Project Report on Ceramic Tile Industry

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A SUMMER TRAINING REPORT ONMARKET RESEARCH ON CERAMIC TILESINDUSTRY IN GHAZIABAD AND MEERUTREGION AND FINANCIAL ANALYSIS OF

ORIENT CERAMICS LTD.SUBMITTED TOWARDS THE PARTIAL FULFILLMENT

OF

POST GRADUATE DIPLOMA IN

BUSINESS ADMINISTRATION

(APPROVED BY AICTE, GOVT OF INDIA)(EQUIVALENT TO MBA)

ACCADEMIC SESSION

(2008-2010)

Submitted To- Submitted By-

Mr. T.N.Srivastava Nitesh shah B-08-28

Head, Training & Placement Cell

Graduate School of Business &

Administration, Greater Noida,U.P

External Guide- Internal Guide-

Mr. Vijay Deepak Gupta Prof. H.S.SHYAM

Regional Manager, Orient Ceramics Industries Ltd. Faculty, Marketing Dept., GSBA

GRADUATE SCHOOL OF BUSINESS & ADMINISTRATION,GREATER NOIDA

Content

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Candidate Declaration/Certificate of Supervisor

I hereby declare that the work which is being presented in this report entitled MarketResearch on Ceramic Tiles Industry in Ghaziabad & Meerut Region Andfinancial overview of company is an authentic record of my own work carried outunder the supervision of Mr. Vijay Deepak Gupta, Regional Manager, Orient Ceramic

Industries Ltd.

The matter embodied in this report has not been submitted by me for the award of anyother degree.

Dated: 4-7-09 Name ofStudent

NITESH KUMAR SHAH

This is to certify that the above statements made by the candidate are correct to thebest of my knowledge.

Signature

SupervisorName:MR.VIJAY DEEPAK GUPTA

Designation:REGIONAL MANAGER

Company-Orient Ceramics Industry LTD.

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Acknowledgement

I express my profound gratitude to Mr. Vijay Deepak Gupta, Regional Manager,

Orient Ceramics Industries Pvt. Ltd who assigned me as a Summer Trainee in

Orient Ceramics Industries Pvt. Ltd. I want to give my sincere thanks to

his kind advice and guidance that had made my project successful. Many

of the sound advices have been well taken by me and it is largely due to

his patience that I was able to achieve my goals successfully.

I am also grateful to DR. P.L.Maggu Executive Director, Graduate

School of Business & Administration, Greater Noida, Mr. T.N.Srivastava

Head ,Training and Placement Cell, GSBA, Prof.V.N.Rai, Dean, GSBA,

Mr. Vijay Deepak Gupta, Regional Manager, Orient Ceramic Industries

Ltd., and all the faculties of GSBA who supported a lot and gave me the

permission of Summer Training in Orient Ceramics Industries Ltd..

Also I would like to give regards to my Parents, seniors, friends who have

in some way helped me in completing this project.

Nitesh kumar shah

PGDBA-III, B08-28

Chapter I

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Preface

The word "Ceramic" has originated from the Greek word, "Keramos", which meanspottery. It also relates to an ancient Sanskrit word whose root meaning is to burn, butit is predominantly used to indicate "burnt stuff". Almost 10,000 years later, with theestablishment of settled communities, tiles were manufactured in Mesopotamia andIndia. The first instance of functional pottery vessels being used for storing water andfood is thought to be around 9,000 or 10,000 BC. Clay bricks were also made around thesame time.

The ceramics industry in India came into existence about a century ago and hasmatured over time to form a industrial base. From traditional pottery making, theindustry has evolved to find its place in the market for sophisticated insulators,electronic and electrical items. Over the years, the industry has been modernisingthrough new innovations in product profile, quality and design to emerge as a modern,world-class industry, ready to take on global competition.

Though there are a number of large companies in the ceramics sector, small andmedium enterprises (SMEs) account for more than 50 per cent of the total market in

India, offering a wide range of articles including crockery, art ware, sanitary ware,ceramic tiles, refractory and stoneware pipes among others. Most of the players aregrouped together in clusters.

Over the last two decades, the technical ceramics segment has recorded an impressivegrowth propelled by the demand for high-alumina ceramics, cuttings tools and structuralceramics from the industry. Overall, the Indian ceramics industry has emerged as amajor manufacturer and supplier in the global market.

Scope Of The Study

Ceramic tile comes under Building Material Industry. Over the years, Indian BuildingMaterial Industry poised to grow at a fast pace of almost 16%/annum due to boom in

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real estate and construction industry. Increase in income levels and availability of arange of financing options for housing is enabling rapid growth in housingconstruction.

In India, particularly in NCR region, growth rate of building material industry is at veryhigh and constantly growing. By this project finding, we have been trying to catch theopportunities and demand of various tile making organisations for their commercial andresidential needs in Ghaziabad and Meerut region.

