Euro Ceramics to foray into sanitaryware market

Euro Ceramics, the Rs 130-crore vitrified tile-maker, plans to diversify into the sanitaryware market. The company plans to manufacture the entire sanitaryware range under the brand name, Euro.

"We have acquired around 21 acres in Bhachau, Kutch district in Gujarat, to set up a manufacturing plant. The company has already signed a contract with SACHMI Hong Kong for supply of machinery," said Paresh Shah, director, Euro Ceramics.

To part-fund the Rs 74-crore project, the company is going public and has filed draft, the offer document with Sebi. The company hopes to tap the market in early-2007.

"The proposed plant will have 11,000 tonne per annum installed capacity and will start commercial operation by October 2007" said Nenshi Shah, chairman and managing director, Euro group.

The company has its own captive power generation unit to meet the power requirements and has also inked an agreement with the Gujarat Water and Sewerage Board for supply of water.

The company is also exploring possibilities of manufacturing calcareous tiles, which will cater to the premium segment. It manufactures vitrified ceramic tiles and aluminium extruded sections at its facilities in Gujarat.

According to the Indian Council of Ceramic Tiles and Sanitaryware (ICCTAS), the current size of the domestic sanitaryware market is about Rs 1,000 crore and the market has 20 per cent growth rate.

Major players in the organised sanitaryware market are EID Parry (40 per cent), HSIL (30 per cent), Cera (20 per cent) and Swastik (10 per cent). However, 60 per cent of the total production capacity, 40 lakh mt per annum, comes from small and medium scale units in Gujarat,

"Looking at the growth rate of sanitaryware market, there is a lot of scope for firms entering the segment. Increasing construction activities in the country will boost the growth further," said G Govindaswamy, secretary, ICCTAS.

On the role of brands, Govindaswamy said, "Brand plays a big role in this market. That is the reason established branded players are also outsourcing from unorganised or smaller companies or even from China under their brand name."

The world ceramic tile market size is 6,955 million sq metre and that of India is 303 million square metre. India ranks fifth in world production but the country's per capita consumption is only 0.27 sq m, compared with 7.78 sq m of Spain and 1.32 square metre of China. The ceramic tile industry is growing at 15 per cent, according to ICCTAS.

Both ceramic tile and sanitaryware markets face stiff competition from China. Eighty per cent of imports is from China directly or through other neighbouring countries.

Although, there is anti-dumping duty, the Bangkok agreement has almost nullified its effect. As per the agreement , finished tiles from China attracts a preferential duty of 5.375 per cent against 12.5 per cent from other countries.

Also, as per the New Shippers Agreement anti-dumping duty is not applicable to certain Chinese companies.