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PRODUCTION, PACKAGING & DISTRIBUTION

PRODUCTION, PACKAGING & DISTRIBUTION

The Ceramic industry of India comprises of both the large scale and small scale units

which manufacture ceramic tiles, sanitarywares and crockery items with wide variation in type,

size, quality and standard. India ranks ih in the world in terms of production of ceramic tiles and

it produced 200 million sq.meters during 2003-04. State of the art ceramic goods are being

manufactured in the country and the technology adopted by them is of international standard.

At present there are 16 units in the organized sector with an installed capacity of 21 lakh

million tones. It accounts for about 2.5 percent of world ceramic tile production. The industry

has been growing at about 12 percent per annum. In India, per capita consumption of ceramic

tile is 0.15 sq.meter per annum whereas in China it is 2.0 Sq.meters and for European countries

the comparable figure is 5.6 Sq.meters. The housing sector is growing significantly and it is

expected to increase the demand for tiles. The Indian ceramic industry exports its products to

East and West Asian countries. The total exports from India during 2003-04 were about Rs.l80

Crore.

Sanitaryware is manufactured both in the large and small scale sector with variation in

type, range, quality and standard. At present there are 7 units with a capacity of 86,500 tonnes

per annum and there are about 200 plants with a capacity of 50,000 tonnes per annum in small

scale sector. The industry has a tum over of Rs.400-500 crore (Source: Google Search). The

industry has been growing at the rate of about 5 percent per annum during the last 2 years. There

is significant export potential for sanitaryware. These products are presently exported not only to

East and West Asian countries but also to Canada, African and European countries. The exports

were of the order ofRs.60 crore during 2003-04.

Potteryware signifying crockery and tableware are produced both in the large and small

scale sector. There are 16 units in the organized sector with a total installed capacity of 43,000

tonnes per mmum. In the small scale sector there are about 1200 units with a capacity of 3 lakh

tones per annum. Majority of the production of ceramics tableware is of bone-china and

stoneware. This industry in India is highly labour intensive while in USA, UK, Japan and other

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countries there is full automation. Quality of finished products, design and shapes in India are

still below the international standards. The equipments are old and need to be updated to meet

the international standard. The export ofpotteryware from India during 2003-04 was ofthe order

of rs.85 crore.

The glazed wall tile units contribute 57 percent to the total turnover of the unorganized

sector whereas the comparable figures for the turnover of the organized sector is 40 percent. As

against this, the contribution of the glazed floor tile units is 46 percent of the turnover of the

organized sector units and 35 percent of the turnover of the unorganized sector units. The share

of unglazed vitrified tiles and glazed porcelain tile is relatively low in both the sectors but the

contribution is on the higher side in case of organized industry. Nearly 70 percent of the

unorganized sector units are in Gujarat with approximately 200 units accounting for 44 percent

of the production. India ranks fifth in the world exports of ceramic floor tiles accounting for 7.30

percent. The other leading countries are Belgium (23.02 percent), China (8.77), The Netherlands

(8.23), and USA (7.34) in the export of floor tiles. However, as regards the export of pottery

goods and sanitary products China is leading with 30.36 and 16.53 percent of the total world

exports respectively. Italy is the leading exporter of clay and refractory and construction

materials in the world (30.18 percent share).

India exported a variety of ceramic products worth Rs.548.1l crores during 2004-05.

Among the products glazed ceramic tiles including wall tiles and mosaic tiles share about 23

percent of the exports. The other important products of exports are ceramic sinks, wash basins,

refractories, bricks and blocks, electrical insulators and tableware, kitchenware, etc. in order of

decreasing proportion of exports which together account for 60 percent of the total ceramic

exports (Source: Monthly Statistics of India's Foreign Trade - Kolkata 2004-05). For our

ceramic products the trade destinations are UAE, UK, Saudi Arabia, Indonesia, Germany, USA,

and Sri Lanka with goods worth Rs.20 crore and more. These countries together get 46 percent

of our total ceramic exports from India.

Production Pattern in Gujarat:

Gujarat State has four important ceramic production clusters - namely, Morbi­

Wankaner, Thangadh, Ahmedabad and Himmatnagar. These clusters have about 480 small and

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medium units that produce crockerywares, sanitarywares and ceramic tiles. Out of these four

clusters, Morbi and Thangadh clusters have better locational advantages and inertia with respect

to raw material, fuel, labour and early start.

