somany final prjct
TRANSCRIPT
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Summer Internship Project
Return on investment of dealers of
Somany Ceramics Ltd.
Submitted in partial fulfillment of PGDM program2008-10
Submitted by:
Nitin Kumar Tripathi16/097
Company Guide Faculty Guide
Mr.Sanjay Sharma Miss. Priya GuptaAssistant General Manager Assistant lecturer
Somany Ceramics limited.
Apeejay School of ManagementDwarka, New Delhi
July 2009
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CERTIFICATE
This is to certify that the project work done on --------Title---- Submitted toApeejay School of Management, Dwarka by --------Name of the student----- in partialfulfillment of the requirement for the award of PG Diploma in Business Management,is a bonafide work carried out by him/her under my supervision and guidance. Thiswork has not been submitted anywhere else for any other degree/diploma. Theoriginal work was carried during --------to ----- in (Name of the organization)
Date: Seal/Stamp of the Organization Name of the guideAddress:
CERTIFICATE
This is to certify that the project work done on --------Title---- Submitted toApeejay School of Management, Dwarka by --------Name of the student----- in partialfulfillment of the requirement for the award of PG Diploma in Business Management,is a bonafide work carried out by him/her under my supervision and guidance. Thiswork has not been submitted anywhere else for any other degree/diploma. Theoriginal work was carried during --------to ----- in (Name of the organization)
Date: Seal/Stamp of the Organization Name of the guideAddress:
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ACKNOWLEDGEMENT
In Indian culture a task is said to be incomplete without the blessings of almighty and
elders. Also acknowledging the work and help of all those who have guided me for the
completition of my project on time, is indeed duty of mine. Knowing the fact that no
words can measure their guidance to any text.
I take this opportunity to express my profound sense of gratitude to all those who
encouraged me, assisted me and cooperated with me for successful completition of this
summer project and without them this summer project would not have been possible.
I am highly indebted to Mr. Sanjay Sharma assistant general manager (AGM) who gave
me an opportunity to work in all the Departments of this esteemed organization and for
his whole-hearted support and suggestions. I am highly thankful to him that in spite of his
demanding professional preoccupation he always made himself available for guidance
and assistance to me in my project works. Working under his able guidance was a
learning experience for me.
It provides me immense pleasure to extend my grateful thanks to Mr. Naveen Singh
(area manager marketing of west region NCR, SPL Miss saalu, Mr. kuber
I would like to acknowledge my sincere thanks to Miss Priya Gupta , Faculty Mentor,
Apeejay School of Management for her excellent guidance and supervision for the
completion of this project successfully.
I express my deep sense of gratitude and reverence for my parents and friends for their
endless love guidance moral support encouragement and cooperation throughout my
study and work without which this work would ever have been completed.
The acknowledgement will not be complete without a vote of thanks to all other
employees of Somany ceramics limited, who helped me in one way or the other in
completion of this project.
NITIN TRIPATHI
PGDBM
APEEJAY SCHOOL OF MANAGEMENT
DWARKA, NEW DELHI
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EXECUTIVE SUMMARY
My maiden voyage with Somany Ceramics Limitedbegan on 6th may 2009. A life time
opportunity to not only work with Somany but also explore my inner self and identify my true
potential.
Somany Ceramics Limited is a leading Indian t ile and sanitary ware company .From over 40
years Somany has been a pioneering manufacturer, supplier and exporter of Floor Tiles, Wall
Tiles, Sanitary Ware including urinals, basins, etc. With the highest standards and its excellence
in quality and design it is the one of the market leader in the industry.
During my training I have been getting continuous insight into the tile industry. My training was
a delight as my mentor designed it in that very manner. I had the opportunity to meet the dealers
and sub dealers of Somany Ceramics My tenure in Somany tiles gave me a practical knowledge
regarding various things, which I learnt in theory and I hope that this will help me in my
professional life in future.
Now as we know there has been welcome improvement in the awareness of satisfaction
level in todays era in each and every field and especially into the manufacturing industry so
it is very important to have satisfied dealers.
This study aims to investigate t he return on investment level of existing
dealers of Somany tiles using different products (ceramics, sanitary ware,
C.P.fitting). The project undertaken in Somany ceramics was a great experience for me
and gave me immense knowledge about the various activities of dealers. This project brings
out various problems related with the Somany due to which its work is affected severely.
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Definitions:
In a broad sense Return on Investment simply means how much money you get out
compared to how much money you put in, in regards to an investment.
A performance measure used to evaluate the efficiency of an investment or to compare the
efficiency of a number of different investments.
To calculate ROI, the benefit (return) of an investment is divided by the cost of the
investment; the result is expressed as a percentage or a ratio. For example, if a project has an
ROI of 300%, the net benefits derived from that project are three times those of the expected
total costs to implement the project.
Expressed in absolute terms as a %, ROI= (total benefits total costs) (total costs) x 100.
Total benefits include financial savings and money made as a result of the investment; Total
costs include the investment (e.g. training) costs, cost of participants time, any physical
materials used, etc., possibly including department overheads.
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Setting a Minimum ROI Threshold avoids the need to precisely quantify benefits in
financial terms. The investment is judged to have given a positive return if a particular
benefit target is achieved or if the cost of benefits has exceeded the costs of the investment.
This may be most suitable when time is limited for calculating absolute ROI or where a
yes/no? assessment of value is whats required.
Return on Investment (ROI) analysis is one of several approaches to building a financial
business case. The term means that decision makers evaluate the investment by comparing
the magnitude and timing of expected gains to the investment costs. Decision makers will
also look for ways to improve ROI by reducing costs, increasing gains, or accelerating gains.
Return on investment is a very popular metric because of its versatility and simplicity. That
is, if an investment does not have a positive ROI, or if there are other opportunities with a
higher ROI, then the investment should be not be undertaken.
ROI measures how effectively the firm uses its capital to generate profit; the higher the ROI,
the better.
Formula of return on investment
(Gain from investment - cost of investment)
ROI = ______________________________________
Cost of investment
Single-period
Arithmetic return
The arithmetic return is:
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Logarithmic or continuously compounded return
The logarithmic return or continuously compounded return, also known as force of interest,
is defined as:
It is the reciprocal of the e-folding time.
Benefits:
Major categories of benefits may include:
y labour savings (e.g. reduced duplication of effort through better team working),
y productivity increases (e.g. resulting from a new process, behaviour, mindset, skill,
knowledge or method),
y better customer management (e.g. less customers lost, better management of debt),
income generation (e.g. sales performance, better success in winning competitive
pitches, sales referrals by non-sales staff)
y New or improved product/process ideas and innovation.
How Can ROI Be Useful?
Perhaps the biggest reason for the popularity of ROI is its simplicity. A companys ROI is
directly comparable to returns on other, perhaps more familiar, investments (such as an
account at the bank) and to the companys cost of capital. If we pay 10 percent interest on
capital but earn only 8 percent, thats bad. If we pay 10 percent but earn 15 percent, thats
goodwhat could be simpler?
It is a comprehensive tool that measures activities of different sizes and Profits happen when
a company operates effectively. We can tell that the management team is doing its job well if
the company prospers, obtains funding, and rewards the suppliers of its funds.
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Perspectives
Different stakeholders are likely to have different perspectives of ROI, for example:
y L&D may look at achievement of learning goals or what skill levels are required by
the organisation and what theyve enabled
y Executives may focus on strategic fit, external reputation or competitiveness
y Corporate functions such as HR may be more concerned with matters like staff
turnover and the ability to attract high calibre staff from other organisations, or
comparing the investment against possible alternatives
y Business managers may put emphasis on performance, profit, productivity and levels
of customer satisfaction
y Project managers set their sights on achieving project / business goals
y Line managers may worry about the extent to which they can confidently delegate or
the amount of time they spend fire-fighting people problems
y Employees may be most concerned with work satisfaction, personal progression,
wellbeing or having a sense of being valued by the organisation.
Limitations of ROI:
ROI is a popular metric for sure. It boils down a complex soup of numbers into a single
percentage that everyone can digest. But there are some limitations of ROI-
y The ROI metric is more accurate for cost-saving projects than for revenue-generating
projects.
y ROI analysis works best for IT implementations that produce tangible easy to
measure cost benefits like improved productivity.
y When calculating ROI from a revenue generation point of view, estimates are often
used - lessening the accuracy of the analysis.
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Ceramic Industry: Tilling Fast!