Also as marble prices begin to pinch purses in these times of meltdown, tiles are makingdeeper inroads into urban homes. And they are getting more designer makeovers to suitmarket demands.

Objective Of The Study

Our soul objective of this report confines with these facts-

To know the nitty-gritty of Ceramic tile industry as much possible

Determine the market size and potential of all the organise and unorganisedplayers

A comparative analysis among some major players of tiles industry , especially inGhaziabad and Meerut region in terms of Quality, Brand Equity, Price andCustomer Service.

Further scope and opportunity analysis.

Chapter-II

Global Tiles Industry

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There are three major regions in the world, namely, Asia, Latin America and EuropeanUnion (EU), that produce and export ceramic tiles in bulk. In 2008, they had jointlyproduced more than 87% of the global output. World production of ceramic tiles was7565 million sq.mt. in 2008.China was the largest producer with a total production of2200 million sq.mt. Spain and Italy were the 2nd and 3rd largest producers withproduction of 635 million sq.mt. and 589 million sq.mt. respectively. India ranks at 5th

position with production of 270 million sq.mt., which is around 2.5% of globalproduction.

The ratio between consumption and production has been stable at around 94 percent. Ceramic tile production has been increasing at a cumulative rate of close to 6 percent. Asia is the most signifcant region by production, as well as consumption,accounting for more than 50 per cent of both. China is the leading country in theproduction of ceramic tiles with a share of 33 per cent at a total production of 2,200million square metres, followed by Spain and Italy. Europe accounts for 30 per centand USA accounts for 14 per cent of the total global production of ceramic tiles. Interms of consumption the pattern remains similar, with Asia accounting for 51per cent, Europe for 26 per cent and USA accounting for 18 per cent of the totalglobal ceramic tile consumption.

Global Sanitaryware Industry

The global sanitary ware industry is estimated to be 187 million pieces and

growing at about 7 per cent Y-o-Y. The main sanitaryware producing countries inthe world are China, Italy, Mexico, Brazil and Spain, which together account forabout 35 per cent of global production India, with a size of 6.7 million pieces,accounts for about 3.3 per cent of global production. Penetration of sanitaryware inIndia-about 30 per cent, is much lower than even neighbouring Asian countries,indicating signifcant growth potential for this sector in the Indian market. The Indiansanitaryware market has been growing at about 10 per cent a year, as compared tothe global average growth of about 7 per cent.

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INDIAN CERAMICS INDUSTRY

Ceramic Tiles

Indias ceramic tile industry emerged in the 1950s. Tiles form the most significant part

of the Indian ceramics industry and consist of floor tiles (46 per cent), vitrified and

porcelain tiles (12 per cent) and wall tiles (42 per cent). The floor tiles segment isgrowing faster as compared to wall tiles. Vitrifed and porcelain tiles are recent

entrants into the ceramic tile industry and have increased the size of the market

considerably. It is expected that this segment will capture the bulk of the market

gradually, replacing the conventional floor and wall tiles segment. These tiles are

light and have the added advantage of being offered in designer looks as compared

to mosaic tiles, which are heavier and more expensive to transport. Both organised

and unorganised sectors play a key role in the manufacturing of ceramic tiles in India.

The per capita consumption of ceramic tiles in India is very less as compared to the

other countries in the world. It is as low as 0.15 sq.mtr per annum. This low per capita

consumption shows the likely demand that is going to arise in the future in India as

more and more development takes place. Ceramic Tiles are furnishing material apart

from being utility or hygiene products. Despite an overall slowdown of the economy this

sector continues to grow at a healthy 12 percent per annum. Growth of the unorganized

sector accounted for 44 percent of the total Production and the revenue earnings from

the organized sector accounted to over Rs150 crore. India ranks 7th in terms of

production in the world and the market share of India have risen from 1.7 percent to 2.7

percent in terms of ceramic tile production.

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MARKET SIZE OF THE INDIAN CERAMIC INDUSTRY

The Indian ceramic tile industry is estimated at US$ 0.35 billion. It Comprises of wall

tiles, floor tiles and vitrified tiles. The per capita Consumption of ceramic tiles in India

is just 0.15 square metres per Annum, which is quite low as compared to developedcountries.

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The industry has been experiencing increased demand, which, in recent years, has

matched the installed capacity. While capacity has also increased significantly, from

120 million tonnes in 2004, to 215 million tonnes in 2008, the demand has grown

nearly two and a half times in the same period, from 97 Million tonnes to 207 million

tonnes. Ceramic tiles are produced by organised, as well as unorganised players. The

share of production of organised players is around 55 per cent. The organised sector is

characterised by the existence of a few large players, such as H. & R. Johnson,

Kajaria Ceramics, Bell Ceramics, SPL, Spartek and Murudeshwar Ceramics,OCIL and

Nitco.

