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23
Annual Report 2011-12
22 Kajaria Ceramics Limited
MANAGEMENT DISCUSSION
AND ANALYSIS
Indian economy
The Indian economy grew 6.9% in 2011-12 against 8.4%
in 2010-11.
The industrial sector was plagued by multiple issues.
Inflation eroded margins. Interest rate hikes throttled
consumer spending. The depreciation of the Indian rupee
against the US dollar eroded corporate profitability. The
euro zone turmoil affected exports. Despite lower growth,
India retained its position among the world’s fastest-
growing economies.
Consumption:
Global ceramic tile consumption increased from 8,460 billion sq. m to 9,350 billion sq. m (10.5% up from
2009) while it declined only in the EU from 991 MSM to 941 MSM (-5%). Asia reported the biggest consumption growth, up
14% to 6.026 billion sq. m, 64.4% of the global consumption. China, India, Iran, Vietnam, Saudi Arabia, Thailand, the UAE
and Malaysia reported large capacity increases.
Sector
2010-11 2011-12 (AE)
Agriculture and allied activities
7.0
2.5
Industry
6.8
3.6
Mining and quarrying
5.0
(2.2)
Manufacturing
7.6
3.9
Electricity gas & water supply
3.0
8.3
Services
9.2
8.8
Construction
8.0
4.8
Trade, hotels, transport
11.1
11.2
storage and communication
Financing, insurance, realty
10.4
9.1
and business services
Community, social and
4.5
5.9
personal services
GDP at factor cost
8.4
6.9
*AE – advanced estimates
(Source: Reserve Bank of India, March bulletin)
INDIA’S GDP GROWTH 2011-12 (%)
SECTORAL CONTRIBUTION TO INDIA’S GDP (%)
Period
Agriculture
Industry
Services
1990-91
29.6
27.7
42.7
2000-01
22.3
27.3
50.4
2010-11
14.5
27.8
57.7
2011-12
13.9
27.0
59.0
WORLD MANUFACTURING LOCATIONS
Regions
2010 (MSM)
%age of world production %age variance (2010/2009)
European Union (27)
1,128
11.9
+4.8
Other Europe (Turkey included)
443
4.7
+12.2
North America (Mexico included)
257
2.7
+8.2
Central-South America
940
9.9
+4.9
Asia
6,370
66.9
+14.9
Africa
370
3.9
+6.6
Oceania
7
0.1
0.0
TOTAL
9,515
100.0
+11.7
Source: Ceramic world review
WORLD CONSUMING LOCATIONS
Regions
2010 (MSM)
%age of world production %age variance (2010/2009)
European Union (27)
941
10.1
-5.0
Other Europe (Turkey included)
456
4.9
+9.1
North America (Mexico included)
389
4.2
+7.0
Central-South America
978
10.5
+7.6
Asia
6,026
64.4
+14.0
Africa
516
5.5
+9.3
Oceania
44
0.5
+2.3
TOTAL
9,350
100.0
+10.5
Source: Ceramic world review
Global tile industry
Following the 2008 and 2009 slowdowns, production and
consumption rebounded with double-digit growth in CY
2010. Global production rose 11.7%, which was higher than
the annual historical average (6-7% up to 2007).
Production:
The most remarkable production increase came
out of Asia, increasing its share to more than 66% of the
global production due to sizeable volume increases by all
leading tile manufactures – China (+600 MSM), Vietnam
(+80 MSM), India (+60 MSM) and Iran (+50 MSM).