Paresh Shah, Director, Euro Ceramics Ltd, holds a Master Degree in Commerce from University of Bombay. He started his career as a retail trader and has more than 13 years of experience in the retail business. He was previously associated with Roopam House of Fashion, a group in retailing of readymade garments, in the marketing department and was responsible for the establishment of retail branches of Roopam in and outside India.
Euro Ceramics Ltd. is a leading player of Vitrified Floor Tiles with total capacity of about 80000 MTPA and has become preferred choice not just in India but in the global arena as well. Euro Vitrified tiles are designed to last, perfectly flat, stain free, abrasion resistant, non porous, intensely vitrified and extremely consistent in terms of colour, strength and other properties. The ambitious Sanitary Ware project was completed in record time with latest equipment and technology from SACMI of Italy. Euro is the first company in India to introduce Robotic glazing and many other innovations to give maximum benefits and satisfaction to customers. Euro also has complete range of Wall tiles, Bathroom concepts and other bath accessories which give total solutions to construction industry. Euro Group is also into manufacturing of all Building Material, Interior products and a leading player of manufacturing of Plywood, Veneer, Laminates and wooden Flooring. It also markets furniture under the brand name of "Tangent". Besides this, the company has also diversified into manufacturing of CD’s and Dry Battery Cells.
Speaking with Meenakshi Patki of IIFL, Paresh Shah, says, " While opportunities are very high in this sector, one has to give the right product to the consumer and constantly upgrade technology."
What is the growth rate being witnessed in the Indian ceramic industry?
Indian ceramic industry is growing very rapidly at 18% growth rate per year. For health, hygiene and aesthetic reasons, the use of ceramic products is increasing day by day. Earlier people wanted polished look but now most of them prefer mat finish. In terms of sizes too the 2*2 was considered a big size previously; now people are opting for 3*3 tiles with mostly mat finish. The customers prefer tiles which resemble natural stones as close as possible. At our end, we try to represent natural stones available all over the world.
To what extent has the slowdown impacted your business?
The slowdown has impacted the business last year quiet significantly. Fortunately, it has now picked up significantly. As far as flooring is concerned, vitrified tiles is the only option available with the builders because it is very easy to maintain and install. Besides, they are also very attractively priced.
Brief us how the company has changed over the last couple of years.
Our company was incorporated in 2002 and we started commercial products in October 2003. Our first line located at Kutch, Gujarat had an installed capacity of 35880 MTPA while 44091 MTPA was added in Dec ‘05. We started with the production of Vitrified tiles and today we are the largest producer of tiles in India. Euro Vitrified tiles are manufactured in a sprawling factory at Bhachau, Kutch in one of the most modern automated plants with ISO 9001:2000 accreditation. The quality matches with best international quality standards and we have received certification from VJTI- Mumbai and Applied Consumer Services, Inc. - USA. We have sanitary ware and artificial marble or composite marble. Now we are expanding into the production of wall tiles.
What are the opportunities and challenges for the industry especially given the unorganized nature of the industry?
There are huge opportunities in this sector given the fact that new projects and new construction are seeing increased growth. This provides lot of scope to improve the infrastructure and building-related activities in the country. While the opportunities are very high, at the same time, the customer has to be given the right product. Moreover, there needs to be constantly upgrading of technology. We spend huge amount on research & development. From the beginning, our emphasis has been to provide best quality that would match international standards. Euro Ceramics has selected manufacturing facilities from Sacmi, Italy, which is one of the leading suppliers of ceramic manufacturing technology globally and which are among the trendsetters in India.
Brief us on the business model of the company?
Our business model is quite unique and we are mostly focused on projects and new constructions. Most of revenues come from the direct projects and are very closely associated with almost all the builders throughout the country especially IT parks and airports are among our large clients.
Tell us about your global presence. How many agents do you have?
We are the largest exporters of tiles from India with almost 20% of our entire production being exported. We have 7000 dealers throughout India.
Tell us about your franchisees. How long do they usually take to break - even? What is the upfront cost?
We have 30 tile stations throughout the country called EUROTILE Stations. Usually, these franchisees achieve break-even within 6 months. The upfront cost differs from person to person.
Brief us on your financials. What is the outlook for the coming years? What is your revenue contribution from India and abroad?
For the year ended 2009 we had a top line of R2.17bn and we had a loss of Rs310mn due to lot of expansion activities throughout the year. For the year 2010, the audited numbers are yet to be out. We are very bullish because the industry demand is very buoyant. Our order books are quite full and we see almost 30% jump in top line. The revenue contribution from India is 80% and that from export is 20%.
What is the size of the market? Given the huge infrastructure spend that is announced what potential are you seeing?
The size of the market is around Rs75bn. The potential is very good, the industry is expecting 18% growth, and we are expecting a top line growth of 30%.
What trend are you seeing in raw material prices? To what extent are you able to pass on the increases?
Raw materials constitute a major portion of our total expenses and any adverse variation in the prices or availability of raw materials, which is dependent upon the market conditions, may affect us. Currently, the raw material prices are stable and we are not facing any shortage so far. We generally procure our raw materials and consumables from few suppliers, with no significant dependence on any one supplier. Similarly, our products are sold either through direct marketing or through a network of distributors across India. Hence, there is no significant dependence on any single distributor.
What is the break-up between institutional and retail sales?
We have 80% institutional sales and around 20% of sales are from retail customers.
What is your message to your shareholders?
The company is doing very well, so the shareholders can expect good results from the company.