ORGANISED PLAYERS

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Some of the major players of Indian ceramics industry are-

o Asian Granito (India) Ltd.

o Euro Ceramics Pvt. Ltd.

o H. & R. Johnson (India) Ltd.

o Kajaria Ceramics Ltd.

o Nitco Tiles Pvt.Ltd.

o Orient Ceramics And Industries Ltd.

o RAK Ceramics India Pvt. Ltd.

o SPL Ltd.

PRESENT MARKET SHARE OF TILE PRODUCER COMPANIES INNORTHERN INDIA

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A Brief Description of Major Players

Orient Ceramics Industries Ltd.

Headquartered at New Delhi, Orient was incorporated as a Public Limited Companyon 18th May 1977 for the manufacture of ceramic tiles with an installed capacity of0.4 Million sq. mtrs. per annum which has now grown to 14 million sq. mtrs. perannum.Mr. Mahendra K. Daga currently heads Orient Ceramics as Chairman & ManagingDirector with the credo of delivering products of sustained excellence and superiorquality.

Orients state of the art manufacturing unit at Sikandrabad (Bulandshar, U.P.) isspread across 40 acres of land and conforms to the IS 13753-56:1993 of BIS, ISO10545-1/17 & ISO 13006 specifications. Orient has also been accredited with the ISO9001:2000 certification for quality control management.

Since inception, OCIL has been scaling new heights and has evinced a steady growthrate. OCILs commitment to excellence and quality has earned it a wide and diversecustomer base, which spreads across Europe, South East Asia, Middle East and theSAARC countries.

It plans to diversify into importing and distributing other building material products.This shall be accomplished through a strong network of over 800 dealers and 2500sub-dealers spread all over the country.

The operative keywords are:

Quality

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Durability Aesthetic Appeal

Thus, it 'creates tiles with a distinct persona'.

OCIL is not just a tiles manufacturer but a company devoted to offer 'extraordinarywall and floor solutions' to create and enliven exclusive designer homes and offices.

KAJARIA TILES:

It is the largest ceramic floor and wall tile manufacturer in the second most populous

country in the world. It is promoted by Mr. Ashok Kajaria and Kajaria Export Limited

(Group Company) in technical collaboration with Todagres, S.A., Spain. It

commenced operation in 1988 in Sikandrabad, (Uttar Pradesh) with an annual

capacity of 1 MSM of floor tiles. It possesses an annual installed capacity of 21 MSM

across two facilities at Sikandrabad, (Uttar Pradesh) and Gailpur (Rajasthan). It has

been equipped with eight stock points, eight Kajaria World showrooms, 19 offices-

cum-display centres and 7,000+ dealers and sub-dealers on a pan-India basis. It isthe most prominent Indian ceramic tile brand with a favourable recall. The largest

exporter of ceramic tiles in India. It has unmatched product offering (wall, floor,

vitrified, Spanish and Italian tiles). It has brand-enhancing customers like Unitech,

DLF, Parsvnath, Magarpatta, Sobha Developers, DSK, Mantri Group,Prestige Group,

Ansals, Hiranandani, Raheja Developers, Omaxe and EMAAR-MGF, among others.

ASIAN TILES:

This company is the result of the dreams of three entrepreneurs, materialized withthe grassroots of passion, experience & dynamism With starting a quest forexcellence a decade ago, today

Asian tiles have blazed a trail in the tile industry. With humble beginning in the fieldof floor tiles, today it has expanded till the horizon, covering almost each of theaspects of the industry. Supported by vast man power along with mind power, Asian

Tiles possesses the strength of over 3000 business associates spread across thenation. Asian is all set to reach the goal of supplying world class product, through anetwork of 18 depots with display centres & ultra modern plant in the ceramic zoneof Sabarkantha, Gujarat, spread over an area of 2, 30,000 Sq. Mtr. and production

capacity of two plants is 32300 Sq. Mtr. Per day of tile. Asian has become India'sleading wall tile manufacturer in large format size, with the biggest size of 300 X 900mm, where we provide wall tiles of white body similar to European tiles, with thepromise of extremely accurate size control, to add brightness and depth to theglaze.

H & R JOHNSONS:

H. & R. Johnson (India) Limited is India's No. 1 tile company offering a wide range ofwall and floor tile products across various segments v.i.z. Wall, Floor, Vitrified,

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Exterior and Industrial. The company also has diversified interests in sanitary ware

and bathroom accessories. With a vast portfolio comprising of 5 well-known brands

in India (Johnson, Marbonite, Porselano, Endura & Milano) the company provides the

most innovative products of international standards that is coupled with the best of

pre and after sales service.

EURO CERAMICS:

Part of Euro Group Integral part of the Decorative industry in India.

Promoters:

Mr. Nenshi Shah: Mr. Talakshi Nandu : Mr. Kumar Shah : Mr Paresh Shah

Current Business Profile:

Vitrified Ceramic Tiles : 79,971 MTPA.

