Documentos de Académico
Documentos de Profesional
Documentos de Cultura
1
as a luxury product. Our stand has been that basic sanitaryware is
not a luxury product, but a utility product for the common man.
Even after 60 years of independence, there is almost 40% of
population, which is in need of access to proper sanitation
facilities. The government policy of not treating sanitaryware as a
luxury product by reducing excise duty can go a long way in
promoting sanitation. A lot of diseases are spread due to improper
sanitation. Thus. Proper sanitation in turn can help government
save on its health related spends.
2
China has the world’s biggest bathroom equipment and taps and
mixers market by volume followed by the US with Brazil in third.
One surprising feature about the world market is that despite India
having a population of over 1 billion people it actually has the
smallest baths market of the 22 countries covered with just under
16,000 units sold in 2002.
3
SECTION B
RESEARCH METHODOLOGY
4
Sources of data:
Data collected for study was primary as well as secondary data.
Research instrument:
Research tools were in depth interview of company employee.
Sample unit:
Data collection from various departmental heads including
manager and executive.
Sampling procedure:
Non probability judgment sample was selected for accurate
information.
Contact method:
Here we have conducted personal interview for data collection.
5
HISTORY OF SANITARYWARE:
6
critical link between order and disorder and between good and bad
environment.
In our own country i.e. India, how can any one ignore the subject
of toilet when the society is faced with human excretions of the
order of 900 million liters of urine and 135 million kilograms of
faucal matter per day with totally inadequate system of its
collection and disposal. The society, thus, has a constant threat of
health hazards and epidemics. As many as 600 out of 900 million
people do open defecation. Sewerage facilities are available to no
more than 30 per cent of population in urban areas and only 3 per
cent of rural population has access to pour flush latrines.
As long as man did not have an established abode, he did not have
a toilet. He excreted wherever he felt like doing so . When he
learnt to have a fixed house, he moved toilet to courtyard and then
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within his home. Once this was done, it became a challenge to deal
with smell and the need was felt to have a toilet which can intake
human wastes and dispose these out of the house instantly and,
thus, help maintain cleanliness. Man tried various ways to do so
i.e. chamber pots, which were cleaned manually by the servants or
slaves, toilets protruding out of the top floor of the house or the
castle and disposal of wastes in the river below, or common toilets
with holes on the top and flowing river or stream underneath or
just enter the river or stream and dispose of the waste of the human
body. While the rich used luxurious toilet chairs or cross stools, the
poor defecated on the roads, in the jungle or straight into the river.
8
INDIAN CERAMIC INDUSTRY: A FUTURISTIC VIEW
a. Ceramic sanitaryware
b. Ceramic tiles for wall, floor and facing
c. Ceramic insulators
d. Refractory, common bricks and clay pipes;
e. Ceramic table ware
f. Glass-ware;
g. Cement, lime, dolomite and gypsum products;
h. Abrasives.
9
for the changes. There exist many constraints including high fuel
costs.
Exports have steadily increased over the years but the present
sluggishness in the market and the recent currency crisis may
induce a marginal decline. Porcelain Electrical Insulators have
maintained a rising growth curve from the beginning and have
played a major role in the export turnover. Bulk of the exports is
being absorbed in Asia and Africa, with increasing acceptance in
the industrialized West. Insulators are in great demand in Asia,
Africa and West Europe. Tiles and Sanitarywares are being
exported to Asia, Africa and USA. Pottery wares find a market
mostly in America and Europe. The global demand of ceramic is
chiefly in Tiles, followed by Tableware, Art ware, ceramic
products, Sanitaryware, Insulators and technical ceramics. There
has been steady shift of industry and technology from the
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developed to the developing world. India, being a slow starter is
presently ranked seventh in terms of exports. China has emerged
as a market leader in the ceramics field. India is expected to profit
from the shift of production base.
