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by Spain and Ita!>' (Table I). Other major ceramic producing countries are Germany, the US.
the UK. and lapan. The Italian ceramic tile industry is the world leader in exports. The largest markets for ceramic tiles in Europe are Ita!>"Spain, Germany. France, and the United Kingdom. The European ceramics industry continues to be high!>' competitive international!>" with strong production concentrations in the Sassuolo (Ita!>': about 180 firms) and Castellon (Spain; over 200 firms) areas, and sizeable activities in Germany. Portugal and France. As per year 2002 EXIM survey. the global production of ceramic tiles was 5,904 million sQUare metres (sQ,mt) at the end of 2002, whereas global export volume was 1385 million SQ,mt. China was the largest producer with a total production of 2.100 million SQ,mt. Ita!>'was the largest exporter with an export volume of 438 million sQ,mt. India ranked 8th in the world, in terms of production, with a total production of 150 million sQmt, which was around 2.5% of the global production. However, India's export volume was minuscule with a nominal share of 0.52% of global ceramic trade. Table I: Top Ceramic Tile Producing Countries
Production* China 6.030 Spain 624 Ita~ 603 Period ended December 2003 Source: www.lndiainfcline.com (MSQM)
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228 D THEORY AND PRACTICE OF CASE METHOD OF INSTRUCTION
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and good credit recovery. The tiles market is grouped under three categories, name!>'mosaic. ceramic and natural stones. The market for natural stones is further subdivided into granites. marbles and other stones. including kota stone. Mosaic tiles claim near!>'70% of tile market share. while. ceramic tiles and natural stones share the rest of the market almost eQual!>'.
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last five years. Both traditional and the latest trends in manufacturing methods are deployed in the manufacturing process. Overall. the bullish growth estimates in the Indian
growth of the Indian ceramic tile industry. The industry has registered a consistent growth rate of 2-15% over the past few years. The main product segments are the wall tile, floor tile. vitrified tile and porcelain tile segments. The market shares are 35%, 53% and 12%respective!)' for wall, floor and vitrified/porcelain tiles. The tiles are available in a wide varie!}' of designs. textures and surface effects. There is a tough competition in the domestic front between wall tiles and floor tiles. Yet, there are more players in the one sQuare foot category in India. nurturing the hope that the housing shortage would be met
incomes of Indian households. H&R johnson. SPL and Kajaria dominate the wall tiles segment, while Murudeshwar, Bell and Spartek, account for 60% of the turnover in the floor tiles sector. Kajaria and SPL are well known brands in the north, while H&R Johnson, Bell and SPL have a strong presence in the west; Murudeshwar and Spartek are domestic brands in the southern markets. An unprecedented boom in the housing sector. retail sector, IT & BPO sectors of recent years promises further growth potential for domestic market. H&R Johnson (India) has the largest market share in the wall tiles. Johnson International of the UK holds 40% of its eQui!}'. The company is setting up a new plant in Raigad district of Maharashtra. which could be the largest in South-East Asia. SPL commands the second-largest market share (19%) in the wall tiles segment. Kajaria Ceramics is the second largest player in the industry with a 30% growth in turnover and 50% in net profit. Apart from the other established players like Deora Ceramics and Diamond Ceramics. there are new entrants like EID Parry. Aurangabad Asbestos and Nitco. The lead players and alliances along with demand and market growth rates for tiles are given in Tables 2. 3 & 4 respective!)'.
10
13
8 8
II 4
KA/ARIACERAMICS LIMITED 231 By Wall Tiles Bell Ceramics H&R Johnson Kajaria Todagres SA (Spain) Murudeshwar SPL Spartek Regency Neycer Pedder & Pedder EID Parry Aurangabad ABC
13
6 /6
14
5 5
4 -
Table 3: Demand: Past and Future Year 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 '000 tonnes 600 625 642 674 770 950 1105 1325 1590 1870 2195 2580
5000
232
Glazed Wall Tile share Glazed Floor Tile share Unglazed Vitrified Tile share Glazed Porcelain Tile Share Unorganized Industry Turnover Glazed Wall Tile share Glazed Floor Tile share Unglazed Vitrified Tile share Glazed Porcelain Tile Share
8. 9.
Investments Organized
in the last 5 years sector Share of Production No. of units Revenue (excise duty)
10.
Unorganized
11.