Aluminium Extruded Sections : 1800 MTPA

Calcareous Tiles : 45,000 MTPA

Sanitary ware : 11,000 MTPA

Trading in Wall Tiles through a 100% subsidiary

Technology:

SACMI (For Vitrified Tiles & Sanitary ware)

Quality focus:

Vitrified Tiles : ISO 13006. Applied Consumer Services Inc.Florida, U.S.A. VJTI, Mumbai

Manufacturing facilities : ISO 9001:2000 certified

NITCO TILES:

A foundation laid on innovation. Since 1953.Going beyond the ordinary and leadingby example is a common tradition practised at Nitco. No wonder, the company isrenowned and revered for its revolutionary concepts, pioneering endeavours andpremium products in the construction industry for over five decades.Today, with itsrich repertoire in offering unique Floor Tiles, Mosaico, Wall Tiles and Marble, Nitcohas gone to become the most preferred name and the ideal choice of millions ofhouse-holds and the real estate fraternity. An avant-garde at the core, the companyhas continued to pioneer ground breaking innovations in all its offerings. Ceramic

Tiles, Vitrified Tiles, Pavers, Imported Marble, Engineered Marble, Intarsia-splendoursof inlay marble and Mosaico- artistic creations in mosaic rendered in stone, ceramic

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and marble, for instance. Winning 13 Capexil awards for innovation and design is theperfect testament to all of its achievements.

SOMANY TILES:

In the Indian tiles sector, Somany has achieved a clear leadership position by

wholeheartedly adopting forward thinking and an innovative and futuristic approach.Whether ceramic glazed tiles, vitrified tiles, sanitary ware or porcelain floor tiles,Somany prides itself in being at the very forefront of style and quality. From rawmaterial imported from Italy and Spain, to the constant endeavor to be the first tointroduce new products in India, Somany has been, and will always strive to be adynamic leader in its field.

It began as a vision of things to come, and is today a trail-blazer that others follow.In 1969 Shri H L Somany incorporated a company called Somany Pilkington's, whichlater became Somany Ceramics Ltd. It was the power of a dream and the zeal toexcel, that drove Shri H L Somany to forge a path of unparalleled success for this

company.

The dynamic leadership team in Somany not only spans three generations of ableleaders, it also brings together their staggering breadth of experience and wisdom.With Shri H L Somany at the helm as Founder, Shri Shreekant Somany as the CMDand Shri Abhishek Somany as the JMD, the company is heading towards an excitingphase of expansion and growth. This core leadership team along with a large teamof highly dedicated and talented people is continuously working towards creatingmore value for all stakeholders. Their commitment to excel in every sphere and tofuel growth in the core as well as new sectors has truly created a powerful vitalitywithin the company, both in mind and spirit.

In 1971 the very first unit of Somany started production in Kassar, Haryana. Sincethen Somany has reached and surpassed many milestones setting-up of secondunit in 1981, buyout of all equity shares by Somany's Indian promoters in 1994;achieving Government recognition for its R&D Department in 1996 (a first in the tilesindustry); getting ISO 9002 certification in 1998; achieving ISO 14001 forenvironment friendly facilities, in 1999; ventured in retailing in 2007, joint venturewith Keraben under brand name Synergy, got patent for VC technology-a first everin Indian Ceramics industry and incorporation of HL Somany group.

Somany Global flagship retail showrooms are currently located in Delhi, Gurgaon,Ludhiana and Mumbai, Pune and Indore. Many other retail showrooms are about tobe opened in leading centres. These showrooms cater to high-end customers andoffer imported tiles as well as exclusive Aquaware brand sanitary ware. A largenetwork of Somany display centers are also spread across the country.

A wide cutting-edge array of designs and material make up the inspiring Somanyrange of tiles. Somany strives to bring its customers floor, wall, vitrified, ceramic,porcelain and innovative tiles that are the very latest in the world. Somany pridesitself in the sheer variety of design and finish, and constantly looks to bring new andtrend-setting ideas into the tile industry. The futuristic patented VC Shield range of

tiles from Somany, are the world's most durable floor tiles. Created using thebreakthrough, 'Veilcraft technology', that creates a special layer on the tiles that

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keep them free from abrasion, scratches and stains, these tiles retain the originalglaze and finish for years. No wonder then, that these tiles comprehensivelyoutperform ordinary ceramic tiles including PEI grade 5 tiles.

Venturing into the burgeoning sanitary ware sector, Somany has already mademajor in-roads into this market. With its range of high quality products and offeringsunder the brand name of Aquaware, Somany is focusing on creating a niche foritself in this sector, by bringing in and adopting the latest in design, concept andtechnology.

In the endeavor to bring the very best to customers, we source our raw materialfrom as far as Italy, Spain, and China besides Rajasthan, Uttar Pradesh, MadhyaPradesh and other major centers in the country.

Somany has a production capacity of 15.7 million sq mt per annum from its Haryanaand Gujarat units. It has always focused on acquiring and leveraging the latesttechnologies and know-how. A commitment to bring to life new ideas and design

innovations is driven by the huge amounts of funds invested in research anddevelopment. This has borne fruit in the form of Somany's achievement ofestablishing the very first Government Recognized In-house Research &Development Centre.