The percentage of units producing ceramic goods worth more than Rs.2 crores each per

annum is 26 (percent) in Morbi and 24 (percent) in Thangadh. The units producing goods worth

Rs.l to 2 crores each per annum account for 45 percent in Morbi and 25 percent in Thangadh.

Majority of the units ofThangadh (51 percent units) produce goods with value of less than Rs.l

crore and comparable figure for Morbi is about 30 percent units (Table 7.1 ).

Table 7.1

Number and Percentage of Units by Type and their Production Value (2003-05)

(Rupees in Crores)

Morbi: I Type of Unit (Average of2003-2005) J

Rs.0.75 to Rs.l.OO to Rs.l.50 to More than --,---- ToW~ 1.00 Crore 1.50 Crores 2.00 Crore Rs.2 crore

-------------+----------+----------~--------+----------+--------

Electric 4 (50.00) 3 (37.50) - 1 (12.50) 8 (100) : Porcelains 6.35 6.25 1.82 3.76 i Cup & Saucers 4 (66.66) - - 2 (33.33) 6 (100) ~

I

6.35 3.64 2.82 ~ 16 (43.24) 9 (24.32) 8 (21.62) 4 (10.81) 37 (100) I

I Sanitarywares 1

25.40 18.75 17.02 7.27 17.37 I 39 (24.07) 36 c22.22) 39 (24.07) 48 (29.63) 162 (ioOfl

61.90 75.00 81.25 87.27 76.~ 63 (29.58) 48 (22.54) 47 (22.07) s5 (25.82) 213 (too) I

( 100) (1 00) (1 00) ( 1 00) (1 00) 1

Tiles

Total

~T~h=a=n~g:ad=h~=---~--------~--------~------~,---------~---------J Electric 6 (42.86) 4 (28.57) - 4 (28.57) 14 (100) I

Porcelains ____ +--___ 8_._7 ----t----1_4_.2-,-9 __ ---t----------+-----12_._12 ____ +--__ 1_0_.1_4 ____ j Cup & Saucers 15 (68.18) 2 (9.10) - 5 (22.73) 22 (100) 1

21.43 7.14 15.15 15.94 1

48(55.17) 21(24.14) 7(8.05) 11(12.64) 87(100) 1

68.57 75.00 100 33.33 63.04 Sauitarywares

Tiles 1 (6.67) I 1 (6.67) - 13 (86.67) 15 (100) I 1.43 3.57 39.89 1 0.8h---l

rT-o-ta-l-------+--70_(_5-0.-7-2)~--2-8-(2_0_.2_9_)-+--7--(5-.0-7)--~-3-3-(2-.3-.9-l_)_r--13_8 __ (100) I 1 (100) (lQO) (lQO) (100) (100)

I Source: Field Survey: 2005-06 _jl ~-----~----~'----------------------------------------------------

o~

o/

-----------

Among the units producing goods worth the value of Rs.2 crore and above, the ceramic tiles

units are important at both the places (Morbi 87 percent units and 40 percent units in Thangadh

of the total units producing Rs.2 crores and above worth goods). However, the sizeable

sanitaryware units of Thangadh also produce goods worth Rs.2 crore each per annum.

Fig. No. 7.1

- --------------,

Number and percentage of Unit by type and their production value in Morvi.

(in crore Rs.)

50

45

40

35

30

25

20

15

10

5

0

<1Crore Crore

IJ Bectric porcelins 4 3 0

• Cup & Saucers 4 0 0

o Sanitaryw ares 16 9 8

o Tiles 39 36 39

(Average Of Year 2003-2005)

2

4

48

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Fig. No.7.2

Number and percentage of Unit by type and their production value in Thangadh

(in crore As.)

50

45

40

35

30

25

20

15

10

(Average Of Year 2003-2005)

Overall 38 percent of the total units of Morbi and Thangadh produce ceramic goods worth the

value of Rs.0.75 crore to less than one crore rupees per unit per annum and another 37 percent

units between Rs. One crore to 2 crores and the remaining 25 percent units produce goods worth

more than Rs.2 crores a year per unit. About 55 percent of the ceramic tiles units of Morbi

produce goods worth Rs.l.50 crore and above per unit per year whereas 68 percent of the

sanitary units of Thangadh produce goods worth less than Rs.1.50 crore per year per unit.

