four
ICRA

57 | P a g e

AND FERRO
ALLOYS
decades, established relationship with the
reputed clients and suppliers, moderately
diversified customer base with top ten
customers accounting for ~38% of total
sales, healthy growth in revenues over
years, moderate financial risk profile of the
group marked by healthy cash accruals,
TATA
CERAMIC
LIMITED
BBB- A3+
CRISIL's ratings on the bank facilities of Tata
Ceramics Ltd (TCL) continue to reflect the
strong support that TCL receives from the
Tata group and the financial flexibility TCL
enjoys being a part of the Tata group. The
rating also reflects TCL's established
customer relationship supported by good
product quality.
TCL's weak financial risk profile marked by a
high gearing and inadequate debt protection
metrics, exposure to risks related to increase
in raw material prices and highly working
capital intensive nature of operations
CRISIL
M.M.
Ceramics
And Ferro
Alloys
BBB- A3
The rating is based on experience of
promoters in the business and strong client
base of company. The company is in
existence since 4 decades.
BRICKWORKS
SOLARIS
CERAMICS
PRIVATE
LIMITED
BBB- A3
The ratings reflect the Varmora groups
promoters extensive experience in the
ceramic industry, Varmora groups
established distribution network and strong
brand name. . These rating
strengths are partially offset by the Varmora
groups susceptibility of its operating margin
to raw material price volatility and low
bargaining power, working capital intensive
operations and aggressive capital structure.
CRISIL
FUTURA
CERAMIC
PRIVATE
LIMITED
BB+ A4+
The rating downgrade takes into account the
deterioration in the financial performance of
the company characterised by decline in
profit margins and coverage indicators in FY
2011 and current financial year.
ICRA
AKASH
CERAMICS
PRIVATE
LIMITED
BB+ A4+
ratings take into account the long experience
of the promoters in the manufacturing and
marketing of ceramic tiles; and the
established relationships with dealers and
distributors across the country. The ratings
also take into account the proximity of
ACPLs plant to raw
material sources, which reduces freight
costs,
ICRA
COSA
CERAMIC
PRIVATE
LIMITED
BB+ A4+
The rating upgrade reflects CRISIL's belief
that CCPL's business and financial risk profile
will strengthen further over the medium
term with its improved scale of operations
and healthy profitability. With Kajaria
Ceramics Ltd (KCL) acquiring a majority
stake in the company in October 2012, CCPL
began its operations and registered a healthy
turnover of Rs.402.2 million during the six
months ended March 31, 2013; 2012-13
(refers to financial year, April 1 to March 31)
was the first year of the company's
operations.
CRISIL
RUBY BB+ A4+
CRISILs ratings on the bank facilities of
Ruby Ceramics Pvt Ltd (RCPL; part of the
CRISIL

58 | P a g e

CERAMICS
PRIVATE
LIMITED
Ruby group) continue to reflect the extensive
experience of the Ruby groups promoters in
the Zircon processing industry, and its
established market position, strong customer
and supplier relationship, and exposure to
low product substitution risk.
The ratings also factor in the groups
moderate gearing and adequate debt
protection metrics.
the Ruby groups small scale of operations
and constrained profitability.
SORISCO
CERAMIC
PRIVATE
LIMITED
BB+ A4+
The ratings reflect the benefits that SCPL
derives from its promoters extensive
industry experience and its association with
Kajaria Ceramics Ltd (KCL); the ratings also
factor in the companys improving financial
risk profile marked by moderate debt
protection metrics albeit a high gearing and
modest net worth. These rating strengths are
partially offset by SCPLs modest scale of
operations in the intensely competitive
ceramic tile industry, and large working
capital requirements.
CRISIL
PAVIT
CERAMICS
PRIVATE
LIMITED
BB A4+
CRISILs ratings on the bank facilities of
Pavit Ceramics Pvt Ltd (PCPL) continue to
reflect the extensive industry experience of
PCPLs promoters, and the companys above-
average financial risk profile, marked by
healthy debt protection metrics and driven
by efficient working capital management.
PCPLs modest scale of operations and
susceptibility of its operating margin to
volatility in raw material prices.
CRISIL
ASSOCIATE
CERAMICS
PRIVATE
LIMITED
BB A4+
The rating downgrade reflects deterioration
in ACLs operating performance, as reflected
in the decline in its revenue to Rs.160.6
million in 2012-13 (refers to financial year,
April 1 to March 31) from Rs.264.9 million in
2011-12. The revenue declined on account of
delays in execution of projects by ACLs
customers leading to lower off take in ACLs
principal end-user industry, steel.
CRISIL
BIKANER
CERAMICS
PRIVATE
LIMITED:
BB A4+
The ratings continue to reflect the benefits
that BCPL derives from its promoters
extensive industry experience, and moderate
financial risk profile marked by a low gearing
and moderate interest coverage.
BCPLs small scale of operations in the
intensely competitive ceramics insulators
business.
CRISIL
ORIENTAL
CERAMICS
AND
REFRACTORY
BB A4+
The rating is based on growth in revenues of
the company. The rating is constrained
because of stretched working capital cycle
because of government customers.
BRICKWORKS
WELSUIT
GLASS AND
BB- A4
WGCPLs weak financial profile, as reflected
by leveraged capital structure, high working
ICRA

