1
Perception risk:
Inability to sustain
historical growth rates
could adversely impact
perception.
Mitigation argument
The Company may not be able to sustain the growth rate of the earlier
years as the base has expanded over a short time. While the growth
percentage could be lower than the historic average, the absolute
growth numbers will continue to be larger than the previous year due to
a dynamic business plan that encompasses sustained volume increase,
continuous innovation towards a sales-mix skewed in favour of value-
added products and improving operational efficiencies. As a result, the
Company will continue to outperform the average industry growth.
2
Business slowdown risk:
A slowdown in India’s
economic progress could
create a gap between the
estimated budget and
ground reality.
Mitigation argument
An economic deceleration primarily impacts metros and urban cities.
Besides, a majority of the demand for consumer products is emerging
from Tier-II and III towns, which usually remains largely unaffected
by economic slowdowns. The Company strengthened its distribution
network in new demand pockets leading to a significant out-
performance.
3
Fuel cost risk:
Rising gas prices could
affect profitability.
Mitigation argument
The sustained increase in gas prices is completely beyond the control of
the Company; it impacts sectoral profitability. To minimise the impact,
the Company is raising the share of value-added products (large format
tiles and digitally printed tiles).
4
Competition risk:
Competition from branded
and unbranded players
hamper margins.
Mitigation argument
The Indian tile industry is undergoing a consolidation phase where
organised/branded players (with marketing skills and a vast distribution
network) are partnering with unbranded players (with low-cost
manufacturing expertise). As a result, competition from the unbranded
sector is expected to decline. Besides, Kajaria has retained its market
dominance through significant capacity increases and by introducing
innovative products, which are expected to continue.
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