11
Ceramic Industry
Ceramic Industry in India is about 100 years old. It comprises
ceramic tiles, sanitaryware and crockery items. Ceramic products
are manufactured both in the large and small-scale sector with
wide variation in type, size, quality and standard. India ranks 7th
in the world in term of production of ceramic tiles and produced
200 million sq. meters of ceramic tiles, out of a global production
of 6400 million sq. meters during 2003-04. State-of-the-art
ceramic goods are being manufactured in the country and the
technology adopted by the Indian ceramic Industry is of
international standard.
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Rs. 180 crore.
Sanitaryware is manufactured both in the large and small sector
with variations in type, range, quality and standard. At present
there are 7 units with capacity of 86,500 tonne per annum and,
there are about 200 plants with a capacity of 50,000 tonne per
annum in small scale sector. The industry has a turn over of Rs.
400-500 crore. This industry has been growing at the rate of about
5% per annum during the last 2 years. There is significant export
potential for sanitaryware. These are presently being exported to
East and West Asia, Africa, Europe and Canada. The exports were
of the order of Rs.60 crore during 2003-04.
13
SANITARYWARE INDUSTRY IN INDIA:
14
Population Covered by Sanitation Facilities
1985 1990 1997
Rural 0.7 2.4 6.4
Urban 28.4 45.9 49.3
Sanitaryware demand:
Sanitaryware Industries in India for the last 6-7 years has shown
very dramatic growth with major players doubling their production
capacity. The Companies have also upgraded their manufacturing
system by introducing Battery Casting, Beam Casting and have
gone in for latest imported Fast Firing Cycle Kiln Technology.
These Companies have also upgraded their quality and have
introduced high value range in the market, which has been
accepted and appreciated. The demand for high value sanitaryware
in India is growing very fast. The Companies are trying to meet the
demand as the realization per Metric Ton for high value product is
very good which ultimately results in good profitability. In order to
educate the customers in India to go for quality products and also
for higher value sanitarywares, companies have adopted a very
aggressive advertisement campaign. Companies have also
strengthened their dealer network by offering showroom incentives
and some of the companies have also gone for their own retail
15
outlets in major towns. The demand for sanitarywares in India is
growing @ 15% -17% every year.
16
Government of India Policy on Housing Sector is very
encouraging. The Government has announced Income Tax rebate
on housing loan to boost the housing sector. All financial
institutions are lending money for construction of house at a very
low rate of interest. Government figure shows that Housing Sector
is growing by approximately 25% every year. The need of Housing
in India with 100 crores population looks to be very potential. As
per DGTD Survey Report there is a shortage of about 20 million
houses in the country by the end of 8th Five Year Plan. The
housing has become a basic necessity, as people in India are
looking forward for improved sanitary condition. The concept of
making toilet is fast growing even in village areas, where toilet till
last two years did not exist.
17
Demand Estimates:
The Indian Sanitaryware market is worth around 500 crores for the
year 2001-02 with an annual market size of around 8 million
pieces. This represents a yearly growth rate of about 3-4%.
Major players:
Until the mid 1940s the only sanitaryware available in India was
imported mainly from UK and was used only in upper class
residences in major cities. The first Sanitaryware manufactured in
India was by M/s. Parasuram Pottery Works. In the 1960s,
companies like EID Parry, in collaboration with Royal Doulton of
UK and Hindustan Sanitaryware in collaboration with Twyford of
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UK, started production of Vitreous China Sanitaryware. Other
major players who joined the organized sector were Madhusudan
Ceramics and Neyveli Ceramics. In the 1980s, 7-8 other players
had entered the organized sector, but most of them have since been
taken over by the majors.
Concerns:
19
SANITARYWARE INDUSTRY STATISTICS:
20
INTRODUCTION TO CERA SANITARYWARE LTD
21
management thought it worthwhile to have independent identity by
de-merging and transferring the entire business to a new company.
The new company was named Cera Sanitaryware Limited It is
now the third largest company in the organized sector with over
20% market share. It is also the largest and only listed company in
pure sanitaryware space. CSL is the first sanitaryware company to
use natural gas and the first Indian sanitaryware company to have
ISO 9002 and ISO 14001 certifications for its products.