The word Ceramic comes from the Greek word Keramos meaning pottery, it is related to
an old Sanskrit root meaning to burn but was primarily used to mean burnt stuff. In the
early days the tiles were hand made, hand formed and hand-painted. But today the ceramic
tile is not hand made or hand painted. In the modern house ceramic tiles is used throughout
for their bathrooms and kitchens and in every vital area of the premise.
Apart from decorative look ceramic tiles are primarily hygiene products and that is evident
from its usage ranging from bathrooms and kitchens in average Indian households to medical
centers, labs, milk booths, schools, public conveniences etc. A ceramic tile is basically a
utility product and popular housing projects are increasingly switching over to Ceramic
Tiles from the traditional mosaic and even granite or marble, owing to several factors viz.
ease in laying ability, versatility, low price and most importantly hygiene.
The main product segments are the Wall tiles, Floor tiles, Vitrified tiles and Porcelain tile
segments. The market shares are 35 percent, 53 percent and 12 percent respectively for wall,
floor & Vitrified/Porcelain tiles.
Industry Profile
Ceramic tiles as a product segment have grown to 3.8 million tons production per annum.
The potential seems to be great particularly in view of the boom in the housing sector, retail
sector and IT and BPO sectors. The ceramic tile sector has been clocking a robust growth of
12-15 percent consistently over the last few years. The investment in the ceramic tile
industry, in the last five years is approximately Rs2000 crores. This industry provides
employment of 550000 people, 50000 of whom are directly employed. The potential is huge
considering the per capita consumption of ceramic tiles in India. Currently it is at 0.5 sq.m
per person in comparison to over 2 for like countries like China, Brazil and Malaysia.
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Some of the key statistics pertaining to the industry are summarized below:
i. World production: 6400 Million Sq.mtrs
ii. India's Share: 200 Million Sq.mtrs.
iii. World Ranking (in production) : 7
iv. Per capita consumption: 0.15 Sq.mtrs.
v. Global Industry Growth Rate : 6%
vi. Growth rate (India Domestic Market) : 12%
vii. Organized industry turnover (India) : INR 22.50 Billion
y Glazed Wall tile share 40%
y Glazed Floor tile share 46%
y Unglazed Vitrified tile share 8%
y Glazed Porcelain tile share 6%
viii. Unorganized industry turnover
y Glazed Wall tile share 57%
y Glazed Floor tile share 35%
y Unglazed Vitrified tile share 6%
y Glazed Porcelain tile share 2%
ix. Investment in the last 5 years: INR 20 Billion
x. Organized sector :
y Share of Production : 56%
y No. of units : 15
y Revenue (excise duty) : INR ~ 2.3 Billion per annum
xi. Unorganized sector
y Share of Production : 44%
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y No. of units :~200 (70 percent based in Gujarat region)
y Revenue (excise duty): INR 0.7 Billion per annum or less
xii. Job Potential: 50000 direct
International Scenario
30 major tile manufacturing companies cover 95.8 percent of the total world production of
ceramic tiles in 2008respectively. China is the largest producer and contributes almost 33
percent of the world production in 2008. This is followed by Thailand, Poland, South Africa
and Russia which are growing at almost 20
percent. Italy, Spain and China are the
leading exporters and USA, Germany and
France are the leading importers.
Countries like Malaysia, Thailand,
Indonesia, Sri Lanka and Vietnam are
setting up their own plants. China has
emerged as a major competitor.
Producers from Spain and Italy have the
advantage of lower transportation costswhile exporting to USA and Germany.In
India, the per capita consumption is as
low as 0.30 square meters per person
compared to China (2 square meters per
person), Europe (5 to 6 square meters
per person) or Brazil (2.5 square meters
per person).
Asia
53%
Central&
south
America
10%
Europe
(Non
E.U.)
6%
Europea
n Union
23%
North
America
4%
Africa
4%
Production Region
Wise(in Percentage)
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Indian Scenario
In India, Ceramic tile industry emerged in the late 1950s. Ceramic Tile Industry can be
classified into three categories namely wall tile segment, floor tile segment and vitrified
and porcelain tile segment. In India the floor tiles segment is growing at a faster rate. The
market for the wall tiles is rising at a relatively slower pace and this has resulted in high
excess capacity in the wall tile segment. The entry of two relatively new product categories
Vitrified tiles andPorcelain tiles has increased the size of the market considerably. It is
expected that these products will gradually take away the market from the conventional
ceramic tiles (wall and floor). As far as manufacturing of ceramic tiles is concerned, both the
organized and unorganized sector plays a very important role in India. Growth of the
unorganized sector accounted for 44 percent of the total production and the revenue earnings
from the organized sector accounted to over Rs150 crore.
Ceramic tiles as a product segment have grown to a sizeable chunk today at 340 Millions
Square meters production per annum.The ceramic tiles sector has been clocking a robust
growth of 12-15% consistently over the last few years.
Asia
50%
Central
& south
America
10%
Europe
(Non
E.U.)
7%
Europea
n Union
20%
NorthAmerica
8%
Africa4%
Oceania
1%
Consumption Region
wise
(in Percentage)
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Despite an overall slowdown of the economy this sector continues to grow at a healthy 12
percent per annum. India ranks 7th in terms of production in the world and the market share
of India have risen from 1.7 percent to 2.7 percent in terms of ceramic tile production.
The introduction of vitrified and porcelain tiles. These new entrant product types are said
to be the tiles of the future. Internationally these tiles are already the major sellers. These
categories of products account for 13% of all organized sales in this industry.
These new products and the conventional wall & floor tiles have together made the organized
industry grow to a formidable Rs. 3000 crores industry.
The industry has a total production capacity of approximately one mn tpa in the
organized sector and 200,000 tpa in the small and informal sector. Some 10% of the
capacity in the organized sector is non-operational. The informal sector has a relatively
variable capacity profile. Apart from the 6 major players at the top, there are about 29
smaller players in the organized sector. With a total production of 1300,000 tones in
2007-08, the capacity utilization in the organized sector was 65%.
y The wall tiles segment is dominated by H&R Johnson, SPL and Kajaria.
y
In the floor tiles, Murudeshwar, Bell and Spartek, account for 60% of the turnoverof the organized sector.
y The institutional to retail sales ratio is about 40:60.
y Floor tiles segment is anticipated to grow faster than the wall tiles as the
consumption ratio shifts from 2:1 to almost 1:1 as is in the developed countries.
y Kajaria and SPL dominate the north while H&R Johnson, Bell and SPL rule the
west; Murudeshwar and Spartek share the southern markets.
y H&R Johnson (India) has the largest market share in the wall tiles.
y Johnson International of the UK holds 40% of its equity. It is setting up a 93,000
tpa plant (30,000 tpa of wall and 63,000 tpa of floor tiles) in Rai gad district of
Maharashtra, which could be the largest in South-East Asia.
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y Kajaria Ceramics is the second largest player in the industry. It has maintained a
fast growth amongst the industry majors with a 30% growth in turnover and 50%
in net profit. SPL, the erstwhile Somany Pilkington Ltd, with a long presence in
the country along with H&R Johnson, commands the second largest market share
(19%) in the wall tiles segment. It is further expanding the capacity from 110,000
TPA to 130,000 TPA.
Among the other established players are Deora Ceramics, Diamond Ceramics. These
apart, there are new entrants like EID Parry, Aurangabad Asbestos and Nitco.
The industry is capital intensive although there is a sizeable presence of the informal
sector, which operates on, smaller capital inputs. With new technology and large
economic size, the capital costs are high. So is the capital working requirements because
of the need to store a wide variety of the product and long credits.
Trends in Indian ceramic tile industry
y In India, the major part of ceramic tiles manufacturing is undertaken by the SMEs.
y The ceramic tiles industry is worth about Rs 6000 crore, and dominated by medium
scale players.y Besides the established 12-14 players there are more than 50 small scale players
today.
y Some of the bigger players have started sourcing from the unorganized sector.
The products are then marketed under the brand names of the bigger companies.
This trend is bound to grow in both short and medium term.
Like developed markets the financial institutions (both foreign and domestic) are beginning
to show interest in the sector. Various foreign Real Estate and Finance companies like GE
Commercial Finance, Tishman Speyer, Ascendas and Farallon Capital have entered the
Indian market.