Somany has also brought in some ground-breaking technologies into the Indianmarket. Their highly advanced Rotocolour Machine has the capacity to decorateceramic tiles with glazes, using a serigraphic decorating system that employs siliconcylinders. This integrated system that optimizes decoration of tiles enables any kindof random design and also a marble effect. A truly trend-setting achievement, it hashelped Somany to set new industry benchmarks in quality and production standards

for ceramic tiles.

Another exceptional technological advantage has been achieved with Somany's newLaser Guided Vehicle system. This cutting-edge material transportation system hasautomated the movement of ceramic materials in the production system. The LaserGuided Vehicle facilitates optimal and accurate handling, thereby minimizingrejection of in-process materials during the production of tiles. All of this is a resultof Somany's commitment to bring the best and the latest to its valued stakeholdersand customers in India.

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INDUSTRY STATISTICS:

1. World production: 6900 Million sq.mt.

2. India's Share: 340 Million sq.mt..

3. World ranking (in production): 5

4. Per capita consumption: 0.30 sq.mt.

5. Global Industry Growth Rate: 6%

6. Growth Rate (India Domestic

Market):

15%

7. Organized industry turnover (India): Rs 3000 crores

Glazed Wall Tile share: 40%

Glazed Floor Tile share: 46%

Unglazed Vitrified Tile

share:8%

Glazed Porcelain Tile Share: 6%

Unorganised Industry Turnover Rs 3500 crores

Glazed Wall Tile share: 57%

Glazed Floor Tile share: 35%

Unglazed Vitrified Tile

share:6%

Glazed Porcelain Tile Share: 2%

8. Investments in last 5 years: Rs 2000 crores

9. Organized sector:

Share of Production: 56%

No. of units: 16

Revenue (excise duty): Rs 300 crores

10. Unorganized sector:

Share of Production: 44%

No. of units: 200 (approx..) (70% based in

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Gujarat region)

Revenue (excise duty):Rs 350 crores per annum or

less

11. Job Potential: 50,000 direct

500,000 indirect

Export & Import Scenario

Apart from domestic demand, exports of ceramic tiles from India have alsobeen increasing. From a level of US$ 33.3 million in 2001-02, exports of ceramictiles from India have gone up to US$ 58.5 million in 2006-07, at a CAGR of 12per cent. India exports tiles to other parts of Asia, Africa and West Europe. The othermain exports of ceramic products consist of chemical porcelain and insulators,

handicraft artware and stoneware crockery. Imports of tiles have gone up rapidlyin recent years, to almost match the level of exports. From around US$ 8.3million in 2001-02, imports have gone up to nearly US$ 55 million in 2006-07, at aCAGR of 46 per cent. Rising imports indicate the rapid growth in domestic demandfor tiles, due to boom in real estate construction.

CHAPTER-III

Research Methodology

Title:

To determine the perception about various tiles quality, brand equity, price andcustomer service.

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Title Justification:

Title is self-explanatory. The study mainly deals with the quality, brand awareness,price analysis and above all customer experience about the various tile products andcategories.

Objective:

To determine the awareness level of different major tile players among thearchitects.

To determine the customer awareness level, particularly for new users of tiles.

In depth study on the dealer network of various tiles manufacturers.

Significance of the study:

Significance for the industry:

This is a limited study which takes into consideration the responses of 20 architects,25 dealers & 150 customers. This data can be explorated to take in the trendsacross the industry. The significance for the industry lies in studying these trendsthat emerge from the study. It is a rapidly changing and evolving sector. A study likethis can attempt to guide the future of the industry based on current trends.

Also the views of the architects and dealers would help in determining the futurestrategies of the companies and add to the betterment of end user requirement.

Significance for the researcher:

To have a firsthand research experience about tiles industry. Various primary andsecondary data sources would help in shaping a good notion about the industrytrends and its future prospects. Also recommending measures to improve thepresent scenario of a company would boost up the confidence of the researcher.

Research Design:

Type of Research: Exploratory and descriptive experimental research

Size of sample: 20 Architect, 25 dealers and 150 customers.

Area of study: Ghaziabad and Meerut City

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Sampling procedure: Convenience Sampling

Method: The research is primarily both exploratory as well as descriptive in

nature. The sources of information are both primary & secondary.

A well-structured questionnaire was prepared and personal interviews wereconducted to come to the conclusion.

Brand Awareness Analysis:

BRAND AWARENESS RATING

MEAN RATING

INTERPRETATION:

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According to the architects brand awareness, Kajaria Tiles is on the top followed bySomany tiles, H.R.Johnsons Pvt. Ltd., Orient tiles and Nitco Tiles.

