For decades, the
focus in the Indian
tile industry was
to grow capacities
in a single location
to capitalise
on production
economies.
Then something happened. More
tiles began to be purchased
in non-metro locations. The
growing distance between the
plant and consuming locations
increased logistic costs.
Catering to the multiplying pan-
India demand, Kajaria’s north-
India centric capacities soon
became restrictive. This needed
an immediate correction.
Kajaria thought differently. It was
one of the few tile companies...
To perceive that a strategic
locational shift was imminent for
proximity to consuming hubs
To distinguish that rather
than commission capacities
from scratch, a lighter-asset
approach would be to acquire
management control in efficient
regional companies instead.
The result is that Kajaria acquired
five units with an aggregate
manufacturing capacity of
15.30 MSM at a low capital cost,
generated revenue from day one
and serviced markets faster.
The result
is that as the
proportion of revenues from the
regional units increased – from
scratch in 2009-10 to 18% of
revenue in 2012-13.
Growingpan-India
demand;North India
focusedcapacity.
We implementedan
immediatecorrection.
13