Growth Trends
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Production
y Indian ceramics industry provides employment to 550,000 people, of whom 50,000
are directly employed.
y As per 2007-08 estimates, there are at present 16 units in the organized sector, with
an installed capacity of 21 lakh million tones (MT). This accounts for 2.5 per cent of
the world ceramic tile production. The ceramic tile industry has been growing at
about 12 per cent per annum.
y In 2009-10, production of ceramic tiles was estimated to be at a 360.00 million square
metres as against 340 million sq. meters of ceramic tiles, out of the global production
of 6,400 million sq. meters during 2008-09, when India was ranked 7th in the world
in terms of production of ceramic tiles produced.
y Gujarat accounts for around 70 per cent of total ceramic production, and the
unorganised sector, comprising entirely of SMEs, manufactures a staggering 37 per
cent of the countrys total ceramic output.
y The size of the unorganized ceramic tiles industry - comprising wall tiles, floor tiles
and fully vitrified tiles - is around US$ 3.5 billion. These are exported to East and
West Asian countries.
y In sanitary ware industry, at present, the production capacity in organized sector is
1.43 lakh MT per annum, and 3,65,695 MT production has been estimated in 2007-
08. In the small scale sector, there are over 200 units with capacity of 53,000 MT per
annum. The industry turnover is above Rs 500-600 crores (US$ 102.77 million - US$
123.32 million) per annum. Sanitary ware industry has been growing by about 5 per
cent per annum during the last two years.
y Pottery ware, signifying crockery and tableware, are produced both in the large scale
and the small scale sectors. There are 16 units in the organized sector, with a total
installed capacity of 43,000 MT per annum and the production was estimated at
58,781 MT for 2007-08. Small-scale sector has over 1,200 plants, with a capacity of 3
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lakh MT per annum. Bone china and stoneware contribute to the major portion of the
production of ceramics tableware.
Exports
y India exports ceramics worth approximately US$ 1 billion per annum. The main
export products are chemical porcelain and insulators, handicrafts, art ware and
stoneware crockery.
y The ceramic tile industry has shown a growth rate at about 12 per cent per annum.
These are exported to East and West Asian countries. The exports during 2006-07
amounted to Rs 251.20 crores (US$ 51.63 million).
y The exports in sanitary ware industry was to the tune of Rs 93.49 crores (US$ 19.21
million) during 2006-07.
y The export of pottery ware during 2006-07 was of the order of Rs 45.50 crore (US$
9.35 million) and major markets include the US and Europe.
Tile Consumption Pattern
From a market point of view, India has always been classified into five different zones,
North, South, West, East and middle. Most of the companies take each of the area into a
single market. From tile industries perspective West is the most lucrative market,
followed by north, south, middle and east zones in that order.
y There has been a spate of constructions throughout the India, but the first three
zones have the maximum concentration of these activities, lead by Mumbai-Pune
belt and a few cities in Gujarat, followed by National capital region and Banglore.
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y Middle and Eastern part of India has not grown in proportion of the rest three
markets and tile consumption is significantly lower as compared with other three
regions. While Middle India is equidistant from all three regions where ceramic
manufacturers are concentrated, for the Eastern part of the country, tile
manufacturers end up spending maximum amount on logistics.
THE INDIAN COUNCIL OF CERAMIC TILES (ICCTAS):
The Indian Council of Ceramic Tiles and Sanitaryware (ICCTAS) is a registered body,
founded in 1990 and based in Delhi, India.The ICCTAS is a voluntary non-profit Association
dedicated to the growth of Ceramic Tiles and sanitary ware.
Objectives:
y Promote sales of products of Ceramic Tiles & Sanitary ware Industry in
domestic and Overseas Markets.
y Promote interest & co-operation of members on above activities.
ACTIVITIES OF ICCTAS:
y Promote/Trade Exhibitions, Campaigns, Events, and
Seminars in India & Abroad.
y Provide Trade related information on regular basis
comprising articles, circulars, periodicals, statistics, etc.
y Joint representation of issues/matters affecting
directly/indirectly the industry to Government, Local
bodies & Institutions.
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y Promote ICCTAS membership in the industry among all
manufacturers in Ceramic & Sanitary ware.
Impact of slowdown on Indian ceramic tile industry
The economic downturn has hit ceramic tile manufacturers, large and small alike.
However, due to the nature of the industry, the effect has been gradual. The construction
industry has a longer cycle than that of most other industries. Almost-completed project
would be completed regardless of the economic scenario.
The ongoing financial crisis has hit the real estate market in India badly, and as a result
the booming business in the ceramic industry has been slightly affected. However, the
ceramic sector depends on the raw material available in the local market, and also caters
to buyers in the domestic market; the financial crisis factor doesnt play a critical role.
However, in the past three or four months, orders have thinned and a number of smaller
set-ups are feeling the pinch of the falling demand. Some companies in Gujarat had even
taken a holiday for some time.
Amid slowdown in construction industry, the ceramic and vitrified tile some manufacturers
have been forced to cut down their production capacity to 50 per cent.
The international gas price has fallen from $ 9 per million Btu to $ 5 per million Btu. Whichis why, manufacturers have asked the government to now bring down gas price from Rs 15
per scmd to Rs 11 per scmd that might offer some respite to the units amidst slowdown.
Apart from gas prices, the units are also demanding other benefits as well. "We are also
asking the government to increase the subsidy on exports from 6 per cent to 15 per cent.
Also, to stand against the Chinese products, they are asking the government to put more duty
on import materials. Also, the units are demanding a reduction in value added tax (VAT)
from 12.5 per cent to 4 per cent.
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COMPETITION WITH FOREIGN HAND:
Many leading foreign ceramic companies have been venturing into the lucrative Indian
ceramic industry. Indian companies catering to the high end luxury segment are facing
steep competition from Italy and Spain, whereas China is trying to capture the market in
the lower end. Interestingly, even this situation has been ineffective in mounting pressure
on the SMEs in the ceramic industry. Although the Chinese ceramic products are cheap
and target mainly the mass market in the country, they lag behind in quality and hence
have very few takers. On the other hand, the Italian companies mainly import equipment
at a lower cost and then get them manufactured by any small enterprise in the business.
SMEs operating in the ceramic industry are going to benefit immensely from this new
trend. This scenario will encourage many new entrepreneurs to venture into the field of
ceramics and set up new units.
Constraints
The industry faces some constraints: it is highly fragmented with very few large players
and a large number of SMEs who face problems of poor economies of scale. Specialists
from different European countries including Spain, Germany, the UK and the
Netherlands feel that doing business in India without a local associate is more difficult
compared to China, and finding the right partner is a major hurdle.
Other constraints are:
y The industry also suffers due to non-availability of raw material with uniform
properties and lack of manpower with suitable technical skills. Problems range from
rising costs and falling prices higher taxes, fuel costs, transportation costs, lack of raw
material, dumping of cheaper vitrified Chinese tiles into India, and to top it all, a
slump in demand from construction.
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y Another common constraint is lack of easy access of raw materials. For example,
lignite material essential for making tiles, were easily accessible earlier to local units
available in Kutch districts. Now, the tile makers are being forced to bring the
material from Bharuch, which adds immensely to the transportation costs.
y Energy costs account for 45 per cent of tile making, which requires natural gas or coal
to file the knives, apart from electricity.
y Taxes add another 25 per cent to costs and hurt the tile manufacturers, especially as
there is no import duty or anti-dumping duty on the Chinese tiles.
y A recent phenomenon has been delaying of payments by big manufacturers, which is
also forcing the local tile makers to close their units.
Where we stand and what we must do?
As a foreign exchange earner or a global player, Indian Tile industry has captured the
attention of the world in the ceramic tiles segment. India is projected to figure in the top 3
countries manufacturing ceramic tiles by 2010. This however is subject to policiesfavorable for the tile industry to complete with international players on an even ground.
To compete internationally, our plants must be geared up to large units , These will also
help us in lowering our cost of production significantly. Better infrastructure will bring in
better growth in terms of consistency and sustenance. Freight,supply of power and gas
remains the key cost-related issues impacting the industry. Availability, consistent supply
and reasonable rates are extremely important for the growth of the ceramic tile industry.
Also, the prevailing anomalies pertaining to Basic Customs Duty on import of ceramic
tiles from China and raw materials imported from abroad need to be corrected to prevent
dumping of tiles from China. Rural thrust should be enhanced by favorable excise duty
and MRP structure.
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Focus on Rural Market
Since the last few years there has been an upsurge in demand for tiles in the rural
markets. Given the scenario where more than 70% of India's population resides in
rural areas and the stagnation that is setting-in in urban cities, the rural market is a
vast untapped market for ceramic tiles. However, for a product to reach six lakh
locations, one needs to be realistic about the fact that 700 million villages are spread
over 3.2 million sq. metre of area & the road conditions are usually poor. It is,
therefore, important that tile manufacturers expecting to tap these markets should
have a good distribution system coupled with efficient logistics.