Quality Analysis:

Quality Rating

Quality Mean

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INTERPRETATION:

According to the Architects, quality wise Kajaria Tiles is leading the marketfollowed by H.R.Johnson Pvt. Ltd., Somany Tiles, Orient Tiles and Nitco Tiles.

Dealers Network:

Dealers Network Rating

Dealers Networks Mean

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INTERPRETATION:

According to Architects view, Kajaria ceramics has the widest dealers network inthe sample area followed by Orient Tiles, Somany Tiles, H.R.Johnson Pvt. Ltd, andNitco Tiles.

Overall Architects Choice:

INTERPRETATION:

Overall view of the Architects leads to this fact that the surveyed region is mostlyfavoured by Kajaria Tiles Pvt. Ltd., followed by Somany Tiles Pvt. Ltd., Orient TilesPvt. Ltd. And Nitco Tiles in the branded and organised ceramic tiles segment.

Customer Experience Study:

A total number of 100 customers (new user) being interviewed at various locationsof Ghaziabad and being asked to rate the above mentioned tile brands in terms oftheir awareness and choice and usage.

The parameters are as follows:

1. Price

2. Durability and quality3. Awareness

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4. Response pace5. Availability6. Variety

Overall Customer Rating

Overall Customer Experience Mean

Interpretation:

The above mentioned graph shows a very tough competition among all themajor organised players. Kajaria tiles is ahead in terms of customer rating followed

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by Orient Tiles, H.R.Johnson Ltd., Somany Tiles and Nitco Tiles.

Dealers Experience Study:

A total number of 25 dealers of various tiles manufactures had beeninterviewed in Ghaziabad and Meerut Region on the basis of following parameters:

Brand availability in the store

Frequency of the inventory

Timely delivery

Special/urgent supply

Supply time Representative relation

Cash/dealers discount

Frequency of taking dealers advice

Customers prerequisite specification needs, if any

Variety in quality and size of the tiles

Dealers ranking

Overall Dealers Experience Rating

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Overall Dealers Experience Mean

Interpretation:

In terms of dealers study, Kajaria Tiles is the most sought after brand followedby Somany Tiles,Orient Tiles, H.R.Johnson Ltd. And Nitco Tiles.

Limitations of the Study:

The sample size is very less, hence it does not imply for the complete

population.

There was lack of time and resources that prevented from carrying out an in

depth study.

The findings of the survey are based on the subjective opinion of the

respondents and there is no way of assessing truth of the statements.

There is some respondents bias which cannot be removed.

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some amount of error exists in the data filling process because of the

following reasons:

Influence of others.

Misunderstanding of the concept.

Hurried filling of the questionnaire.

The research is confined to a certain parts of Ghaziabad and Meerut and

does not necessarily shows a pattern applicable to all of Country.

Some respondents were reluctant to divulge personal information which

can affect the validity of all responses.

In a rapidly changing industry, analysis on one day or in one segment can

change very quickly. The environmental changes are vital to be

considered in order to assimilate the findings.

Chapter IV

ORIENT TILES

. (OCIL) spearheaded by Mr. Mahendra K.Daga,has earned a reputation of being the frontrunner in innovation in home dcor.

In line with the company's credo of sustained excellence and superior quality, weconstantly endeavour to provide customers with the finest ceramic floor and walltiles, through our exhaustive product range, innovative designs & sophisticated

colours. This endeavour is accomplished using a state-of-the-art environmentfriendly manufacturing unit at Sikandrabad, UP. Here, the latest technology is

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expanded their distribution networks significantly. Owing to the delicate nature ofthe product, distribution and logistics costs form a substantial portion of the totalcosts and the success of the distribution chain marked by delivery promptness,well-equipped dealer stocks and wide market reach is critical to the success ofretail sales.

Indian economy is poised to grow at 7-8 percent and with growing incomes andurbanization, demand for houses is slated for growth. The increasing focus on ruralareas, by government and corporate, the demand for housing would also increase inrural areas. The ceramic industry will also benefit from the above developments.Increasing demand is just one part of the story the availability of Finance is the otherpart. With the availability of loans at low interest rate and tax incentives haveenabled the people to buy houses and build up their own establishment. With theincreasing competition amongst both Banks and Housing Finance Companies thepeople are avail of getting better financing options and that too at a cheaper rate.

This would further increase the demand for tiles.

THE WORLD OF ORIENT

Tiles Range:

Interior Range

Floor Tiles

29.5*29.5

30*30

39.5*39.5

40*40

49.5*49.5

60*60

60.5*60.5

Wall Tiles (in cm.)

14.8*14.8

20*20

20*30

20*40

29.5*59.5

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60*60

60.5*60.5

Exterior Range

Floor Tiles (in cm.)

30*30

39.5*39.5

40*40

Wall Tiles (in cm.)