Job Potential
233
TaiW5tn
0:
j;;o
., "
10
15
20
(Source: ASCER. countries listed according to output in 2000) Note: The top 10 countries shown above account for more than 69% of world production Ceramic Tiles. Total world production as per 2000 figures was 4122.80 million sq.mts.
of
~ C = =
(Source: ASCER. figures for 1999) Note: India does not figure in the above chart. The Per Capita Consumption!
stands at only 0.1. Although nations.
Sq.Mt. for India India figures in the 11th position in the list of top consuming
234
1988. KCL has expanded the installed capaciry of ceramic tiles during the financial year 2003-
04 by 2300000 sQm. and with this expansion, its total capaciry has risen to 13800000 sQm.
14 Million 12 Million
1:1
23S
The Indian ceramic market produces about 270 million sQm. with a turnover of Rs 5.500 cro~e. India accounted for 4.1% of the global production of ceramics. KCL was the first ceramic tile company in India to be accredited with the ISO 9002. The company has sharpened its focus on exports. KCL has won the prestigious Capexil Special Export award (given for the highest exports achieved in a year) four times in succession in 1992, 1993. 1994 and 1997. also bagging it asain for the year 1999-2000. KCL is the largest exporter of ceramic tiles from India with exports to over 20 countries. It exports to Europe. West Asia and SMRC countries and has plans to tap the export potential in Australia, South Africa. Vietnam. North America and Singapore. KCL is opening its office in Sharjah, which will function as the marketing arm of the company in the Gulf. KCL is adopting a concept of mock bathrooms. kitchens. and living rooms in organized retailing. as a marketing strategy. It has also invested Rs.25 million in creating a subsidiary, Kajaria Plus Ltd, to market its ceramic products. In February 2001. the company also entered the Australian market by floating a subsidiary company in Australia, IWs Kajaria Ceramics (Aus) Pry Ltd with an initial investment of Rs. 10.86 million.
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I:l
import of tiles in 2004 was worth Rs 100 crare. But, in the first nine months of 200S, imports
have gone up to Rs 300 crore. Dumping has resulted in downward revision in prices by the domestic manufacturers. The price war would negate the benefit of the investments made by
the domestic manufacturers towards capaci!}' building and technology upgradation. According to an industry estimate, industry players have made a total investment of Rs 2,500 crare in the last three years for this purpose. The market is expected to take more than three years to absorb this capaci!}'.
FINANCIAL HIGHLIGHTS
The financial statements, name!)' Prafit & Loss account, Balance Sheet and Financial of Kajaria Ceramics Limited are given in tables 6, 7 & 8 respective!)'. Table 6: Profit and Loss Account
Kajaria Ceramics Account Industry :Ceramics ltd Profit & Loss - Tiles (Rs in Crs) Year INCOME: Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income EXPENDITURE: Raw Materials Power & Fuel Cost Employee Cost Expenses Expenses Capitalised Other Manufacturing Miscellaneous Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar
overview
