Our sense of pride is derived from the
fact that Kajaria did not just capitalise
on prevailing economic growth; the
Company helped transform the Indian
tile industry from flooring and wall
cladding options to the creation of
something that consumers would
be proud of. Kajaria did not just
push products into a competitive
marketplace; it created a brand that
would trigger a consumer pull. Kajaria
did not just grow profits year-on-year; it
created India’s most valuable listed tile
company (market capitalisation
of
`
14,146 million at the close of
2012-13).
Across the value pyramid
Over the last 25 years, the biggest
transformation at Kajaria is that what
started out as a tile manufacturing
company is now an aesthetics-led
organisation.
Over the period, incomes rose,
aspirations increased but incremental
production costs could not entirely
be passed on to end-users. The most
effective counter to these realities is
encapsulated in a single term: value-
addition.
At Kajaria, we adopted a two pronged
approach – we introduced a value-
added vertical in our existing business
and strengthened our value-mix by
introducing larger sizes in all segments.
So, while we continued to increase the
proportion of large-sized and digitally
printed tiles in our ceramic tiles
business, we established a dominant
position in the vitrified tiles space,
which contributes more than 50% to
the Company’s topline.
As a result, Kajaria increased the
proportion of value-added tiles in its
sales mix and strengthened its average
realisation.
This reality has translated into growing
returns: ROE increased from 5.62% in
2008-09 to 32.51% in 2012-13 ROCE
strengthened from 13.08% to 28.89%
during the same period, ensuring
shareholder faith in our capability to
deliver superior value.
Optimism
At Kajaria, we’ve only just begun for
some pertinent reasons.
Demand:
The spread of public
infrastructure (roads, telephones and
electricity) is extending to Indian
cities and towns which are away from
their centres of gravity; the number
of ‘census towns’ in 2011 tripled
compared to 2001, translating into
a growing appetite for homes - and
tiles. At Kajaria, we strengthened our
presence in India’s Tier-II and Tier-
III locations where much of India’s
growth is happening; a majority of our
dealer additions in 2012-13 were in
non-metro locations, widening our
distribution wingspan.
Cost:
Since gas prices in India are
regulated, related investments have
declined, supplies have dwindled and
tile manufacturers need to purchase
energy at market-determined rates that
are significantly higher than the global
average. To minimise the impact of
ballooning gas prices, we are suitably
developing novel input mixes that
Kajaria increased
the proportion of
value-added tiles
in its sales mix and
strengthened its
average realisation.
Mr. Chetan Kajaria
Joint Managing Director
16
Kajaria Ceramics Limited
Annual Report
2012-13
25
YEARSOF
WORKINGWITH
ANATTITUDE
CELEBRATING