14.8*14.8

20*40

Price Analysis

The price of ceramic tiles depends on the various size and measurements of the

tiles. Although we have noticed that tile dealers are not ready to give price details

fairly, somehow we have managed to extract some of the tiles prices of various

players.

the mostly used vitrified tile size for living room is 2 X 2, for kitchen and for toilet

people used to install ceramic tiles of 16 X 16 and 12 X 12. For dining they used

to stick with vitrified tiles of 2 X 2 size.

Now , in wall tiles segment, the general market price in Ghaziabad starts from

Rs.21/sqft,in floor it is Rs.22/sqft and in vitrified it is Rs.35/sqft.

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Financial Overview of OCIL

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FINANCIAL ANALYSIS AND RECOMMENDATIONS

After the analysis of profit & loss account and balance sheet of orient ceramics we

have got some financial analysis about the company and tried to give our

recommendations according to it.

We went for ratio analysis to find the actual financial condition of the company.

1. Liquidity ratios

2. Profitability ratios

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3. Investors interests ratios

1. CURRENT RATIO- It is an indicator of the firms commitment to meet its short

term liabilities.

It is expressed as follows- current assets/current liabilities

From balance sheet=inventories+sundry debtors+cash+bank

Balances+short term loans & advances/

Current liabilities +provision

=423999406+404470339+6962801+149639658/

411841400+23653137

=2.26

RECOMMENDATIONS- An ideal current ratio is 2.this is just above 2 but a

company should maintain ratio between 1.5-2 so company should decrease it

some points as it is showing less efficient use of funds.

This is due to because of high dependence on long term sources of raising funds.

Long term liabilities are costlier than current liabilities therefore this will result in

considerably lowering down the profitability of the company.

In balance sheet of 31-03-2008 and 31-03-2007 we can also observe that long

term liabilities has grown up by 599525935 rs.to 942762466 rs.in 2008 by 57%

increased.

2. LIQUIDITY RATIO- (acid test ratio or quick ratio)

This ratio is the indicator of the short term solvency of the company.

It shows the comparison of inventory holds up.

We will not consider prepaid expenses and stocks in liquid assets.

Liquidity ratio- liquid asset/current liabilities

= 985072204-423999406/435494357

= 1.28

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Recommendation-satisfactory ratio should be 1.so it is just above 1 so

company needs to reduce its inventory level as it blocks cash of the company.

3. DEBT EQUITY RATIO- the debt-equity ratio is determined to ascertain the

soundness of the long term financial policies of the company.

=long term debt/equity

=942762446/479817704

=2:1

So it can be said as satisfactory that company has 2/3 part debt and 1/3 part

as equity.

4.RETURN ON INVESTMENT/RETURN ON CAPITAL EMPLOYED-

IT INDICATES THE PERCENTAGE OF RETURN ON THE TOTAL CAPITAL

EMPLOYED IN THE BUSINESS.

=operating profit/capital employed

=43685580/14939220722=2.92%(in2007-08)

And comparison with 2006-07

=173837365/1122303254=15%(2006-07)

In 2008 the ROI was very less and will called as totally unsatisfactory as your

operating cost is higher than to return.no one can dare to run a investment in

just 3% which is below than to the interest of banks saving account.

Company gave some reasons behind this-

a. High operating cost due to high inflation.

b. The maximum projects that company undertook were in bulk discounted so

they increased the sales revenue but could not increase profit margin.

c. High competition from local players.

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5.RETURN ON EQUITY SHARE HOLDERS FUND-

=PROFIT AFTER TAX/EQUITY SHARE HOLDERS FUND

=24873117/479817704

=5.1%(2008)

In compare to 2007-25%

So the return has been decreased by 80%.and it could not be said as satisfactory as

8-10% is easily available through in fixed deposits,bonds ,debentures so investors

will go away.

Recommendation-company needs to decrease its operating cost such as inventory

cost, manufacturing costs because this year they were having higher percentage inoperating costs.

6.GROSS PROFIT RATIO-this ratio is the relationship between gross profit and net

sales.

=gross profit/net sales

=net sales-cost of goods sold/net sales

=2145679729-(199560672+1829127984)/2145679729

=5.45%(poor)

Suggested reasons-

a. The cost of goods sold has grown up without corresponding increase in the selling

price of goods.

b. There may be decrease in the selling price of the goods sold without

corresponding decrease in the cost pf goods sold.

We found out from the company sources that due to bulk discounted orders in 2007-08 which were got by dealing high competition resulted decrease in selling prices

without decreasing in the cost of goods.

7DIVIDEND PAYOUT RATIO-

=DIVIDEND PER SHARE/EARNING PER share

=.50/2.46

=20%

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8. DIVIDEND YIELD RATIO-

=DIVIDEND PER SHARE/MARKET PRICE PER SHARE

=.50*100/30

=1.67%

On this ratio investors will not go for investing in company as they will get high yield

in other investments so company should consider shareholders benefits or try to

increase dividend yield.

9.EARNING PER SHARE-THE EPS HELPS IN DETERMINING THE MARKET PRICE OF

THE EQUITY SHARE OF THE COMPANY.