59 | P a g e

CERAMICS
LIMITED
capital intensity of operations on account of
stretched receivables and decline in
operating margins in FY13 owing to
increased power & fuel cost and other
manufacturing overheads.
LIVON
CERAMICS
BB- A4
The ratings are constrained by Livon
Ceramics weak financial profile
characterized by moderately high gearing
and small size of operations in relation to
other large organized ceramic tile
manufacturers; limited track record of
commercial operations; highly competitive
nature of the ceramic tile industry and
relatively lower visibility of its brand
compared to other large organized players
ICRA
SHREENATH
CERAMICS
LIMITED
BB- A4
The assigned ratings are constrained by
SCIs modest scale and high working capital
intensity of operations on account of
stretched receivables and high inventory
holding period resulting in tight liquidity
position for the firm. The ratings are further
constrained on account of the the expected
deterioration of capital structure an account
of ongoing debt funded capex; demand
scenario being dependent on real estate
business cycles.
ICRA
ARTISTIQUE
CERAMICS
PRIVATE
LIMITED
BB- A4+
The ratings reflect the financial, technical,
managerial, and marketing support that
ACPL receives from Asian Granito India Ltd
(AGIL); the ratings also factor in ACPLs
low gearing and moderate debt protection
metrics. These rating
strengths are partially offset by ACPLs small
scale of operations in the intensely
competitive ceramic industry and large
working capital requirements.
CRISIL

60 | P a g e

Ceramic product buying behavior questionnaire

1. Name:
2. Occupation:
3. Have you used ceramic products?
Yes no
4. Reason for choosing a tiles/ ceramic product over conventional cementing ?
Aesthetics social status
Cleaning ease any other, please specify
5. For what purpose did you use ceramic products?
Home decor tableware
Sanitary ware construction
Others, please specify
6. How did you come to know about ceramic product?
Television radio
Website &online newspaper and other print media
Magazines hoardings
7. Most important factor/ criteria considered while buying product.
Price quality
Design convenience
Prestige size, weight
8. Would you opt for alternative products such as marbles, wooden flooring etc?
Yes no

61 | P a g e

9. If yes, what are reasons behind choosing substitute products over ceramic products?
Price quality
Cleaning ease maintenance costs
Design any other, please specify
10. If no, what are advantages of using ceramic product over other products?
Price quality
Cleaning ease maintenance costs
Design any other, please specify
11. Are you satisfied with your current product?
Yes no
12. Would you choose the same product/ recommend the product to your family/friend/ colleagues .
Yes no
13. Expectations from the Ceramic Market / Companies apart from the price of product.

1.
2.
3.
4.

Thank you

62 | P a g e

Ceramic consumers buying behavior:
The questionnaire had been prepared to collect information regarding the
behavior and factors considered by consumers while buying ceramic products.
The following results are obtained from the survey.

1. The reason behind choosing ceramic products over conventional products:

Ceramic products are having cleaning ease which is most important reason for
choosing ceramic products. Also some people choose ceramics because of
maintaining social status.

