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Mr. Vijay Shankar Sharma, Chief Financial Officer, Orient Ceramics, is an all India rank holder Chartered Accountant with approximately 20 years distinguished career in leading MNCs- ICI India, Ranbaxy Laboratories, Idea Celluar and Vodafone. His previous organization was Vodafone, the largest telecom company in the world. He was heading a team of nearly 100 professionals as CFO of Vodafone Karnataka and was responsible for Corporate Finance functions at Vodafone Essar South Ltd.
Orient Ceramics and Industries Ltd (OCIL) pioneers in manufacturing ultra vitrified tiles in India was formed in 1977 as a public limited company and has been at the forefront of innovation in home décor ever since. The company is accredited with ISO 9001:2000, ISO 14001 and ISO 18001 certifications for quality control management systems. Having a base of more than 900 retail outlets and more than 2000 secondary retailers spread all over the country and also a wide customer base ranging from Middle East to Europe.
Replying to Anil Mascarenhas of IIFL, Vijay Shankar Sharma says, "Our market share is around 7% and with Bell, we are well poised to double our market share in the coming years."
Comment on your acquisition of Bell Ceramics. What kind of synergies do you see with this acquisition?
We have chosen to grow inorganically for faster speed to market where the combined value of OCIL and BCL business is far in excess of the individual businesses due to excellent business synergies. With OCIL manufacturing experience and enhanced market potential for both the companies, we are confident of doing a turnaround of BCL’s performance and enhancing OCIL’s own financial performance.
Post the acquisition what would be your capacity and utilization?
Orient Ceramics currently operates at approximately 90% capacity utilisation whereas Bell is at around 70%. We will be able to improve Bell's capacity utilisation fairly soon by taking advantage of the additional market access provided by Orient as well as by outsourcing some of the production that we currently outsource from other companies in Gujarat.
Which are some of the geographies you need to tap now?
Orient Ceramics is an all India market player. However, our market share in South and West India, the two largest tile markets, was small compared to our market share in North and East India due to distribution costs. We now expect to become a significant player in South and West.
What is the market size for ultra vitrified tiles in India?
The market is relatively smaller but increasing at a faster pace than other product categories. These products are for customers who not only want the benefit of genuine vitrified tiles, which are virtually non-porous but also want to have great designs, which polished vitrified tiles do not offer. These tiles are great for all sorts of applications like wall, floor and facade and high traffic applications. Ultra Vitrified Tiles under Europa brand do not wear off with use and time unlike polished vitrified tiles.
What are the triggers for growth in India?
Growing income levels and awareness, consumer preferences for the best and of course the cost effectiveness, hygiene, utility and ease of installation are some of the factors that are leading the growth of tile sector in India. The good news is that there is lot of scope left for growth in the years to come as the per capita tile consumption is still very low in India at 0.5 square meters compared to 3+ of China and 8+ of some of the developed countries.
To what extent are aesthetics gaining more importance?
With awareness and need to have something different and exclusive for oneself, the retail consumers lay a lot of emphasis on aesthetics. With Orient's design expertise, we are well prepared to fulfil this consumer need and provide the aesthetics solutions of the future.
What is your current market share in each segment? What efforts are you making to improve the same?
Orient Ceramics is the only pure play tile company amongst the top 5 tile companies in India. Our market share in Orient is around 7% and with Bell, we are well poised to double our market share in the coming couple of years.
Brief us on your product mix and new marketing strategies?
We are the only company in the top 4-5, that has manufactures wall, floor, facade, ceramic, polished vitrified and ultra vitrified tiles apart from decorative tiles. We have products for all consumer segments through our brands Orient Ceramics, Europa and Stiler. We are strengthening our display infrastructure by setting up nearly 100 high end display points across the country and investing heavily in below the line promotion and working with architects and influencers.
Any major expansion in outlets planned?
We are focusing on launching a few of company owned showrooms and want to convert more of our existing retailer outlets into franchisee showrooms and shop-in-shops; in the process improving their and company's product sales profile.
Would both the brands co-exist?
Yes. Bell is an old and established brand; particularly in South and West India, for over 2 decades. Part of our reason for acquiring Bell is the established dealer network and brand equity it enjoys. We believe that there is reason and space for Bell, Orient and Europa brands to co-exist and provide value to their respective markets and customer segments.
Comment on your power requirements and how is it being catered to?
Orient has sufficient power and gas available and a long term agreement with GAIL for gas supply. Dora plant of Bell not only has sufficient power and gas available but about 70% of the gas available to it is nearly 40% cheaper than the gas price applicable to most other tile manufacturers. Hoskote plant of Bell uses dry process and therefore relatively smaller amounts of fuel and runs on LPG, which is available in the open market.
What is your message to shareholders?
We see the acquisition of Bell as an excellent value addition that fits well with our strategic vision of being a leading player in the fast growing tile industry. With Bell, we will have the largest installed capacity among all tile companies in India and the only one that has plants in North, West and South India. With our technical expertise, we would be able to do a quick turnaround of Bell operations. This will give us a lot of room to improve our market share, margins and shareholder value in the long run in line with our objective of delighting our shareholders.