Tiles and sanitary ware makers are changing their strategies to remain relevant in the market where competition intensity is growing and at the same time, pricing power is going down. Further, slowdown in real estate sector is not helping their cause either.
For example, largest player, Kajaria Ceramics believes in more and better branding, more SKUs (Stock Keeping Units) and ensuring seamless availability of products as the only way to remain ahead of other players. On the other hand, for Jacquar wide reach and prompt service (before and after sales) are the success mantras. The company also keeps different distribution structure and approach to market place. Further, the company provides highest warranty – 10-year warranty – and also regular in bi-annual product launches.
Though players in organised sector face competition from unorganised players, its mostly in lower end products which are mostly high-volume, low-margin products. As a result, players in organised segment are mostly concentrating on premium segment and also diversifying from simple tiles manufacturing into sanitary ware segment which is one of the fastest growing segments. Also, tiles manufacturers see less competition in wall tiles and large sized tiles as opportunities to be exploited as competition is less in these segments due to limited number of players.
However, there are signs of competition intensity receding if the liquidity crisis continues for long. Most of the players in unorganised sector, especially in Morbi region, are facing liquidity problems and recovery of dues and managing working capital are becoming a big issues for them. Unconfirmed reports say that some of the players have already shut their units for lack of working capital.
Recent NGT order banning coal gasifiers is not helping the unorganised players either. Shifting to natural gas will not only increase the cost of manufacturing but also everything has to be accounted for above the table which was not the case earlier. Also, increased cost cannot be passed on completely due to intense competition prevailing. Thus, most of the unorganised players find themselves between devil and deep sea.