2. Purpose for choosing ceramic products:

The major purpose behind choosing ceramic products is its use home
dcor sanitary ware.
76
8
14
1.2
ceramic over conventional
flooring
cleaning ease
aesthetics
social status
not used
80
18
2
use of ceramics
home dcor and
sanitaryware
table ware
not used

63 | P a g e

3. How you came to know about ceramic products.

Television is the most effective source in spreading communication regarding
ceramic products. 50 % of the consumers came to know about ceramic products
from television.

4. Most important factor while buying ceramics?

Quality is the most important factor considered by consumer while buying
ceramic products. After quality, price is the most important factor which
consumer considers while buying ceramic products.

50
12
8
28
communication
television
hoardings
newspaper
online and radio
44
24
20
1.2
factor
quality
price
design
size , weight

64 | P a g e

5. Would you opt for alternate products like marbles, granite etc?

60% of the consumers say that they wont opt for alternative products,
While the rest 40 % of the consumer said that they would try alternate products
like marbles, granite etc.

6. Reason for choosing alternate products?

The consumers choose different alternate products because of different
benefits being sought by them:

1. Marble: marbles remain cool in summer
2. Wood : price economy
7. Reason for choosing ceramics over substitute products?

1. Better design
2. Cleaning ease
3. Quality
8. Expectations from the ceramic industry?
The consumers said that they will expect greater variety and designs and
colours and more alternatives.
Based on this, I have prepared questionnaire to be asked from ceramic
companies.
40
60
alternate product
yes
no

65 | P a g e

An encouraging report for ceramic industries given by Indian ceramics on 9
th
April
2014
Boost to Gujarat Ceramic Industry
Coal-gas plants approved by authorities: 40% saving in fuel cost
Madhu Barbhaya
Camp: Morbi
Ceramic industry of Gujarat, in particular Morbi received a boost as coal-gas plants are approved by
central authorities. This news has come when ceramic and related industries in Morbi, Wankaner and
Thangadh and elsewhere in India are suffering from recession, competition, dearness and inflation.
So many manufacturing units are struggling to survive in stiff competition from their Chinese
counterparts and slow down in US and Europe.

Meanwhile a report by central agencies of survey on effect of pollution due to coal-gas plants has
come in favor of ceramic industry. As the report clearly mentions no pollution due to coal-gas plants
fitted with new technology, there are indications that ceramic industry will be given green signal for
coal-gas plants by Gujarat Pollution Control Board.

Natural gas and coal-gas are used as fuel in ceramic industry in Morbi, Wankaner and Thangadh. In
past as coal-gas plants used to contributes increase in pollution, chief minister of Gujarat Mr.
Narendra Modi, then offered natural gas to ceramic industry few years back. Cheap gas was
promised at that time but at later stage when this scheme became functional gas prices were
increased and this practice was adopted till today. As price of gas has reached at unaffordable level
on one hand and industry if suffering from recession and slow demand on the other hand, industry
has no option but to lookout for ways to reduce production cost.

Meanwhile leading industrialist of Morbi formed an organization namely "Morbi Green Environment
Services Cooperative Society" with purpose to address and manage problems faced by Morbi ceramic
industry in respect of fuel. They undertook a specific mission to get use of coal-gas approved by the
government on base of non-pollution. As a consequence, central agencies undertook investigation
about functioning of coal-gas plants and ultimately found it non-pollutive. Thus reports of central
agencies are positive.

This survey was conducted by "Sardar Patel Energy Research Institute, New Delhi' and "The Energy
and Resources Institute, New Delhi' Report reveals that coal-gas plants with indirect cooling system
does not contribute to pollution. In all three central agencies gave green signal to coal-plant for
ceramic industry.

A delegation of industrialist from Morbi personally met Mr. Kanubhai Mistry, Chairman, Gujarat
Pollution Control Board with these reports and requested to regularize coal-gas plants to ceramic
industry.

This delegation was promised that coal-gas plants with modification envisaged by National
Productivity Council will be approved.

At present there are 270 coal-gas plants in Morbi and application for further 100 such plant are
pending. If Gujarat Pollution Control Board starts giving permission to coal-gas plants, use of natural
gas will be stopped in Morbi units. The 40% saving of fuel cost in coal-gas plant compared to natural
gas plants will boost the industry.

66 | P a g e

THANK YOU

Growing Indian Ceramic Industry Analysis

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