06(12) 05(12) 04(12) 03(12) 02(12) 01(12) 00(12) 99(12) 98(12) 97(12) 351.79 300.4 269.84 239 227.84 235.93 236.48 193.94 136.22 130.21 21.36 20.46 20.66 28.76 25.12 30.03 36.09 28.05 24.97 26.89 330.43 279.94 249.18 210.24 202.72 205.9 200.39 165.89 111.25 103.32 0.81 1.02 0.58 0.4 0.19 0.07 8.69 4.4 0.04 0.35 14.47 0.2 -3.36 4.89 0.48 2.56 1.45 11.93 4.19 1.43 345.71 281.16 246.4 215.53 203.39 208.53 210.53 182.22 115.48 105.1 147.06 60.62 20.06 10.08 38.33 1.02 0 277.17 68.54 14.28 54.26 18.12 36.14 4.47 3.5 28.17 -0.06 28.23 0 34.41 0 10.25 52.33 5.15 0 35 3.73 18.43 103.78 53.37 16.44 10.3 33.47 3.04 0 220.4 60.76 14.61 46.15 14.88 31.27 2.09 3.69 25.49 -1.4 26.89 0 19.17 0 10.25 34.41 5.15 0 35 16.83 80.5 91.97 51.9 14.31 9.14 27.97 0.91 0 196.2 50.2 19.66 30.54 13.19 17.35 3 0.81 13.54 -0.04 13.58 -1.71 10.37 0 3.03 19.17 2.94 0 20 8.94 67.17 80.11 44.65 12.67 7.07 23.45 1 0 168.95 46.58 23.45 23.13 13 10.13 0.8 -0.6 9.93 -0.08 10.01 -0.01 3.26 0 2.81 10.37 1.77 0 12 6.6 61.39 76.08 34.21 11.61 8.33 27.26 1.21 0 158.7 44.69 28.79 15.9 12.85 3.05 0.21 0.21 2.63 -0.13 2.76 0 1.31 0 0.68 3.26 0.74 0 5 1.79 56.01 74.69 34 10.95 9.24 25.22 1.21 0 155.31 53.22 33.15 20.07 12.59 7.48 0.65 0 6.83 -0.14 6.97 0.07 3.16 0 8.75 1.31 0.73 0.43 5 4.23 82.79 71.85 29.41 10.34 8.76 30.67 1.07 0 152.1 58.43 33.91 24.52 12.01 12.51 1.45 0 11.06 -0.21 11.27 -0.06 3.25 0 11.09 3.16 1.47 0 10 7.3 79.02 63.48 27.21 8.74 5.92 26.55 0.7 0 132.6 49.62 31.04 18.58 11.03 7.55 0.8 0 6.75 -0.03 6.78 -0.02 4.74 0 8.22 3.25 1.47 0 10 4.49 72.75 38.88 14.59 5.96 4.55 8.98 7.35 0 80.31 35.17 12.44 22.73 6.15 16.58 1.75 0 14.83 -1.33 16.16 0 3.24 0 13.33 4.74 2.94 0 20 9.88 69.28 34.85 13.48 4.32 4.53 10.48 0.55 0 68.21 36.89 8.3 28.59 5.4 23.19 3 0 20.19 -0.03 20.22 -0.23 4 0 20.72 3.24 3.38 0 23 13.49 61.4
Selling and Administration Expenses Less: Pre-operative Total Expenditure Operating Interest Gross Profit Depreciation Profit Before Tax Tax Deferred Tax Reported Adjusted Net Profit Items Net Profit Extraordinary Profit
Expenses
Adjst. below Net Profit P & L Balance brought forward Statutory Appropriations Appropriations P & L Balance carried down Dividend Preference Earnings Dividend Per Share-Unit Curr Curr Equity Dividend % Book Value-Unit
237
06
Share Capital Reserves Total Total Shareholders Secured Loans Unsecured Total Debt Total Liabilities APPLICATION Gross Block Less: Accumulated Net Block Lease Adjustment Capital Work in Progress Investments CURRENT Inventories ASSETS, LOANS & ADVANCES Depreciation OF FUNDS: Loans Faunds
Mar
Mar
Mar
Mar
99
98
97
14.71 14.71 14.71 92.31 87.2 75.61 107.02 101.91 90.32 197.92 193.27 79.12
2.39 5.65 3.5 3 5.25 14.45 202.58 145.19 146.59 150.41 168.3 181.49 194.88 200.92 198.52 93.57 338.2 263.68 245.47 240.78 250.74 308.28 311.12 307.94 300.43 183.89 388.49 138.41 250.08 0 31.68 4.46 65.95 50.92 5.04 25.31 147.22 360.66 120.37 240.29 0 6.18 4.46 49.96 41.63 2.88 26.89 121.36 55.26 8.37 63.63 57.73 0 0 44.98 -44.98 263.68 51.95 292 264.85 263.58 258.06 254.1 105.8 92.79 80.11 67.53 55.12 186.2 172.06 183.47 190.53 198.98 0 0 0 0 0 4.79 3.23 0 2.08 0.77 3.93 3.93 4.45 4.03 0.45 45.76 50.22 3.04 25.99 125.01 26.85 6.32 33.17 91.84 0 0 41.29 -41.29 245.47 16.86 47.89 46.3 44.97 48.44 3 3.63 26.92 24.41 122.78 122.78 17.94 17.92 2.79 0.95 20.73 18.87 102.05 103.91 0 0 0 0 40.49 41.09 -40.49 -41.09 240.78 250.74 24.21 16.19 242.77 224.33 115.18 43.33 32.33 26.21 199.44 192 88.97 0 0 0 2.1 3.6 30.28 0.45 0.45 0.45 17.09 32.11 7.83 26.35 83.38 12.54 6.72 19.26 64.12 0.07 0 0 0 183.89 21.54
