RAK Ceramics is a $ 1 billion global conglomerate that supplies to over 160 countries and has been officially recognised as the world’s largest ceramics manufacturer with a global annual production output of 117 million square meters of ceramic and porcelain tiles, 4.5 million pieces of bathware and 20 million pieces of tableware.
Santosh Nema, CEO, RAK Ceramics India told Sandeep Menezes that the biggest concern of the industry is the import of Chinese tiles which has eroded profit margins of all brands in the market.
Excerpts from the interview:
What are the current tile market trends in India?
The current trend in market is towards digital printing on tiles, increasing options for wall tiles and comparatively thinner tiles. With a liberating Indian economy with greater numbers of middle class, the consumers are demanding more options than a decade before. Tile manufacturers understand it quite clearly and one can see the different technological advancements churning new tile designs everyday.
What are the opportunities and challenges especially given the unorganized nature of the industry?
The Indian market is ripe for innovation with the growing middle class becoming more demanding in the choices of home decoration, furnishing and reconstruction. The conventional size of 600x600mm is slowly giving way to larger size of 800 X 800 mm & 1000 X 1000 mm. Digital printed tiles are going to be the future in this industry with random patterns and high resolution edge-to-edge printing resulting in greater clarity of tiles. Thus, with these innovations in place and consumers getting to know the importance of it, there will be a shift in the percentage of unorganized players to organized players with organized players having a greater share in the market.
What are the main challenges facing the industry?
The biggest concern of the industry is the import of Chinese tiles in India which has eroded profit margins of all brands in the market. Import of raw material and finished goods is also an issue in our country. The duty on import of raw material is higher than finished products. We have been struggling with government bodies so that the import duties are minimized and all products become competitive.
An ASSOCHAM report also suggested that Indian players must come up with innovative product lines which would help strengthen India’s export performance. Do you agree?
As I said the profit margins across the industry are taking a hit with increasing Chinese imported tiles in the market. As it is, tiles are a low profit margin industry, so innovation is the key for survival at the moment. Indian players will be pushed to focus towards innovation which may result in benefiting all in the long run as it always does in free market and the consumer too gets more options for his purchase. But I personally feel that the quality and durability of Indian Vitrified tiles are far more superior to those made in China.
What are the major factors contributing to the growth of the market?
India is experiencing a construction boom which has resulted in a surge in demand for tiles for the ever growing middle class. Consumers have started looking beyond the conventional stone and marble floors and slowly accepting maintenance free vitrified tiles. Virtually every design is now available in high gloss polish, lapato, satin and rustic finishes giving an enviable choice to consumers. Though the market is still largely unorganized (contributing nearly 55 per cent), with the entry of big brands including some international brands, it is slowly changing by the day.
Even the non residential sector is switching to use tiles as it gives a rich and luxurious look to the ambience. Right from restaurants to resorts & hotels to hospitals, all the sectors are doing quite a bit to add to the look and feel of their ambience and thus having high quality and durable wall and floor tiles and add to its luxurious abode.
Outline your business in India, especially products?
RAK Ceramics started its operations in India in 2004 and setup its own manufacturing plant in Samalkot, Andhra Pradesh in 2005. In India, RAK Ceramics has the largest and most modern vitrified tile manufacturing plant in Andhra Pradesh with manufacturing capacity of 30,000 sq. mts. of vitrified tiles and about 1,500 sanitary ware pieces per day. RAK Ceramics is the only company in India to manufacture 10 distinct variants of vitrified Tiles. The company also has a strong sanitary ware division, manufacturing several product lines from its plant in Andhra Pradesh.
What kind of revenues are you looking at in the next fiscal? Tell us about financial targets for the current fiscal and how did your company perform in the recent years?
We are looking at 40 per cent growth in our revenues in the next fiscal year keeping in line with the growth in the tile industry. With impending launches of Slim tiles, Nanopix digital printed tiles and ceramic wall tiles, we are excited and on course to achieving our targets for next fiscal year.