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Creating a world of tiles. About organization
It is said that to accomplish great things you must dream. Somany Tiles was initiated
with the same vision to lead the market. Today after three decades, it is one of India's
leading manufactures of quality wall and floor tiles. A face of constant innovation,
progression and quality products in a market plagued by fickle competitors.
Over the years Somany has made some of the most revolutionary and technically superior
benchmarked products for its customers, like India's most durable VC Shield floor tiles,
the Durastone range of world's toughest tiles, the 14x10 range of world's most preferred
sized tiles and 12x18 (bigger size rectified tiles).
Somany is also the first tile manufacturing company in India to be honoured with both
the prestigious ISO 9002 & ISO 14001 certifications for its two highly advanced state-of-
art manufacturing facilities at Kassar, Haryana and Kadi, Gujarat. Somany's
marketing strength has also leaped to greater heights. Today it has one of the most
extensive and robust dealer network spread all over the country.
Somany is the front-runner in the industry to use the latest technology possible and to come
up with innovative tile designs and sizes. Somanys design and sizes are the most copied
varieties in India. Somany Tiles believes that the days are pass when tiles were sold as
pieces used to cover floors and walls. Now is the age when tiles are sold as concepts, which
could be visualized by the consumers before purchasing them in exclusive display outlets.T
Somany becomes Indias first ceramic tile company to receive patent for its
manufacturing technology
Somany has collaborations with the biggest and the best international tiling brands too,
like Kaleseramik, Turkey and Leonardo Cermica, Italy. Somany plans to get in to
future tie-ups with other prominent international players and market their global product
portfolio in India.
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Just like all the other aspects of the brand, Somany's communication has also been
consistent yet refreshing. The current logo sports a dash of red that gives it a vibrant
touch and indicates the rejuvenated spirit of the brand. It is in anticipation to the evolving
customer trends and fast changing market environment. Thus connecting with the
changing tastes of the discerning customers and keeping Somany fresh, young and
relevant in their minds.
It is this dedication towards quality and hardwork combined with accurate marketing
strategies that will take Somany ahead in the market and place it high in this race to
perfection.
Business profile
SPL ltd. formerly Somany Pilkingtons ltd.(SPL),was promoted by the KL Somany Group
and PilkingtonTiles ltd.,UK in1968.in FY95,the Somanys acquired the entire 20.3% stake of
its UK collaborater at a cost of rs.290mn (at Rs616 per share).SPL is engaged in the
manufacturers of ceramic floor and wall tiles,with a market share of about 19%.the company
has wall tile units using state- of- the- art technology,of 5000sq.m/day capacity each,at
Kassar (Haryana) and Kadi (Gujarat).
The company had tied-up with Schblona India to manufacture ceramics decals and fire the
same on glazed tile.it has one of the first Indian companies to use this techonology.it also
commissioned a new unit at Kassar with a fire printing technology that van print any kind of
prints on tiles.inFY9,the company had entered into a technical collaboration with Leonardo
Ceremica, Italy:the fourth largest producer of ceramic tiles in Italy and a leading
manufacturer in the vitrified porcelain tiles segment. InFY 00, it entered the vitrified tiles
segment by launching Greviti. In FY01, the company launched a new concept in floor and
wall tiles, called the Versa tile brand.
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Promoters
Mr. H.L.Somany
A visionary and the founder director of SPL limited, (formerly known as Somany Pilkington)
he is also credited with setting up mega brands like Hindustan Sanitary ware &industries ltd.
and M/s Hindustan National Glass limited.
With more than 60 years experience in business, Mr. Somany is a member of Institute of
ceramics. During his illustrious carrier,he has held various position with Government and
non government agencies and was the chairman of Capexil in 1969, Commissioner of
Calcutta Port Trust during 1972-74, President of ASSOCHAM in 1997 and a member of the
eastern regional committee of IDBI.
His social commitment saw him being instrumental in setting up and running several schools
and colleges in rajasthan and Haryana .his multi faceted personality makes him keen patrons
of arts and the chairman of the Sangeet Kala Mandir Trust&Samagam.
Mr.Shreekant Somany
Founder director of SPL ltd. was trained at foundary practices and machine shop, Geneva. He
set up soma plumbing &fixtures in 1975. Later,he moved on to head and glass division of
Hindustan sanitary ware,a turn around venture .two years after joining SPL limited in
1992,he took over as managing director.since then he has spearhead the companys growth
and foray in to futures. He is the chairman of the Indian Council of Ceramics Tiles and
Sanitaryware (ICTTAS) and holds key positions with managing and expert committees of
ASSOCHAM and PHD chamber of commerce and industry and also a member of National
Council of Confederation of Indian Industry (CII).
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Mr. Abhishek somany
An mba from Richmond University with specialization in Accounts &Finance, he is the
Executive Director of SPL.
Before chartering a new success course for the company; which has taken SPL to new
heights, he has undergone intensive training at M/s Pilkingtons tiles U.K., Manchester plant
.in manufacturing of Glazed ceramic wall &floor tiles and has attended advance management
course at sun ridge park.UK.
In course of his association with the company in various capacities, Mr. Somany has gained
wide knowledge and experience in all aspects of Ceramic &Tile Industry and also acquired
valued experience and knowledge in varied aspects of corporate affairs.
Mission
To manufacture market and service products of international standard. Ensure that all
company processes are geared to deliver the highest levels of customer satisfaction .keep on
employee-centric focus in all the operations. Foster innovation and creativity at all levels.
Deliver value to all stakeholders of the company
Vision
To emerge as Indias finest manufacturer of ceramic tiles using the latest technologies,
delighting customers and enhancing shareholder value on a consistent and sustainable basis.
MILESTONES TO SUCCES-
Somany Ceramic India made its beginning with as a small organization, but hascontinued to learn and grow to a commanding status in the tile industry. The company
has gone a long way in popularizing and making easily available a whole range of tiles
and sanitary ware. And it has set very high standards in developing products and
processes which meet stringent quality norms. As it grows further, Somany will continue
to markup on major milestones along the way, setting the road for others to follow
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YEAR EVENTS
The company was incorporated on 20th January at Calcutta
The company entered into a collaboration agreement with
Pilkington's Tiles Limited, U.K.
1968 Issued 93,200 No. of equity shares to directors, etc.
20,000 No. of equity shares to ICICI, 78,000 No. of equity share to
Pilkingtons Ltd., U.K. (30,000 shares for cash and 48,000 shares
against plant and equipment).
1970 1, 08,800 No. of equity and 10,000 Pref. shares offered to public
in January 1970.
1974 - 100 forfeited shares reissued.
1976 - 2, 99,950 Bonus Equity shares issued in prop. 1:1.
1983 - The company undertook to set up a new unit at Kadi in Gujarat
with a licensed capacity of 6,000 tonnes per annum.
Production was started in June.
Kadi unit had teething troubles and did not reach its installed
capacity.
1984 Pref. shares redeemed on 28.2.1985. 2, 99,950 bonus equity
Shares issued in prop. 1:2.
1985 - Production increased further to 5,665 tonnes despite power Supply
constraints.
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The company continued to face problems at Kassar due to
changeover of a large part of firing system from furnace oil to
residual fuel oil.
A modernisation programme was undertaken at Kassar which
would enable the company to introduce newer designs.
1986 Production declined to 19,742 tonnes due to strike at the Kassar
factory from 22nd June 23rd September, 1987 and poor power
availability.
The company proposed to install a 22 MW diesel generating set
and steps were taken to install storage tanks for liquified petroleum
gas, for which Government approval has been received.
Modernisation in the body preparation section was in progress.On
completion of the proposed programme of modernisation and
expansion, the production capacity at Kassar would stand
increased to 31,000 tonnes per annum.
1987 50 forfeited shares reissued.
1988 Commissioning of hydraulic presses at Kassar was completed and
trial production was started. Active steps were being taken for
further modernisation under the TDF Scheme at Kadi was
approved by Government.
1989 The company took up a floor tile project with a capacity of 12,000
tonnes per annum
8, 99,900 Bonus shares issued in prop. 1:1.
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1990 Imported machines under TDF Scheme were installed at Kadi.
1991 Two more automatic hydraulic presses were installed at Kassar.
1992 The Company entered into a collaboration agreement with M/s
Pilkington's Tiles Ltd. for upgradation in the existing technology.
1993 During October/November the company made a right and public
Issue
1994 The capacity of floor tiles was expanded from 15,000 tonnes to
30,000 tonnes.
1995 5,000 sq. mtr./day wall tile unit by double fast firing was
commissioned and is fully operational.
45, 99,600 bonus equity shares issued in prop. 2:1.