Type and Value of Packaging Material:

The type and material of packaging material is one of the important aspects of ceramic

industry. The significance of it cannot be ignored and undervalued. The safety and the quality of

the factory finished product be maintained till it reaches the consumer's place and also

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thereafter. The various packaging material includes agricultural, forest, agricultural and forest

waste and others. It is observed that the sanitaryware units of Thangadh and ceramic tiles units

of Morbi use forest material as packaging material to the extent of 57-58 percent of the total

value spent on packaging material.

Table 7.2 Per Unit Average Expenditure on Packing material per annum (2003-05)

(Figures in Rupees)

Type of Ceramic Unit Type of Packing Material Agricultural Forest Agricultural Other

Forest Waste Materials Electrical Porcelain 8,590 46,180 8,090 15,770 Cups & Saucers 525 32,570 5,360 13,710 Sanitarywares 7,440 38,710 6,440 15,530 Ceramic Tiles 9,080 55,360 8,680 21,770 Source: Field Survey 2005-06

The maximum expenditure on packaging material of Rs.1,67,960 (58.80 percent) was

made by ceramic tiles units as its production is the highest among the types of units under study.

The produced goods need to be distributed in the regional, national and international markets

with best packing condition. Protection of the goods at the handling, loading, transport,

unloading, transit, unpacking and display stages is very important. Therefore, the manufacturers

take utmost care in choosing the best packing material, best packing methods and also

experienced man power in handling the finished goods. Sanitaryware units spent Rs.84,48,000

i.e. 29.57 percent on packing material, cups and saucers units about Rs.l5,93,000 (5.58 percent)

and electric porcelain units about Rs.l7,30,000 (6.06 percent) as an average expenditure of all

the units per annum. All the ceramic units under study used and spent more money on forest

material for packaging. Next to forest material the other sources that include are all sorts of

waste paper, waste packing material, etc. were used by the units. The other types of packaging

material are agricultural and forest waste and also agricultural material.

The per unit average packing material cost is highest in case of forest material for all the

types of ceramic units. (Electric & Porcelain - Rs.46,180, Cups and Saucers - Rs.32,570,

Sanitarywares- Rs.38,710, and ceramic tiles- Rs.55,360 per unit per year). The average lowest

amounts were spent on procuring agricultural and forest waste materials for packing goods by

the Electric Porcelain, Sanitarywares and Tiles units. Whereas the cups and saucers units spent

lowest average amount per unit per annum on getting agricultural material for packing their

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goods. The second highest average expenditure on procuring packing material for all the units is

other materials- waste paper, waste packing material, etc.

The agricultural material . which is used in almost all the ceramic units as packing

material is of less than Rs.25,000 per year. However, the forest based material for packing is

used more widely and is of greater value. About 60 percent of the total units i.e. 351, use less

than Rs.50,000 value worth material and remaining 40 percents spend more than Rs.50,000 per

year on packing material.

Transport and Handling Charges:

This is also one of the important stage of the ceramic manufacturing units. All produced

goods must find some place in some market at some level. The ceramic tiles units incur highest

average charges for transport and handling of goods i.e. for all the units per year transport and

handling value is approximately about Rs.279.29 lakh. Next in order of expenditure is

sanitaryware units that incurs an average charges of Rs.138.26 lakh i.e. almost less than half the

value of ceramic tiles units. Both the products find place in national and international markets.

59 percent of the total transpmi and handling expenses is incurred by the ceramic tiles units as

the market of tiles industry is at national and international level. The sanitaryware units account

for about 29 percent of the total expenses on this account.

Table 7.3

Approximate Value (in lakh Rs.) of Transport and handling by type of unit (2003-05)

Type of Unit Value (in lakh Rs.) Percentage Electric Porcelains 22.79 4.84 Cup & Saucers 30.50 6.48 Sanitarywares 138.26 29.36 Tiles 279.29 59.32 Total 470.84 100.00 Source: Field Survey 2005-06.