=PROFIT AFTER TAX/NO OF SHARES

COMPARISON

Euro ceramics=16(F.V.=10) 160%

KAJARIA=2.3(F.V.=2)115%

Orient=2.46(F.V.=10)24.6%

So in comparison with other company orient has got less EPS.so we can say that the

capital of shareholders is not being effectively used.

10. PRICE EARNING RATIO-

=MARKET PRICE PER SHARE/EARNING PER SHARE

EURO-2.5=40.05/EPS=16.02(F.V.=10)

KAJARIA-24.9=29.25/EPS=1.17(F.V.=2)

BELL-46=6.90/EPS=.15(F.V.=10)

ORIENT=16.9=30/EPS=1.79(F.V.=10)

P/E RATIO COMPARISON-

EURO


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Demand drivers:The demand for value-added tiles (large-format) outpacedthat of the plainer variants, thanks to two important realities: rising incomes and

growing urbanisation, catalysing housing demand.

Growing affluence: The average Indians per capita income increased from Rs.11,672 in 2003-04 to Rs. 24,321 in 2007-08, and is estimated at Rs. 31,448 by 2010.Annual household incomes between Rs. 90,000 and Rs. 2,00,000 increased from41.3 million in 2001-02 to 53.3 million in 2005-06, and are expected to rise to 75.3million by 2010.Families with Rs. 2,01,000 to Rs. 10,00,000 annual income grewfrom 10.7 million in 2001-02 to 16.4 million in 2005-06, and is expected to reach28.5 million by 2010. More surprisingly, families whose annual income is above Rs.10,00,000 grew from a mere 0.8 million in 2001-02 to 1.7 million in 2005-06, and isexpected to be 3.8 million by 2010. Interestingly, a majority of this affluent class will

stay in cities and create an income pool comparable with the major US cities by2015 (Source: India Infoline).

Increasing urban demand: The urban population (28% of the total Indianpopulation) grew 2.77%, higher than the overall population growth of 2.3%. Goingforward, the overall population will grow at 1.5%, while the urban population willmaintain a 2.27% growth till 2010. As a result, urban population is expected to touch590 million by 2030 [Source:IBEF], leading to a robust housing demand of over 24.3million dwelling units in urban India by 2015 (Source: Housing Skyline of India 2007-08).

2008 Sales2,145,679,729(Year Ending Jan 2009).

Employees: 750

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SWOT ANALYSIS:

Distribution System:

Ceramic Marketing:

The 4Ps of ceramic marketing are like different levers that can be used in differentdegrees to achieve the same objective.

Product There is a wide range of designs and sizes to choose from. Introductionof two new categories-i.e., Vitrified and Concept tiles.

Price The price range is very vast. Due to capacity expansion supply is increasedso price is lowered down by 35%. Moreover price war from china has also lowered

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down prices.

Promotion Advertising is done in leading Construction magazines and interiordesign journals. Taking part in international exhibitions is routine.

Place Wide distribution network in and outside state. Products delivered withinfeasible timeline of order.

CHAPTER-V

RECOMMENDATIONS:

MARKETING:

Should adopt the widest distribution network model to deliver products to theend user in quickest and most effective way. It would also accelerate the

sales. It may include company owned showrooms, franchises, multi-productdealers and sub-dealers.

Distribution network should be clearly segregated towards specific productsegments.

May introduce three dimensional catalogue visual experiences to itscustomers and also give customer a chance to design product in their ownway of choice (customized design specification).

Setting up exclusive showrooms for special products instead of keeping withwith the regular range. As example, the upcoming product ORVIT-a product inhigh glaze tiles segment should have an exclusive place to showcase. It wouldadd to the exclusive ambience of the product.

More introduction of matching wall and floor tiles. To grow its institutional business, the company should organize more

interactions with architects, developers and government agencies at its dealeroutlets. This would serve a dual purpose: it would enable the company toacquire an insight into evolving preferences of some of the most prominentand trend- influencing architects; on the other hand, it helped the companycater to their evolving preferences.

BRAND:

More focus on packaging and product merchandising.

It may introduce a specific dedicated team to look after the overall brandequity. They will ensure that all showrooms and dealer display centres were insync with the Orient profile. Also they will look after the external packingmaterial which creates an eye on look-and-feel, resulting in a holistic brandingapproach.

More focus on Research and design-development activities to achieve the costand product design leadership.

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fired- furnaces is likely to enhance fuel efficiency and reduce cost as well asensure better quality and reduction of environmental pollution.

Reduction in threshold limit under Zero Duty Export Promotion Capital Goods(EPCG) Scheme would also help accelerate the modernisation process inceramics industry.

References:

For secondary data-

www.icctas.com

Company websites

Annual reports

Previous summer training projects

Magazines, web-articles and catalogues

For primary data-

Questionnaire

Supervisors advice and information
http://www.icctas.com/http://www.icctas.com/

Project Report on Ceramic Tile Industry

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