1996 The Company introduced India's largest ceramic tile
(45cmX45cm), production of such large size ceramic tile requires
very high technology and skills.
1997 SPL has tied-up with Schblona India to manufacture ceramic
Decals and fire the same on glazed tiles. SPL would be one of
theFirst Indian companies to use this technology.
SPL introduced 45x45 cm tiles - a world class product for the
first time in the domestic market.
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A new unit has also been commissioned at Kassar with a fire
printing technology that can print any kind of prints on tiles.
1999 The company has entered into a technical collaboration with
Leonardo Ceramica, Italy which is a part of the Cooperative
Ceramica di Imola group: the fourth largest producer of
ceramicTiles in Italy and a leading manufacturer in the vitrified
Porcelain tiles segment.
The Company has entered into an Agreement with National
Securities Depository Limited (NSDL) in order to provide the
requisite facilities for dematerialisation of its shares.
2000 SPL Ltd., the makers of Somany tiles, has entered the vitrified
Tiles segment by launching `Greviti'.
2001 SPL Ltd., makers of Somany tiles, has launched a new concept in
floor and wall tiles, called the versaTile brand.
2004 Delists shares from Delhi Stock Exchange Association Ltd.
2006- SPL Ltd has entered into Joint Venture (JV) Agreement with
Keraben S A with the aim of manufacturing, promoting,
distributing and selling the products within India and other
countries.
ORGANIZATIONAL STRUCTURE:
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NAME DESIGNATION
Mr. Shreekant Somany Chairman and Managing Director
Mr. Abhishek Somany Joint Managing Director
Mr. G L Sultania Director
Mr. R K Daga Director
Mr. R L Gaggar DirectorMr. Ravinder Nath Director
Mr. Salil Singhal Director
Mr. G. G Trivedi Executive Director
Mr. Sunil Trikha Nominee Director
Mr. A K Beejawat President
Mr. R K Lakhotia Vice President(Finance)
Mr. Ketan Dave Vice President(Technical)
Mr. T K Jena Vice President(Sales and Marketing)
Mr. R P Mittal Vice President(Commercial)
Mr.Samir Raheja Company Secretary
PRODUCTS &THEIR FEATURES
RANGE OF WALL TILES
PRODUCT (SIZE INMM)
INDUSTRYFOCUS
TYPES
Wall Tiles of Size 200x200 Tiles New Arrivals, Deluxe, Super
Premium, Premium, Classic and
Regular
Wall Tiles of Size 200x300 Tiles Deluxe, Super Premium, Premium,
Classic and Regular
Wall Tiles of Size 250x350 Tiles Woodart, New Arrivals, Colorz, LTD,
Barcode, Super Premium, Premium,
Classic and Regular.
Wall Tiles of Size 300x450 Tiles Forest, Tifny, Acero, Special Prints,
Super Premium, Plain Colour
Wall Tiles of Size 450x600 Tiles New Arrivals
Wall Tiles of Size 605x605 Tiles New Arrivals
Wall Tiles of Size 150x605 Tiles New Arrivals
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Wall Tiles of Size 200x425 Tiles Marfil, Emporio,Sandra,Lorel
Floor tiles of size300x300 Tiles Plain Colours ,Super Premium,
Premium, Printed Series
Floor tiles of size
396x396(Edgecut)
Tiles Ocean Magenta Gr.3.,Silvia Beige
Gr.3, Starflame Almond Gr.3
Floor tiles of size406x406(Edgecut)
Tiles Premium, Olympic(glossy), Popular,Classic
Floor tiles of size 605x605 Tiles New Arrival
Floor tiles of size
496x496(VC Shield)
Tiles Noble Mushroom, Lazio Marfil,
Laguna Beige
Floor tiles of size 600x450 Tiles Comfort Brown, Element Nero, Zenith
Blue. Zenith Light, Loft Brown
Floor tiles of size 450x600 Tiles New Arrival
Floor tiles of size 300x605 Tiles New Arrival
Floor tiles of size 333x333 Tiles Rustic Series
Floor tiles of
size:605x605(Virtified)
Tiles New Arrival
SANITARY WARE
PRODUCT INDUSTRY
FOCUS
SIZE DESIGN COLOR
Rounded
shape
Wall hung
bidet
Wash basin 555x360x335(mm) Rounded
shape
White and
cream
Wall hung &
Pedestal
Basins
Wash basin 555mm x 420mm Semi -recessed White
Art Basin Wash basin 530x420mm Over the
Counter
White
Round shape
Wall Hung
Wash basin 550x365x370
[mm].
rounded shape White&
Cream
Wall Hung &Pedestal
Basins
Wash basin 520x410 mm square white
Wall Hung &
Pedestal
Basins
Wash basin 565x450 mm Straight-line Best White
and Cream
Wall Hung & Wash basin 640x500x835 mm Bowl shape Best White
and Cream
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Pedestal Basin
Over the
Counter Art
Basin
Wash basin Diameter of 455
[mm].
full-bodied
design
Best White
and Cream
Over the
Counter Art
Basin
Wash basin 650x420 mm Wide-bowl
design.
Best White
and Cream
Over the
Counter Art
Basin
Wash basin 600x400 mm boat shaped Best White
Wall Hung-
WCs Ren
Bathroom &
Kitchen
Fixtures
550x365x370
[mm]
Italian `passo`
design
Best White
Coupled Sets
WCs
Bathroom &
Kitchen
Fixtures
685x365x760
[mm]
Compact-
Space saving
design
best White&
Cream
Single Pc.
Toilet
Bathroom &
Kitchen
Fixtures
740x440x740
[mm]
Neo-classical
oval design
best White&
Cream
Wall Hung
Urinals
Bathroom &
Kitchen
Fixtures
700x470x265[mm] Square
Designed
best White&
Cream
Wall Hung-
Urinal
Bathroom &
Kitchen
Fixtures
620x420x240 mm `Nest-like`
design
best White&
Cream
Large and
Small Urinals
Bathroom &
Kitchen
600x370x405 mm
430x350x300 mm.
Over the
Counter
best White&
Cream
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Fixtures
Wall Hung-
Urinals
Bathroom &
Kitchen
Fixtures
735x470x300 mm square
designed with
sharp
protrudes
Best White
Press Panel-
Front Push
Oval Shaped
Cistern
Bathroom &
Kitchen
Fixtures
240x160 mm. oval shaped white, Cream
chrome-shiny,
and chrome-
matt, brushed-
metallic
Press Panel-
Front Push
Overlap
Cistern
Bathroom &
Kitchen
Fixtures
240x160 mm. overlap dual-
flush design
white, Cream
chrome-shiny,
and chrome-
matt, brushed-
metallic
Concealed
Cistern
Bathroom &
Kitchen
Fixtures
510x450x90 mm. 3 press-panel
design
Best White
Squatting
Pans Toilet
Bathroom &
Kitchen
Fixtures
520x430 &580x440 mm
Wide-bowldesign.
Best White
Wall Hung &
Pedestal Basin
Bathroom &
Kitchen
Fixtures
650x530x820 mm. Square
Designed
Best White&
Cream
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Marketing strategies:
Somany tiles is facing competition not just from the unorganised sector but also from
Chinese imports To mitigate this problem, SCL is trying to focus more on value added and
innovative products which are outside the domain of unorganised players. Further to cater to
the top end of the market, it has also started importing tiles from countries like Spain, Italy,
Turkey and China.
To interact directly with the customer, the company has opened display centres called
`Simply Tiles' in all the major metros to help the customer get the touch, feel and colour of
tiles.this will help company to spread its presence in metro cities.In 'Simply Tiles.'company
will showcase entire range of solution floor and wall tiles, tile accessories, readymade
spots and skirtings and Eton glass basins.Company also wants to know about specific
requirement of different customer for this Customised advice and requirement is available in
these display centre.
.
Somany Floor and Wall Tiles is distributed through a large and committed network of
Dealers & Sub-dealers in the country with 25 branch offices and more than 600 dealers
Apart from doubling its advertising budget to Rs 4.5 crore, the company has also shifted
focus for the first time to the electronic media to increase its advertising reach and
penetration. The company has shifted its creative account from Leo Burnett to AB&M.
Madison continues to handle media buying for the group.
Somany Tiles new TVC builds an emotional connection to create unique brand positioning.
As part of its new marketing strategy, the SPL Ltd (Somany Tiles) plans to set up a chain
of stores called `Fine Line', to showcase the company's premium tile offerings. Starting
with a store each in Delhi, Mumbai and Chennai, the outlets would also sell sanitary
ware, for which the company has tied up with Hindustan Sanitaryware and Industries Ltd.