Table 7.4 reveals overall per annum average income, expenditure and profit per unit by

type of ceramic units at Morbi and Thangadh. Among the four types of units Ceramic Tiles units

make a maximum average profit of Rs.15.38 lakh per annum per unit. This is mainly due to the

large number of units high production and greater demand. The remaining three types of ceramic

units make a profit margin between Rs.1 0 to 13 lakh per unit per annum. There is a considerable

wastage by way of breakage at various stages of production process. Hence, relatively a low

profit margin.

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Table 7.4

Per Annum Average income, expenditure and balance (2003-05)

(Rs. In Lakhs) Type of Unit Average Average Average

Income per Expenditure Balance Unit Per Unit

(2003-05) (2003-05) Electric Porcelains 143.00 130.29 12.71 Cup & Saucers 119.11 108.41 10.70 Sanitarywares 121.67 110.98 10.69 Tiles 172.43 157.05 15.38 Source: Field Survey 2005-06.

The ceramic tiles units of Morbi and Thangadh together contribute 59 percent of the total

value of production inclusive of all the four types of units under study. This is mainly due to the

accessibility to abundant raw material, easy transport access to market or demand centres and

use of advanced technology leading to bulk production. Next in the order of production value is

sanitaryware units which account for 29 percent (both the places) of which 68 percent value is

contributed by Thangadh and the remaining 32 percent production value comes from the

sanitaryware units of Morbi. This is also due to the process of urbanization, better level of living

and increased demand. Among the ceramic units of Morbi, the ceramic tiles units have greater

primary index (5.6) compared to the primary index of sanitarywares units of Thangadh (2.8).

Except the units of ceramic tiles, the units of other types in Thangadh contribute more to the

total value compared to the units of Morbi. Therefore, Morbi is considered as big bazaar of

ceramic tiles in the world.

The average maintenance cost of building and plant and machinery is fairly high

(average annual cost of ceramic tiles per unit is Rs.49 .61 lakh and Rs.24 7.19 lakh respectively)

in Morbi whereas for sanitarywares units the maintenance cost per unit is high in Thangadh.

(Rs.20.98 lakh for building unit and Rs.91.87 lakh for plant and machinery.

Distribution of Ceramic Products:

The ceramic products of Morbi and Thangadh find place in not only local and national

market but also in the international market. Out of a total of 351 units of Morbi and Thangadh,

only 33 (9.40 percent) units export their products across the country to the extent of 35 to 60

percent and the remaining share in the national and regional markets. A majority of the ceramic

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units (91 percent) concentrate on regional and national markets. The units which have higher

capture of regional market have lower share in the national market. The units with medium share

of regional markets also have medium share in national market and some of the units have

moderate share in both national and international markets. Out of a total of 33 units which

export goods outside India 22 units are ceramic tiles units. Here again, out of 22, 9 units export

goods worth less than Rs.150 lakh each per annum and only 6 units export goods worth more

than Rs.175 lakh each per annum. However, the remaining 3 types of ceramic units constitute 11

units export their goods. Among them 6 are sanitaryware units of which 4 units export goods

worth Rs.150 to 175 lakh. Cup and saucer units participating in international market are only 3

and since the value of products is relatively low, each units exports to the extent of Rs.150 lakh

per annum. Only the Electric Porcelain units (two units) export more than Rs.175 lakh each per

annum. (Table 7.5,7.6).

Table 7.5

Production Value and Percentage bv Tvpe-wise and Place wise (Average for 2003-05) (Rs.in lakhs)

Type of Unit Production Morbi Thangadh Total

Electric Porcelains 971 (30.83) 2179(69.17) 3150 (100) (2.90) (11.80) (6.07)

Cup & Saucers 846 (25.48) 2474 (74.52) 3320 (1 00) (2.53) (13.39) (6.39)

Sani tarywares 4783 (31.78) I 0268 (68.22) 15051 (100) (14.31) (55.61) (29.01)

Tiles 26818 (88.33) 3542 (11.67) 30360 (1 00) (80.25) (19.18) (58.51)

Total 33418 (64.40) 18463 (35.60) 51881 (10) (100) (100) (100)

Source: Field Survey 2005-06.

Table 7.6

!

