Sanitaryware and ceramic tile makers have much to cheer from Prime Minister Narendra Modi´s Swachh Bharat programme, which attempts to build toilets across the country to eliminate open defecation. In a country where only 40 per cent of the population has access to toilets, the prime minister envisions one for every Indian. At present, the country´s ceramic tiles market is worth Rs 20,000 crore, while the sanitaryware market is worth Rs 3,000 crore - both are growing at 12 per cent every year. Going forward, the Swachh Bharat scheme along with the 100 smart cities plan is expected to push this growth up to 15 per cent. That said, ceramic tiles and sanitaryware makers are planning on expanding capacities.
What´s more, sanitaryware maker HSIL has set aside about Rs 150 crore to develop a new manufacturing unit in Gujarat to meet the growing demand for bathroom fittings. Also, tiles and sanitaryware maker Somany Ceramics has planned a CAPEX of Rs 270 crore in the next two years. Cera Sanitaryware is in the process of expanding capacities with a total planned outlay of Rs 180 crore over the next two years. Similarly, sanitaryware solutions provider Roca Parryware has invested over Rs 100 crore to scale up production capacity in the last two years. The company is preparing to export products from its Indian manufacturing units to Europe and China. While earlier it exported from China, Roca is now directing some of its global orders to India.
However, slowdown in the real estate sector has led to low sale volumes even in the bigger centres of India. There has been lack of adequate funds and buyer interest in the market, which has resulted into many residential projects being delayed by developers. Amid this slowdown, the tile and sanitaryware segment has not been affected much. If compared with the normal times, the YoY market growth was 14 per cent, and it has been 11-12 per cent over the past two years. This difference is not that significant as compared to the scenario of the real estate industry. Further, India globally ranks third and accounts for over 6 per cent of the total production worldwide. The industry is largely unorganised, to the extent of 50 per cent.
Despite a robust growth by the organised tiles sector over the past years, the per capita consumption of ceramic tiles in India is only a seventh of Brazil´s, a sixth of China´s and a third of Indonesia´s. About 80-85 per cent of tile demand is driven by new housing or first-time users, while the balance is derived from replacement, which is a vice versa of the scenario in western countries. Interestingly, new housing demand is expected to emerge from non-metro locations (smaller urban centres, Tier-II and Tier-III towns) while replacement demand is expected to be largely a metro phenomenon.
Also, in recent times, the Indian market has started moving from functional products towards lifestyle products in this niche segment.