Ceramic Tiles Market - India August 2014
Executive Summary Market
Drivers & Challenges
Trends
Regulatory Body
Indian ceramic tiles market size is an INR ‘m1’ industry, growing steadily at a CAGR of ‘p1’% Globally, India is the ‘r1’th largest country in terms of ceramic tiles production A formidable feature in this sector is the vast distribution network of players Vitrified tiles market, a sub-set of the ceramic tiles market, has been growing at ‘p2’% over the last few years
Drivers
Challenges
Boom in real estate sector Increase in disposable income Untapped market potential Replacement market
Tough competition from unorganized players Import of cheap tiles from China Depreciation of Rupee and rise in energy costs
Introduction of Nanotechnology Environment-friendly flooring Designer tiles Introduction of 3D tiles
Shift towards vitrified tiles Larger distribution networks Strategic alliances Shift from Chinese sourcing to local production
Indian Council of Ceramic Tiles and Sanitaryware (ICCTAS)
Major Players
Competitive Landscape
Company 1
Company 2
Company 3
Company 4
Company 5
Company 6
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•Macro-Economic Indicators
•Introduction •Market Overview •EXIM Data •Drivers & Challenges •Trends •Regulatory Body •Major Concern •Competitive Landscape •Strategic Recommendations •Appendix CERAMIC TILES MARKET IN INDIA 2014.PPT
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Economic Indicators (1/3) GDP at Factor Cost: Quarterly INR tn 15
13
d1 c1 b1
12
a1
14
c4 b4 a4
c3 b3 a3
d2 c2 b2 a2
11
Q1
Q2 2010-11
2011-12
Q3 2013-14
2012-13
Q4
Inflation Rate: Monthly % 2 1
p
r
s
q
0 -1
t
-2
Jul 2013 - Aug 2013
Aug 2013 - Sep 2013
Sep 2013 - Oct 2013
Oct 2013 - Nov 2013
CERAMIC TILES MARKET IN INDIA 2014.PPT
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Definition and Market Scope Definition
• Ceramic tiles are mainly used for covering roofs, walls and floors, and are usually made from hardwearing materials like ceramic, stone, metal or glass • Clay, which happens to be one of the most important materials required for production, is generally imported from ‘a1’
Ceramic Tiles
Wall tiles
‘p1’%
Floor tiles
‘p2’%
Vitrified tiles
‘p3’%
Industrial tiles
‘p4’%
Scope of the report CERAMIC TILES MARKET IN INDIA 2014.PPT
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Easy availability and maintenance of ceramic tiles is pushing the global market by a large extent Top Three Producers (2013)
Global Market – Overview • Global ceramic tiles market is witnessing an increase in demand due to changing lifestyle and increased disposable income • Manufacturing has now shifted to ‘a1’, ‘a2’ and ‘a4’ from ‘a5’ and ‘a6’ to reduce costs • The top 3 producers are ‘c1’, ‘c2’ and ‘c3’ • ‘c4’ has replaced Italy as the world’s largest exporter • As of 2014, ‘b1’ of ‘c5’ is the largest producer of ceramic tiles in the world
250
u1
200 150
INR bn p1%
6,000 v1
v2
v3
b3
0
b1
v6
v5
15
p2%
w1
w2
w3
w4
2013
2014e
2015e
2016e
w5
w6
2017e
2018e
10
2,000
5
0
0 2013
b2
50
20 v4
u3
100
bn sq.m.
8,000
u2
Market Size and Growth (Volume)
Market Size and Growth (Value)
4,000
mn sq.m.