For a thrust in retail segment the company has devised a "shop in shop" concept where the
product shall be displayed at selected dealer counters in major towns & cities of India.
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To strengthen the ties with the traders and architect fraternity Somany organizes interactive
session in which industrialists, traders, architects, engineers and businessmen take
participation.It helps to create a platform where they could interact with the company
representatives and trade partners.
To make the dealers happy, Somany Tiles has launched its Dhan Varsha Scheme which is
a token of gratitude for the support of Somany dealers entrusted on Somany
SCL has formed a JV with Keraben Ltd. of Spain viz. Somany Keraben Pvt Ltd. to market
`Synergy' brand of tiles in India to target and capture a larger market share.
SCL is foccussing on establishingits presence across all verticles of the demand prism,
beginning from the niche segment to the low-cost tiles segment to meet the demand of SCL
has been increasing its capacities over the years, visualizing the demand growth in future.
Competitors:
H. & R. Johnson
H. & R. Johnson (India) Limited is India's No. 1 tile company offering a wide range of
wall and floor tile products across various segments. With a vast portfolio comprising of
5 well-known brands in India (Johnson, Marbonite, Porselano, and Endura & Milano)
their plants are located in dewas (MP.i.e.central India), Pen (Maharastra, Western India),
Kunigal (Karnataka, Southern India), Karaikal (Tamilnadu, Southern India), Vijaywada
(Andhra Pradesh) and Rajkot (Gujarat, Western India).
It has implemented a comprehensive ERP to integrate over 2000 SKUs across different
qualities, manufacturing locations, 23 branch offices / warehouses. This helps it to
improve efficiency in production planning and better inventory management.
Kajaria Ceramics
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Kajaria Ceramics is one of the largest manufacturers of ceramics tiles in India. It has an
annual capacity of 26.4 mn. Sq. mtr. Distributed across two plants - Sikandrabad at Uttar
Pradesh (capacity 9.70 mn. Sq. mtrs) and Gailpur at Rajasthan (capacity 16.7 mn. Sq.
mtrs.). Kajaria Ceramics has a strong distribution network of about 600 dealers and over
6000 sub-dealers spread all over India. It operates 14 exclusive showrooms in the
country.
Nitco:
The company has four manufacturing facilities in the country in Maharashtra - three near
Mumbai and one in Silvasa, Gujarat. It also imports tiles from China under contract
manufacturing from Foshan Lungo Ceramics and Foshan Chancheng Oulian
Construction Ceramic Co Ltd in the Guangdong province in China.
Nitco believes in setting up manufacturing unit closer to market as further process losses
are not significant to justify locating the unit close to raw material source.
Orient Tiles
Headquartered at New Delhi, Orient was incorporated as a Public Limited Company on
18th May 1977 for the manufacture of ceramic tiles with an installed capacity of 0.4
Million sq. mtrs. Per annum this has now grown to 14 million sq. mtrs. Per annum.
Orients state of the art manufacturing unit at Sikandrabad (Bulandshar, U.P.) is spread
across 40 acres of land. The company today possesses a strong network of over 800
dealers and 2500 sub-dealers spread all over the country.
Murudeshwar Ceramics
Murudeshwar Ceramics Ltd (MCL) was incorporated in June 1983. The company is into
manufacturing of ceramic wall, floor tiles, and vitrified tiles; it was amongst the first few
companies to set-up a manufacturing unit for vitrified tiles and has been a dominant
player in the segment. Around 60% of its sales come from southern India. Though it has
opened exclusive show rooms and stock depots in various centers in Western and
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Northern India, but the focus is clearly on Southern and western market to save on the
transportation costs.
Government policy
Ceramic tiles find its maximum usage in residential and commercial buildings and are also
finding acceptance in other construction projects as well like airports, bus terminals etc. as In
India the Construction sector is expected to do well in future mainly due to fiscal incentives
given to infrastructure development. India is expected to be among the top 5 retail markets in
the world in10 years. The Ceramic tiles particularly the vitrified tiles are finding increasing
usage in both these sectors and the sector would benefit from an upsurge in these areas as
well.
The ceramic industry will also get benefit from the growing incomes and urbanization and
huge demnd for housing from rural areas.. The Indian economic growth is interlinked to the
growth of infrastructure development and for sustained development the government has to
continually recognize this segment. The government is set to pump in rs.172000 crore in the
national highway sectors by2012, rs.40000 crore for airports by2010.and rs.50000 crore for
ports by 2010 and thereby the economy to grow over 8% per annum (source: economic
survey)
The government impetus to improve hygiene and sanitation is likely to increase the
demand for sanitary ware in India. The focus of the central and state governments to
provide housing facilities to the poor is also expected to generate demand. Along with
The National Housing Policy formulation that envisages "Housing for all" by the end of
Ninth Plan period is a big step towards this. Indira Awaas Yojana, Samgra Awaas
Yojana is programs for providing housing to the rural poor is a key step taken by the
government in this area. The housing development organizations like HUDCO, State
Housing Development Boards and Rajiv Gandhi Rural Housing Corporation Ltd. are also
playing a large role in this initiative.
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Reduction in threshold limit under Zero Duty Export Promotion Capital Goods (EPCG)
Scheme would also help accelerate the modernization process in ceramics industry.
SOMANY HR POLICY:
SOMANY is committed to fostering an atmosphere of caring, open communication and
candor among its employees, where it treats each other with respect.Company places a great
deal of emphasis on personal integrity and believe long-term results, from real
accomplishments, are the only fair way to judge performance. Respecting individual
differences in culture, ethnicity and color, equal opportunity for all employees and
applicants, to providing a workplace free from all forms of discrimination, respect the right
of individuals to achieve professional and personal balance in their lives is among many ofthe key features of the company.
SPL thinks that hiring new people to replace the old workers and training those costs the
company more than retaining people in the first place.
SPL Ltd has adopted a multi-pronged strategy, which includes identifying individual
employee potential, chalking out career growth plans for an employee based on the
potential so determined, giving out performance-based rewards and incentives, and
finally, conducting skill and attitude development training programmes.
The central point of SPL's HR policy is identification of individual potential, and this is
done by taking each employee through various job functions in different departments.
When an employee is found more productive and to exhibit his natural talent in a
particular department, he is assigned to that department and his career growth planned
along the lines of that particular job function.
SPL also sends its employees on regular training sessions. In this session emphasis is on
both soft-skill development and hard-skill development.
The soft skills include interpersonal communication and attitudinal changes, among
others; the hard skills include technical skills.
SPL organizes soft skill development training for its employees twice a year, while hard
skill development training goes on throughout the year on a job-to-job basis. To identify
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the kind of training the employees need on an individual basis, SPL conducts skill need
identification programmes.
The company is conducting a technical persons exchange programme with its
Italian collaborator, Leonardo Ceramica to provide the necessary technical training
to its employees.
SPL employees are also motivated to bring out the best in them through the process of
reward recognition. Under this programme fall cash incentives, gifts or citations for
achieving pre-set targets. SPL has introduced reward recognition schemes in its
marketing division and in all its factory units as well.
In the marketing division, the scheme works as a sales incentive; at the production level,
it takes the form of a production incentive. The cash reward, in both cases, amounts to
20-25 per cent of the employee's annual salary.
Somany is committed by its current diversity initiatives. They have been formulated to
ensure that it attains its core value of diversity as a competitive advantage.
y Dedicated executives for managing diversity within our operating divisions.
y Multi-year strategic plans for diversity are developed with the same vigor and
goal setting process as other business issues. Goals include diverse recruitment,
improved retention and fostering a more inclusive culture.
y External Diversity Advisory Boards consisting of educators, politicians, practitioners
and customers to advise somanys senior management on a variety of issues relating to
diverse audiences.
y Annual employee performance reviews incorporating inclusion-related goals for all
managers.
y Mandatory annual Affirmative Action Planning process.
y Corporate-sponsored multi-level program for training employees to work and manage in
an inclusive environment.
y Employee networks to mentor and support diverse employees.
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Problems
Increasing cost of power & fuel: increasein the prices of all petroleum products has
resulted in a huge hike in the cost of production of all ceramic tile companies and that
would ultimately result in reduced margins of the company.
.
The recent Court order disallowing overloading in a transport vehicle has
disproportionately increased freight rates by almost 30% and ceramic tiles are extremely
freight-sensitive. This element of freight and transport has led the industry to contemplate
and revise the costs of its products.
Competition from the unorganized sector:
In India organize sector is facing stiff competition from the unorganized sector, which is
huge as their costs are lower due to relief from duties and taxes.