Sundry Debtors Cash and Bank Loans and Advances Total Current Assets Less: Current Liabilities Current Liabilities Provisions Total Current Liabilities Net Current Assets Miscellaneous Expenses not written off Deferred Tax Assets Deferred Tax Liability Net Deferred Tax Total Assets Contingent Liabilities and Provisions
41.04 40.73 38.21 25.49 48.66 55.08 44.58 41.92 4.98 4.87 2.07 3.99 37.82 35.96 39.44 53.12 132.5 136.64 124.3 124.52 19.39 1.47 20.86 111.64 0 0 0 0 308.28 42.24 22.48 3.24 25.72 110.92 0 0 0 0 311.12 44.56 15.93 2.42 18.35 105.95 0 0 0 0 307.94 36.43 15.19 4.98 20.17 104.35 0.03 0 0 0 300.43 22.72
EQuity Paid Up Networth Capital Employed Gross Block Net Working Capital (Incl. Def. Tax)
200603 200503 200403 200303 200203 200103 200003 199903 14.72 14.72 14.72 14.72 14.72 14.71 14.71 14.71 135.62 118.49 98.88 90.37 82.44 121.79 116.24 107.02 338.2 263.68 245.47 240.78 250.74 308.28 311.12 307.94 388.49 360.66 292 264.85 263.58 258.06 254.1 242.77
199803 199703 14.71 101.91 300.43 224.33 104.35 124.52 20.17 14.71 90.32 183.89 115.18 64.12 83.38 19.26
51.98 12.75 SO.55 61.56 62.82 111.64 110.92 105.95 147.22 121.36 125.01 122.78 122.78 132.5 136.64 124.3 Current liabilities and Provisions ( Incl. Def. 95.24 108.61 74.46 61.22 59.96 20.86 25.72 18.35 Total Assets/liabilities (excl Reval & w.oll) 433.44 372.29 319.93 302 310.7 329.14 336.84 326.29 Gross Sales 351.79 300.4 269.84 239 227.84 235.93 236.48 193.94
Current Assets (Incl. Def. Tax)
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Net Sales Other Income Value Of Output Cost of Production Selling Cost PBIDT PBDT PBIT PBT PAT CP Revenue earninl:S in forex Revenue expenses in forex Capital earnings in forex Capital expenses in forex Book Value (Unit Curr) Market Capitalisation CEPS (annualised) (Unit Curr) EPS (annualized) (Unit Curr) Dividend (annualised%) Payout (%) Cash Row From Operating Activities Cash Row From Investing Activities Cash Row From Financing Activities
330.43 279.94 249.18 210.24 202.72 0.81 344.9 256.98 28.99 68.54 54.26 50.42 36.14 28.17 46.29 26.34 53.82 0 2.21 18.43 320.9 6.19 3.73 35 18.76 3.93 -53.29 51.52 1.02 0.58 0.4 0.19 203.2 280.14 245.82 215.13
205.9 0.07
200.39 8.69
165.89 111.25 103.32 4.4 0.04 69.3 5.35 35.17 22.73 29.02 16.58 14.83 20.98 14.67 5.35 0 41.88 69.28 78.75 14.07 9.88 20 20.22 -22.57 -82.5 /01.23 0.35 ~.36 7.35 36.89 28.59 31.49 23.19 20.19 25.59 14.23 8.77 0 2.S3 61.4 188.05 17.17 13.49 23 17.03 22.17 -33.56 16.63 177.82 115.44 104.75
208.46 201.84
199.73 181.94 158.33 144.21 159.63 115.31 116.81 25.82 21.35 18.32 21.94 19 24.67 21.44 60.76 50.2 46.58 44.69 53.22 58.43 48.76 46.15 45.88 31.27 25.49 40.37 18.29 26.5 0 35.81 80.5 224.48 26.94 16.83 35 20.79 77.1 -72.52 -4.73 30.54 37.01 17.35 13.54 26.73 14.94 22.01 0 16.32 67.17 104.51 17.9 8.94 20 22.34 34.74 -28.9 -5.81 23.13 33.58 10.13 9.93 22.93 20.94 15.42 0 0.54 61.39 24.73 15.43 6.6 12 18.23 22.38 -4.39 -18.62 15.9 31.84 3.05 2.63 15.48 31.51 12.36 0 1.13 56.01 26.5 10.52 1.79 5 28.14 22.27 -4.23 -19.38 20.07 40.63 7.48 6.83 19.42 35.21 18.2 0 0.99 82.79 40.63 12.79 4.23 5 11.74 /9.99 -9./8 -10.71 24.52 46.42 12.51 11.06 23.07 48.2 38.64 0 2.56 79.02 107.09 15.47 7.3 10 13.69 20.91 -10.45 -7.66 18.58 37.73 7.55 6.75 17.78 36.75 25.95 0 2.2 72.75 52.99 11.99 4.49 10 22.27 15.93 -17 -0.85
Question
Ana!yse the financial performance of the company using Ratio Ana!ysis.