2014e
2015e
2016e
2017e
2018e
Note: Figures are for the respective calendar years
Note: Figures are for the respective calendar years
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Domestic market is set to witness increased growth in coming years with increasing aesthetic sense of consumers Market Structure (2013)
Indian Market – Overview • Indian ceramic tiles market is valued at INR ‘m1’ and is part of the INR ‘m2’ tiles industry
Organized
• It ranks ‘r1’ globally and accounted for ‘p1’% of the total global production in 2013
Unorganized p4%
• ‘p2’% of the total output originates from ‘r1’, with the city of ‘r2’ being the principal supplier
p5%
• Presently around ‘n1’ players in the organized segment account for ‘p3’% of the market share in India
Market Size and Growth (Volume)
Market Size and Growth (Value) INR bn
bn sq.m. p6%
400 300 200
a2
a1
a3
a6 a4
a5
2.0 1.5 1.0
100
0.5
0
0.0 2013
2014e
2015e
2016e
p7%
2017e
2018e
Note: Figures are for the respective calendar years
b1
2013
b2
b3
2014e
2015e
b4
2016e
b5
2017e
b6
2018e
Note: Figures are for the respective calendar years
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India has transformed… Exports – Overview
Exports: Country-Wise Segmentation (2013)
• Till 2011, India was a net importer of ceramic tiles • In 2012, India clocked a production volume of ‘q1’ sq.m. of ceramic tiles against a domestic consumption of ‘q2’ sq.m., securing a place among countries with surplus production
Country3 Country4 r6%
Country5 Country6
r9% r8%
r7%
Exports: Country-Wise Segmentation (2012)
• By ‘y1’, India is expected to have a surplus of around ‘r4’% of its production • Since turning to a surplus country in 2012, ceramic tiles exports from India have been rising steadily in both value and volume terms
Country2
r10%
• The production surplus has been rising steadily, as domestic consumption has been growing at ‘r1’% against the growth in production of ‘r2’% • In 2014, India is expected to produce ‘q3’ sq.m., and consume ‘q4’ sq.m. of ceramic tiles, thereby having a surplus of ‘r3’%
Country 1
r5%
Country1 r11% r16%
• Currently, the biggest markets for Indian tiles are ‘c1’ and ‘c2’
CERAMIC TILES MARKET IN INDIA 2014.PPT
Country2 Country3 Country4 Country5
r15% r14% r13%
r12%
Country6
8
India has transformed… Imports – Overview
Imports: Country-Wise Segmentation (2013)
• Innovation in production technology has helped India emerge as the ‘p1’th largest producer of ceramic tiles • Since turning to a net surplus country in 2012, import of ceramic tiles to India has been steadily witnessing negative growth
Country 2 Country 3 Country 4 Country 5
• Local tiles industry is severely threatened by rise in input costs coupled with cheaper imports from China
• To protect the local industry and ease the threat, Government of India has intervened and now regulates the import of tiles into India
Country 1
r5% r2%r3% r6% r4%
r1%
Country 6
Imports: Country-Wise Segmentation (2012)
• As a result of government intervention, the import of tiles into India has significantly reduced in the past 2 years, although ‘c1’ is still the principal import partner
Country 1
r10% r8% r9% r11% 2%
Country 2 Country 3 Country 4 Country 5 Country 6 r7%
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Drivers & Challenges – Summary
Challenges Drivers
Tough competition from unorganized players
Boom in real estate sector
Import of cheap tiles from China
Increase in disposable income
Depreciation of Rupee and rise in energy costs
Untapped market potential Replacement market
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Trends – Summary Introduction of Nanotechnology Environment-friendly flooring Designer tiles Introduction of 3D tiles ` Key Trends
Shift towards vitrified tiles Larger distribution networks Strategic alliances
Shift from Chinese sourcing to local production CERAMIC TILES MARKET IN INDIA 2014.PPT
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Indian Council of Ceramic Tiles and Sanitaryware (ICCTAS) (1/2) Brief Overview Address
: 4th Floor, PHD House, 4/2 Siri Institutional Area, August Kranti Marg, New Delhi – 110016 Contact No : +91-11-26964238 Key People : Mr. A. K. Kajaria (Chairman) Mr. P.N. Trivedi (Vice Chairman)
Objectives
Activities
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Major concern (1/3) Demand for ban on Feldspar and Quartz from India (1/3)
• ‘c1’ has made demands to ban the export of two essential minerals Feldspar and Quartz • These two minerals are the principal raw materials for manufacturing of ceramic tiles • Moreover these are very rare minerals found in the sediments of the earth • As per ‘c1’, total production of feldspar in India (including from unreported mines) reached ‘q1’ tons in ‘y1’, more than twice the official production figure for the year • Moreover, based on official figures, ‘r1’%-’r2’% of the feldspar produced between ‘y2’ and ‘y3’ were exported out of India
• Depletion of these minerals cause import dependency of domestic ceramic industry which led to increase in price of ceramic tiles • However this price rise has a negative impact on the survival of the domestic manufacturers and many of them were forced to shut-down
Raw material cost is ‘r3’% of the total production cost CERAMIC TILES MARKET IN INDIA 2014.PPT
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Market Competition – Porter’s Five Forces Analysis Threat of New Entrants •x
Impact i4 Bargaining Power of Suppliers •x
Impact i1
Impact i5 Competitive Rivalry
Bargaining Power of Buyers •x
•x
Threat of Substitutes
Impact i2
Impact i3
•x
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Competitive Benchmarking (1/5) Public Trading Comparables Company 1
