Driven By The Bottomline

But which direction is the sector moving towards?

Most of the common factors on a standard checklist for competitiveness are applicable to the ceramic tile industry as of now. For example, high margins, indigenous raw material, competitiveness in price and quality compared to other generic products. There is even a high entry barrier because it is capital intensive and the break even capacity is also high. Couple that with the fact that demand from user industries is growing, and that dominant players have the latest technology and can be compared to plants in other parts of the globe. To top it, it is also a branded product industry.

This industry has been in existence since 1958 when H R Johnson set up its wall tile manufacturing unit in Thane in Bombay. For almost thirty years the industry was dominated by Johnson and Somany Pilkington (currently SPL) but both these companies were only manufacturing wall tiles. In 1985 Spartek Ceramics, whose name is the generic product name for most consumers, launched floor tiles for the first time. Earlier ceramic tiles were used only in bathrooms and kitchens. Tiles are now available in a wide range of colours , sizes and textures and are increasingly finding usage in many areas in offices and houses. Showrooms, lobbies and other high traffic areas use tiles because they are easily maintained and are also wear resistant.

The products manufactured in the ceramic tiles industry can be classified into wall and floor. The wall tiles market is dominated by Johnson and SPL. Wall tiles have size tolerances in the range of +0.25 to -0.25 while floor tiles have tolerances of +0.75 to -0.75. SPL claims that its double fast firing technology to manufacture wall tiles makes them more accurate than those produced using single firing technology.

Further classification happens on the basis of finish - glazed, matt and semi-matt. The glazed tile segment accounts for 40 per cent of the total tiles market. The floor tiles segment has been growing at a faster speed. A special category of floor tiles is the vitrified tiles which are acid and abrasion resistant with zero moisture content. Murdeshwar Ceramics has the facility to manufacture these tiles. They are however expensive.

Tiles, till two years ago were expensive because they were classified as luxury goods and attracted an excise duty of 55 percent. The duty was brought down to 40 per cent in 1994 and further down to 30 per cent in 1995. In the housing segment, mosaic flooring has been a serious competitor to ceramic tiles. The reduction of excise duties has made tiles competitive.

Explaining the costs R K Budhiraja, Senior General Manager Finance, Kajaria Ceramics says