Price checks due to increased capacity: As most of the players in the industry are
increasing their capacities, price checks could be experienced in future, thereby restricting
the growth in topline to some extent.
SWOT ANALYSIS OF CERAMIC INDUSTRY
Strengths
y The cost of production of tiles in India is 25-30 percent lower compared with the US
and Europe, mainly owing to labor costs.
y Consistent growth of 12-15 percent inspite of Slowdown in economy.
y The Indian ceramic export market is rising at the rate of 15 percent per annum.
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Weakness
y Not much importance given on brand building and network thus creating hindrance
for export growth.
y Low per capita consumption (0.15 sq.mt. p.a.) as compared to developed nations.
y Non-availability of standard raw material with uniform properties, manpower with
low technical skills and limited facilities for technical skills and for technical
education in ceramics production
Opportunities
y The construction and Housing Boom to provide bolstering demand for ceramic tiles.
y Tourism in India has been growing at a fast pace. There is an increasing demandsupply gap of hotel rooms both for regular and seasonal tourists and for event specific
visitors such as to the commonwealth games 2010.
y The untapped rural market supported by a strong growth witnessed by Indian
Agriculture provides tremendous potential for the domestic ceramic manufacturers.
y European companies are investing in the market, the time of market entry is
interesting as import duties have decreased and the trend is expected to continue.
Threats
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y Freight, supply of power and gas remains the key cost-related issues impacting the
industry.
y Basic Customs Duty on import of ceramic tiles from China and raw materials
imported from abroad should be corrected to prevent dumping of tiles from China.
y Indian ceramics industry is highly fragmented and face problems of poor
economies of scale.
y Unorganized tile sector in India accounts for 55% of the total production in India,
which in some way possess major threat to major players.
SWOT ANALYSIS: SOMANY
Strength
y Qualified and motivated Human Resource
y Well planned infrastructure
y Good market reputation
y Steady increase in Demand due to raise in standard of living
y The company has a network of 600 dealers across the country.
Weakness
y Low market share in southern region of India.
y Way behind market leader.
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y Inferior trade promotion schemes.
y dealers complain about delay in supply
y Complains not attended on time
y Replacement not on time
Opportunity
y Convert image into market share.
y Increasing presence in Sothern India.
y Increasing presence in International markets
Threat
y Heightened competition with Chinese and national players.
y Razor thin margins.
y Dissatisfied dealer base.
y Better advertisements of competitors.
y Better incentives given by the competitors to the dealers.
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Achievements
Mr. Shrikant Somany,
Chairman cum M.D
receiving award
List of Awards & Recognitions received by Somany
Ceramics Limited
1996 - R & D initiatives and activates recognized
by the Govt. Of India.
1998 - ISO 9002 awarded.
1999 - ISO 14001 awarded.
ISO 9001: 2000 awarded.
Export House award.
Capixel award for 03 consecutive years.
Mr. Vineet Maitin, GM -
Exports and Mktg. (East)
receiving Capixel award
Somany Ceramics Ltd. has become the first Indian tile company to receive patent under the
Indian Patent Act for its revolutionary high abrasion resistant glaze composition, known as
VC (VeilCraft) Shield.
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Capital Structure AS ON 31.03.2008
Somany Ceramics Ltd key data
Ticker Somany Cera Country India
Exchance Bom Major industry Apparel &Textile
Sub industry Home furnishing
2008 sales 3,266,649,350(yr ending Jan2009)
Employee 1,253
Currency Indian rupee Marker Cap. 443,631,420
Fiscal yr ending March Share outstanding 6,899400
Share type Ordinery Closly held share 4,103,919
Stock price:
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Current share price (as on 2nd July 2009): 67.50(Figures in Indian Rupees)
Authorized Capital:
No. of Shares Type Value Amount
15000000 Equity Shares Rs. 10/- Each Rs. 150.000 millions
1000000 Preference Shares Rs. 100/- Each Rs. 100.000 millions
Total Rs. 250.000 millions
Issued, Subscribed & Paid-up Capital:
No. of Shares Type Value Amount6899400 Equity Shares Rs. 10/- Each Rs. 68.994 millions
NOTES:-Including 6099400 Equity Shares allotted as fully paid up Bonus Shares by
capitalization of General Reserve, Share Premium and Capital Redemption Reserve.
CAPITAL STRUCTURE OF SOMANY
Promoters,
,
59.48%
Institutions
,
2.78%
Foreign
Holdings
5.02%
Non-
PromoterC
orporate,,
5.59%
IndianPubli
c &Others,,
29.17%
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CSR ACTIVITIES:
At both Somany units in Haryana and Gujarat, a deep-felt sense of corporate social
responsibility is a trademark of the company. Fulfilling its social and environmental
responsibilities has been an important part of the company's overall philosophy and vision.
The Somany Education Trust gives scholarships to the deserving children in the Cherawa
College and the Cherawa Higher Secondary School. Another Trust works in the area of
providing aid to the poor, disabled and needy people.
Creating a great work environment, fostering an ethical work culture and instilling the right
values in every member of the Somany family, is a vital part of Somany's success. The right
outlook and a strict adherence to certain basic ethical and moral codes of conduct are an
important part of Somany's company ethos. Within the factories and plants a very strict no-
plastic usage dictum is adhered to, and there is a genuine commitment to the recycling of
wastage and mason training, as well as a concerted thrust towards extensive tree plantation.
National and international image
Somany Ceramics Limited has kept on going from strength to strength in exports. The
companys exports climbed to Rs. 40 crores during the year '08-'09.Somany ceramics exports
to more than 20 countries round the globe. The exports are mainly to countries like Middle
East, Sri Lanka, Mauritius and Australia. The company enjoys very good brand image in
these international market and do have a similar brand recall as that of domestic.
Company has made a marketing joint venture with big international player like Keraben
Ltd. of Spain,Kaleseramik of Turkey.
SPL has recently entered into a technical tie-up with the Italy based Leonardo Ceramica for
manufacturing vitrified tiles.
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What makes Somany as one of the brand leader is precision in meeting customer demand
and also helping them imagine the possibilities.Somany's new positioning statement
Creating a world of tiles, Clearly enunciates its fresh brand philosophy.Somany is regarded
as one of the most trusted and innovative brand in the industry. This is substantiated by
various surveys carried out both in-house and by external research.
The brand Somany tile has today become synonym of quality, service and innovation
not only in the domestic market but even in the international market.With increased
capacity, increase in turnover and a growing domestic and exports market, somany
ceramics is set to emerge as a leader in the international ceramic tiles market.
FUTURE PROSPECTS OF SOMANY TILES:
witnessing an unprecedented boom in the construction and real estate sector as a national
player and an important part of the supply chain to the construction sector, Somany tiles has
a wonderful opportunity to continue to aggressively expand its market share over the next
few years..
As most leading architects and builders have pre-approved Somany for use at their new
projects, the company expects to gain a significant share of this construction boom in the
hospitality sector.
Individual buyers across India are gaining rapid international exposure to new building
materials, design styles and product applications. Keeping this in mind, Somany tiles are
investing heavily in expanding its dealer network across India to make its high quality
products at the best retail outlets.
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Indias diverse demographics contribute to a huge market for attractive priced, budget
tiles.somany is quickly capitalizing on this relatively untapped market by expanding its
product portfolio with the addition of another production plant at kadi, Gujarat.
To stay ahead in the creative field of special design and effects, SOMANY with its advance
microprocessor controlled profile cutting technology to kept their designers create master
pieces that are worthy of anybodys imaginations.
SOMANY CERAMICS LIMITED IN NUT SHELL:
Registered Office : Address 82/19, Bhakerwara Road, Mundka, New
Delhi 110 041
Incorporated : 1968/01/20
Registration No.: 55-5169
Line of Business: Manufacturer of Ceramic Tiles
Chairman andManaging Director Mr. Shreekant Somany
Status : Company is a very well established renowned concern
having good track Record. Trade relations are good.
