Pritesh Parikh Pritesh Parikh

Organised

The Indian Ceramics & Tiles Industry is highly fragmented with presence of numerous family-owned entities apart from some very large integrated manufacturers leading to high level of competition. The unorganised sector accounts for nearly 50% of the ICTI, represented by more than 500 family-owned entities and around 15 entities in the organised segment. The composition of the ICTI provided opportunity for consolidation and scaling up the operations by the entities in the organised segment in a cost-effective manner. During the four years ended March 2015, there has been continuous increase in installed capacity, through organic and inorganic expansions by the organised players (Refer Chart 1 for installed capacity of 11 leading players). The manufacturers have resorted to either of the above investment methodology depending upon their requirements and feasibility; majority of the capacity addition has been through entering in to Joint Venture (JV) agreements with small and medium scale players or outright acquisition of existing operational units. Organised players benefit from local expertise and faster penetration in the region through meeting local demand with local supply and immediate scaling up of operations. Furthermore, inorganic expansion has helped organised players to generate higher returns through lower capital commitment and de-leverage their balance sheet from higher cash flow generated through incremental sales volume. Unorganised and small players, too, stand to gain from the partnership as they are assisted by larger entities in streamlining their manufacturing operations and generate economies of scale, expand geographical reach through use of well-established marketing channels of organised players and ensure compliance of stringent pollution control norms of the State and Central Government’s Pollution Control Boards.

Pritesh Parikh

Pritesh Parikh Creator

PGDM student. finance, economy

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Pritesh Parikh