Company 2
Company 3
Company 4
Company 5
Market Capitalization (INR bn)
Share Price (INR)
EV/EBITDA (x)
EV/Revenue (x)
PE Ratio
Note: Top 5 Public companies based on the Market Capitalization; Market Capitalization, Share Price and PE ratio is as of 17/06/2014 CERAMIC TILES MARKET IN INDIA 2014.PPT
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Competitive Benchmarking (2/5) Key Ratios of Top 3 Companies – Operational Basis (FY 2013) (1/3) Operating Margin
%
15
Net Margin
12.67
10
6.73 4.68
5
4.67 2.29
0.35 0 Company 1
Company 2
Company 3
• Company 1 recorded operating margin of r1%, higher than both Company 2 and Company 3 which recorded operating margins of r2% and r3% respectively • Company 1 recorded net margin of r4%, higher than both Company 2 and Company 3 which recorded net margins of r5% and r6% respectively
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Public: Company 1 (1/5) Company Information
Offices and Centres – India
Corporate Address Tel No. Fax No. Website Year of Incorporation
H1
Ticker Symbol Stock Exchange
Head Office
Products and Services Category
Products/Services
Key People Tiles
Name
Designation Chairman and MD
Marble and Quartz
MD and Director CFO Director
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Public: Company 1 (2/5) Financial Snapshot
Key Ratios
Total Income
INR mn
Net Profit/Loss
INR mn
8,000 6,000
300 p
q
4,000 2,000
b
a
r
200
s b
e 100
0
0
2010
2011
2012
2013
Financial Summary
• The company reported total income of INR ‘m3’ in FY 2013, registering an increase of ‘r1’% over FY 2012 • The company earned an operating margin of ‘r2’% in FY 2013, a decrease of ‘r3’ percentage points over FY 2012 • The company reported debt to equity ratio of ‘p1’ in FY 2013, a decrease of ‘r4’% over FY 2012
Key Financial Performance Indicators Market Capitalization (INR) Total Enterprise Value (INR) EPS (INR) PE Ratio (Absolute)
y-o-y change (2013-12)
2013
2012
2011
2010
Profitability Ratios Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
Cost Ratios
• The company incurred a net profit of INR ‘m1’ in FY 2013, as compared to net profit of INR ‘m2’ in FY 2012
Indicators
Particulars
Value (17/06/2014)
Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
Liquidity Ratios Current Ratio Cash Ratio
Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover Improved
CERAMIC TILES MARKET IN INDIA 2014.PPT
Decline
18
Public: Company 1 (3/5) Key Business Segments
Key Geographic Segments
Segment 1
100% 50%
100%
Country 1 It has been the only revenue generating segment for the last 4 years
0%
100% 50%
100%
Country 1 is the only geographic segment in which the company has been operating significantly for the last 4 years
0% 2013
2013
Business Highlights Description
News
Overview
• The company was incorporated as ‘n1’ and later converted into public limited company as ‘n2’ • The company was renamed as ‘n3’ in ‘t1’ • Thereafter, it has changed its line of business from ‘b1’ to ‘b2’ and accordingly renamed as ‘n4’ • Company is a pioneer in the production of ‘b3’
Joint venture
• Italian ceramic tiles company ‘n5’ formed a ‘r1’:’r2’ joint venture with the company Note: Business segments and geographic segments are based on revenues CERAMIC TILES MARKET IN INDIA 2014.PPT
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Public: Company 1 (4/5) Certifications and Awards Year
Certifications
2013 2013 2012 2011 2009 Year
Awards
2012 2012 2010 2010 2007 2006 2005
2005
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Public: Company 1 – SWOT Analysis (5/5)
S
W
O
T
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Private: Company 2 (1/5) Company Information
Offices and Centres – India
Corporate Address
Tel No. Fax No. Website
H1
Year of Incorporation
Head Office
Products and Services Category Tiles
Products/Services
Key People Name
Designation Managing Director Director Director Managing Director
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Private: Company 2 (2/5) Shareholders of the Company Name
Ownership Structure No. of Shares held Segment 1 Segment 2 Segment 3 Segment 4
r4%
r1%
r2%
r3%
Note: AGM as of 29th Sep 2012 CERAMIC TILES MARKET IN INDIA 2014.PPT
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Private: Domestic Company – Company 2 (3/5) Financial Snapshot
Key Ratios
Total Income INR mn 1,500
INR mn
q
p
30
1,000 500
Particulars
Net Profit/Loss
20
r a
b
c
d s
0
10 0
2010
2011
2012
2013
Financial Summary
2011
2010
2009
Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
Cost Ratios Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales)
Liquidity Ratios
• The company reported total income of INR ‘m3’ in FY 2012, registering an increase of ‘r1’% over FY 2011
Leverage Ratios
• The company reported debt to equity ratio of ‘p1’ in FY 2012, an increase of ‘r4’% over FY 2011
2012
Profitability Ratios
• The company incurred a net profit of INR ‘m1’ in FY 2012, as compared to net profit of INR ‘m2’ in FY 2011
• The company earned an operating margin of ‘r2’% in FY 2012, a decrease of ‘r3’ percentage points over FY 2011
y-o-y change (2012-11)
Current Ratio Cash Ratio Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover Improved
CERAMIC TILES MARKET IN INDIA 2014.PPT
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Private: Company 2 (4/5) Business Highlights Description
News
• The company is one of the most renowned brands in ‘i1’ industry Overview
• It has a manufacturing plant ‘d1’ km from ‘a1’ • The modern imported plant has the capacity to produce around ‘q1’ sq.m. of ‘b1’ per day
Notable Clients
Certification
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Public: Company 2 – SWOT Analysis (5/5)
S
W
O
T
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