Payments: Slow but Correct
Litigation: Clear
Banking Reputation: Satisfactory
Offices: 93589, Works and Corporate Office:
P.O.: Kassar
City - Bahadurgarh
State - Haryana
PIN - 124507
Email ID - [email protected]
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Factory/plant: 93588, 14, GIDC Industrial Estate,
District: Mehasana
City - Kadi
State - Gujarat
PIN - 382715
Email ID - [email protected]
LEGAL FORM:
Public Limited Company. The Company's shares are listed on the Stock
STOCKS IN WHICH COMPANY IS LISTED
y Bombay stock exchange
y Calcutta stock exchange
y Delhi stock exchange
y National stock exchange
PRODUCTS DETAILS:
Products Code No.: 69089090
Principal Products:Ceramic Glazed Wall, Floor Tiles
Floor Tiles, Wall Tile, Imported Tiles, Sanitary ware, Toilets, Basins, and Urinals
EXPORT DETAILS
Exports to Countries: Mauritius, Middle East, Australia, Sri Lanka
PRODUCTION STATUS (As on 31.03.2008)
Particulars Unit Registered /Installed ActualCapacity Production
Glazed / Vitrified
Porcelain Tiles MT 272500 228795
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BANKERS:
y Punjab National Bank Limited
y Industrial Development Bank of India Limited
y Export Import Bank of India
y State Bank of Bikaner and Jaipur Limited
y Standard Chartered Bank
y Central Bank of India
AUDITORS Name: Lodha and Company, Chartered Accountants
Conclusion:Somany story is all grit, determination and accomplishments. It goes on to prove that singleminded focus and dedication pays. . These products; by virtue of product innovation andquality, have set an exemplary standard in the industry and have found ever ready domesticand export markets.
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About the project:
Working with somany as a summer trainee was a great experience for me both individually
and professionally. My summer training project was to calculate the return on investment of
Somany dealers in Delhi &NCR.
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The objective of the project was to motivate dealers to increase their investment on somany
products so that their return can be maximized; another objective was to tell dealers how they
can maximize their return on investtmnet.
Since all commercial organizations exist to make a return on their investment (ROI). Money
is a scarce resource and it is therefore reasonable to question how well it is spent whenever itis in any quantity. Indeed, most substantial sums of money require justification and the mostfrequently sought justification is the return on the investment the ratio of money gained orlost on an investment relative to the amount of money invested.
All substantial investments are scrutinized for their return and the motive is same here too,we want to scrutinize the investmnrt of the dealers. Different criteria are used in thisjustification and typically the percentage annual return and the payback period are consideredvitally important. Return on a fixed investment can vary over time, because the levels of riskvary depending on the type of investment, and because there could be different opportunitycosts for the investment, i.e. the money could be spent elsewhere.
In the main, ROIof the dealers was measured on fixed investments, such as new buildings capital items, stock level of the product.. The day-to-day running costs of businesses,however, have traditionally never had ROI measured.The motive behind the project ws to build a strong relationship with dealers by assuring
them that the company is willing to increase their profit and to make align their objective
with company objective.
For my project I prepare a questionnaire to gather information from dealers.in the
questaionnaire questions were asked about the investment and expenses such as rent rate of
the shop, salary &other administrative expenses, total stock level for somany product and for
other companys product.We gather information about the total area of the shop and the area
dedicated for display to somany tiles & to competitors.
We asked about the turnover of the dealer from somany product and from other companys
product. Payment term with the company and its competitors, margin which a dealer gets
from different product; sanitary ware, ceramic tiles, C.P.fitting and other (tanks) etc.
As we are groups of summer trainee working for the same project in the organization. Total
Delhi&NCR is divided in to some parts to make our study more convenient.i got the area of
central and east Delhi.
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My job was to do the market research for calculating ROI, for this my mentor gave me the
list of dealers and sub dealers from whom I was supposed to gather information
Measuring return on investment, or ROI, from the marketing budget can help the company
gain better answers to its competitors policy.
ROI measurement of the dealers was an opportunity to review the marketing practices andmake smart, informed decisions about the future which tactics to emphasize, whatsworking and whats not, and whether the companys message is connecting with prospects orneed to be fine-tuned. Measuring the ROI of dealers indirectly generate new business andstrengthen existing dealer relationships
With ROI data of dealers in hand the top level manager of the Somany can make informedcomparisons between its Dealer-development activities. It could result in competitive
analysis of dealers and thus can be very tactful in motivating them.
My research will help the company to a greater extent to know about reasons,why
different dealers are unsatisfied with the different strategies of the company & find out
the ways to sought out there queries to make them more satisfy and increase there income
.
As the industry is booming o double digit growth periphery but real promise or
competition lie is to satisfy the dealers and there needs to a greater extent.my research
will figure out those research areas and parameters that can help the company to increase
its market share.
So my research is of utmost importance as it highlights all the practical discrepancy and
suggest the company some practical rectification to change their market position.
.
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Literature Review
Davidson
Return on InvestmentSeveral different methods for calculating return on investment were uncovered during theliterature search. Five areas were recommended by Davidson (1998) in her recent articleentitled, "Measure what you bring to the Bottom Line." She suggests measuring:
y productivityoutput per unit of input,
y processessystems, workflow,
y human resource costs and benefits for a specific initiative,
y employee retention, morale, commitment, and skills,
y Capabilities of the organizationcycle time, learning, shared mind set,
accountability.
Phillips (1996a)
Phillips (1996a) believes that ROI measurement isn't complete until results are converted tomonetary worth. Phillips also recommends looking at a variety of other data, each of which isbriefly described below.
y
Converting output to contribution: This reflects the "profit contribution" of anadditional unit of product or service, or the contribution or the savings from
producing an additional unit of output from the same input. Marginal-cost statements
and sensitivity analyses can be used to pinpoint the values associated with changes if
the output data are not available.
y Calculating the cost of quality: Poor quality is waste generated by human error and
bears a cost: defective products, spoiled raw materials, and discarded paperwork. The
most costly waste occurs when a product is delivered to a customer and returned for
repair. Staff performs the rework and cost is added to the overhead. The highest cost
of poor quality is customer dissatisfaction.
y Converting employees' time: Converting the value of time saved is relatively easy
and is an important measure of a program's success. The most obvious measure is the
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reduced cost of performing work. Monetary savings equal the hours saved multiplied
by the per-hour labor cost. Time saving is realized when the amount of time saved
translates to a cost reduction or profit contribution and the additional time saved is
used productively. Most ROI calculations simply use the average wage (with a
percent added for employee benefits). Some experts recommend adding in "employee
maintenance" costs including such items as office space, furniture, telephone,
utilities, computers, calculators, and administrative support.
y Using historic cost: Company records can often show the cost and value of one unit
of improvement.
y Using internal and external experts: Experts can provide the cost (or value) of one
unit of improvement.
y Using data from external studies: For some soft data, it may be appropriate to use
information from studies or research projects that focus on the cost of those data
items to estimate value or determine benchmarks and industry standards.
y Using participants', supervisors', and/or senior mangers' estimates.Sometimes the
people closest to an improvement can provide the most reliable estimates on its value.
y Using Human Resources estimates: These may be perceived as biased. After all, the
HR department will determine the basis for its claim for improvements due to
training.
Maglitta (1997)
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Three more alternatives for calculating ROI were presented in a recent article by Maglitta(1997) in Computerworld magazine. [In fact, many of the models described immediatelyabove incorporate these methods to varying degrees.] These alternatives are:Business value added measures information technology (IT) contribution not in dollars butby support of key goals and metrics of functional groups. (It works best when high level
support, business growing, routine operations are under control, but is not useful for shortterm payback or heavily quantitative culture.)Intangible value is a less formal metric than evaluation of soft benefits such as attracting newstaff, improving product quality, enhancing reputation, staying in the marketgeneral costand benefit statements suffice. (It looks for benefits measured in clear dollars, which worksbest when credibility is established and executives support. However, it is not useful forheavily quantitative analysis.)Net present value gauges tomorrow's returns in today's dollars. It recognizes businessconditions, interest rates, risk and inflation and produces ballpark figures.
InformationWeek surveyAccording to the 1998 InformationWeek survey mentioned previously, the most popular
method of calculating ROI is traditional cost/benefit analysis (about 97% of all respondentsselected this option.) Cost benefit analysis is easy to understand and easy to calculate. Othermeasures also used are Net Present Value reported by 44% of the respondents, weightedscoring (22%), and applied information economics (12%). Also gaining popularity is theEconomic Value Added (EVA) method developed by Stern Stewart and C. (Violino, 1998).EVA measures the difference between after-tax operating profit and the cost of capitalemployed to generate the profit (in other words, the equity involved in producing profit .
Stolovitch et al. (1998)Stolovitch et al. (1998) present a detailed plan for calculating ROI for training interventionsthat might be adaptable for the present evaluation. It consists of seven distinct steps, each ofwhich is addressed here:Step 1: Calculate Potential for Improved Performance
y determine purpose of training (mandated, new system, performance gap)
y identify desired and actual performance
y identify feelings related to desired performance
y identify causes for not achieving desired performance
y
identify solutions
Step 2: Calculate Estimated Training CostsIncludes:
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y Training Development Costs: human resources, travel, media production, fees,
licenses.