ANNUAL REPORT 1999-2000
SUN EARTH CERAMICS LIMITED
Before I answer, let me present the ground realities.
Much of the competition in the international ceramic tiles industry arises
from China, Korea, the Middle East and Europe. There is a vast difference
in their respective quality: the Chinese, Korean and Middle Eastern
products are inferior in quality and design, and are directed at a price-
sensitive consuming market. The European material is value-added and
reaches out to markets that can pay well for it.
Some of these countries enjoy low energy costs; since the manufacture of
ceramic tiles is energy-intensive, this gives them a significant
competitive edge. Besides, the transport cost within India is prohibitive
and, in some cases, it is cheaper to import than transfer material across
the Indian land mass.
This is Sun Earth's response to the competitive emerging scenario:
Sun Earth is graduating to the value-added wall and floors segments of the
Indian ceramic tiles industry where the competition is expected to be less.
In 1999-2000, we produced the perfect form ar,d the third fired tiles to
add value; in the conventional wall and floor tiles, we concentrated on the
large size glossy varieties that enjoyed better margins. The emphasis in
earning the highest average realizations per square metre in the country
Sun Earth is raising its aggregate capacity to 1million sq. metres -
the average size of a European company in 2001. This will not only enable
us to capture an attractive economies of scale, it will also enable us to
address an interesting evolution transpiring in the Indian market. A
greater interest is going into the attractive presentation of the home and
office interiors than ever before. Tiles were known for their utility but
have now become an essential part of interior design. The modern Indian
consumer wants products that are comparable in design, size and colour with
those being used in the west - and is willing to pay well for it. As a
result, a fair part of the demand is not necessarily coming from new
construction activity; it is coming from the choosy and selective
replacement market. Added to this, loan costs are dropping, there is a rise
in home loan demand, disposable incomes are rising and the availability of
land for sale arising from the repealing of the Urban Land Ceiling Act are
expected to emerge as powerful drivers of growth in our industry.
Sun Earth is in the process of emerging as a global entity by acquiring
plants in Spain and Romania. This will accelerate our access to cutting-
edge technology and designs. By carrying out these initiatives, Sun Earth
expects to create competition for material coming into the country !