Distribution of 2:oods bv Tvpe of unit proportion and Level of market ~

(2003-05) Type of Unit Distribution

Regional National International L M H L M H L M H

Electric Porcelains - 10 10 10 12 - - 2 -Cu_ll_ & Saucers - 9 16 16 12 - - 3 -Sanitarywares - 58 60 60 64 - - 6 -______, Tiles - 126 29 29 148 - - 22 -Total - 203 115 115 236 - - 33 -L- 35% & Less, M- 35-60%, H- More than 60% Source: Field Survey- 2005-06

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Out of I38 units of Thangadh, 130 units are distributing their products at regional and national

level and only 8 units are exporting to foreign countlies. Among them 2 are electlic porcelain, 1

unit of cup and saucers, 4 units of sanitarywares and I unit of ceramic tiles. In Morbi, out of 2I3

units, 188 units are distributing their products in the regional and national markets and the

remaining 25 units export their products to various countries of the world.

Direction of Ceramic Exports:

The sanitaryware goods produced at these two places are exported to the countries of

Middle East, West Asia, East Asia, Africa, Europe and North America. The ceramic tiles export

is.,imited to four directions namely- Middle East, Africa, West Asia and South East Asia.

However, the cup and saucer items are exported to only West Asian and South-East Asian

countries and Electric Porcelains to only East Asian countries such as Japan, Korea and China.

The countries that import sanitary and plumbing goods are Kuwait, Qatar, UAE, Saudi

Arabia, China, Indonesia, South Africa, Italy, Germany, UK, France, USA and Australia. The

ceramic tiles are exported mainly to Qatar, Kuwait, UAE, South Africa, Indonesia, and Sri

Lanka. During 2004-05, India exported the ceramic products to the tune of Rs.548.Il crores, of

which maximum value of goods were exported to UAE (Rs.69.34 crores) (Table 7.7)

Type of Unit

Table 7.7

Type of Ceramic Units bv their export value (2003-05)

Value ofExport (in lakh Rs.) Less than I 50 I50 to I75 More than 175

Electric Porcelains - - 2 Cup & Saucers 3 - -Sanit<l!}'W_ares I 4 1

I--Tiles 9 7 6 Total 13 I1 9

·-

Total 2 3 6

22 33

Figures in Table refer to the number of ceramic units in Morbi and Thangadh Source: Field Survey: 2005-06

Sanitaryware is manufactured both in the large and small sector with variations in type,

range, quality and standard. There is a significant export potential for sanitaryware. These are

presently exported to East and West Asia, Africa, Europe and Canada. The exports were of the

order of Rs.60 crore during 2003-04. Although the quality of finished pottery and tableware

products, design and shapes in India are still old and need to be updated to meet the international

standards, the exports ofthese items during 2003-04 were ofthe order ofRs.85 crores. However,

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the Indian ceramic tiles are competitive in the international market. These are exported to East

and V/est Asian countries. The exports during 2003-04 were about Rs.l80 crores.

Table 7.8

India's Exports of Ceramic Products to Major Market~ (Figures in Rs.Crores)

Country 2003-04 2004-05 UAE 54.67 69.34 UK 59.12 40.06 Saudi Arabia 54.97 36.77 Indonesia 26.16 32.27 Germany 26.29 28.35 USA 21.04 28.18 Sri Lanka 25.15 20.35 Nepal 15.32 13.84 Qatar 11.40 11.32 Italy 13.87 11.12 South Africa 12.18 9.98 Kuwait 11.96 9.37 Australia 18.22 9.29 Total All India 565.75 548.11 Source: "Monthly Statistics oflndia Foreign Trade" Export and Re-exports March 2004 & 2005 issues, Kolkatta.

'--

The preceding discussion highlights the production pattern, packaging material and

distribution pattern at local, national and international level. Out of the total production value of

ceramic units of Thangadh, 56 percent is contributed by the sanitaryware units and the

remaining three types under study contribute about 12 to 19 percent each. As against this, in

Morbi it is the ceramic tiles units that contribute maximum of 80 percent of the total production

value of Morbi units. Among the various packaging materials, agricultural and forest materials

are predominantly used in all the ceramic units. As regards the exports, the sanitarywares of

Thangadh and ceramic tiles of Morbi are exported to South Asian, South-West Asian, South­

East Asian countries and USA and Russia.

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