Recovery in real estate will change fortunes, says Madhur Daga, Joint Managing Director of ceramic and vitrified tiles manufacturer Orient Bell Ltd, as he shares his insights and strategies. Edited excerpts:
Do you aspire to hit double-digit market share in the Indian tiles market?
Orient Bell has been in the tiles industry for more than 40 years. We are an innovative and forward-thinking company with a market share of 6 per cent within the organised market segment. But construction may soon ramp up on large-scale government initiatives such as Pradhan Mantri Awas Yojna (PMAY), which focuses on low-cost affordable housing, and a major growth in health and education sectors. We aspire to seize these opportunities in a bid to gain double-digit market share. The recovery in the realty market will also auger well for us.
What are the main growth drivers, given the still sluggish realty market?
We continue to launch innovative products as per consumer requirements, which gives us a competitive placement in the realty market. Our tiles are also designed keeping in mind the requirements of massive constructions and developments happening in tier II and tier III cities.
Moreover, the government is planning to allocate a significant amount for the infrastructure space in the current financial year and it will boost the industry. The concept of low-cost housing and affordable housing can be successfully executed if developers use locally available materials, and leverage improved skills and technology, without sacrificing the strength, performance and life of the structure. Architect groups also wield a major influence with increased spending on interiors and designs. All this can effectively drive growth.
Do you see a change based on the renewed government focus on infra spending?
The ceramic industry is expecting a major boost from government initiatives such as Housing for All, Swachh Bharat Abhiyan and Smart Cities Mission. Recent lowering of interest rates also plays a key role in ensuring growth.
The healthcare sector is also expanding fast. A number of hospitals and primary health centres have been planned and are being built under the National Health Mission. Further, the aviation sector is getting a huge facelift with the growing number of airports. A big leap is also witnessed in the education domain as numerous schools, colleges and universities are being developed. Even the insurance sector is poised to upgrade all their properties across India.
As mentioned before, the Indian government has allocated a substantial budget for the same to boost development. State governments may also follow suit.
Tell us more about your new products. How do you see the Indian market changing and how do you intend to stay abreast?
The new tiles launched by Orient Bell (Cool, Digital, Abrasion-resistant, Wood Finish) can be called an attempt to stay abreast. Retail expansion is of great importance to us. Our company-owned boutiques are well equipped and aims to enhance the retail customers' experience. At our facilities, they can look at the complete range of wall and floor tiles for living and working spaces. The retail margins are high and growth in this segment benefits the company.
That said, innovation is our core strategy to stay abreast. Using innovation as a strategic, systemic and technological lever, we plan to develop Orient Bell as one of the largest and most evolving players in the ceramic industry.
Is the market moving towards vitrified tiles? What is the future of conventional ceramics?
Vitrified tiles are gaining momentum due to digital printing technology. Tiles now come with high abrasion, stain resistance, shock resistance and other such technical qualities preferred by consumers. So, the market is moving towards vitrified tiles. With digital printing advancing fast, it is easier to print almost any texture such as wood, cement, slate or bamboo on a tile, which makes them a more functional product and a great base for the tiles industry.
Is the industry relatively low on margins? Do you see any scope for improvement?
The tiles industry is both competitive and capital intensive. The key to bottom-line growth is technological improvements, efficiency in fuel consumption and strengthening of distribution channels. While these criteria form the base, we need to top it by brand building, working with architects and influencers, and providing good after-sales service. This will improve unit realisation in both retail and institutional markets, thus improving our margins substantially.
Any new strategic initiative you want to share that can redefine this space?
In India, customers' buying experience is not a pleasant one. We need to build good display capacity and help consumers (including architects and influencers) visualise the built. It should be done using traditional mock-ups, 3D views and virtual reality (VR) techniques. This will bring revolutionary changes in tiles marketing and will benefit the first movers immensely.