22
To achieve growth in the rapidly changing retail market in the
country, Cera, has launched its one of a kind Cera Bath Studios in
Ahmedabad, Bangalore, Chandigarh, Kolkata, Cochin and
Hyderabad. With the opening of the Cera Bath Studios, the
discerning consumers architects and interior designers can have
full view of the CERA’s premium ranges of WC’s, Wash Basins,
Shower Panels, Shower Cubicles, Bath Tubs, Shower Temples,
Whirlpools, CP fittings etc. Cera Bath Studios will complement its
existing network of 400 distributors and 4000 retailers. Several
Bathrooms are displayed live, so that the customers can get a feel
of CERA’s vast range of products.
Having shown a growth rate of more than 20% since last 3 years,
Cera Sanitaryware Ltd. today is the fastest growing sanitaryware
company in India.
PRODUCT DETAILS AND CONCEPT
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massage and inbuilt Jacuzzi unit which give experience artificial
water waves and facility like radio and telecalling with six body jet
spray.
SECTION C
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Raw Material
Casting
Green House
Kerosine
Inspection
Glaze
Placing
25
Kiln
Sorting
Ware House
Dispatched
26
china clay, Tulk, Zinc oxide, Barium Carbonate , Zirconium
Silicate which is imported from African country
27
Thus production process carried out from raw Material to Finished
Product. Stringent Quality control followed by CERA. It is first
one to use Natural Gas in Its Production Process.
HR PRACTICES
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Here we have included some of the HR practices followed by cera
sanitaryware. Purpose is to study what kind of HR Procedures
being followed and what are the details of the same etc.
Recruitment:
The recruitment is done mostly through advertisement in
newspaper, internet portals or campus recruitment. This
recruitment is done on the basis of manpower requirement from
various department of the company. If the candidate has qualified
for the next round, then higher authority takes an interview of the
concerned department in which position has been vacant and then
if is being selected, then they get the offer from the company side
and the candidate has to reply within 2 days.
Selection:
Selections of the candidates are based on the interview
performance of the candidate and his/her educational qualification,
additional qualification, speaking & Convincing ability of the
candidate (for Sales Personnel) and relevant experience. While
comparing with the recruitment at higher post, they are selected on
the basis of interview performance and on the basis of their ability
to handle people and handle tricky situations and ability to lead
people are also analyzed.
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Letter of intent is given to the selected candidate an official
offering and then offer letter will be given after approval of joint
director.
Compensation:
Salary:
Compensation type in cera sanitaryware is the salary. It gives
compensation to their employees on fixed salary basis. The sales
Personnel are been provide a salary slip and their salary is been
credited to their salary accounts with HDFC Bank. Higher
authorities are also been compensated with salary.
Allowances:
30
The company is providing allowances to the employees like
conveyance allowance, traveling allowance, mobile allowance, etc.
For instance, the sales personnel get their petrol allowance on
producing the voucher of the amount expensed by them. Also the
higher-level people also get the allowances by the way of
preparing the voucher.
Incentives:
Incentives are also provided to the sales personnel as well as Team
Leaders and Branch Heads. Sales Personnel get the incentive on
achievement of the target given to them. The company pays
overtime incentives to their employees.
Promotions:
Promotions are based on the performance only and on the basis of
appraisal feedback. If any higher position is being vacant then
suitable candidate from the company is considered first. By this
he/she gets promoted.
Thus, Performance is the only criteria for the employees to be
promoted.
Separations:
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Separations of the employee are also based on the performance. If
suppose a sales person has been a non-performer for some months,
then is being separated from the cera sanitaryware. Same applies to
higher authorities also. This can be done by employer with the
prior notice of 15 days to the employee. On the other hand, if
employee wants to be separated form the organization, he/she
should give 15 days prior notice to the employer.
32
MARKETING ASPECTS
Product:
Product of the company as is defined in company’s introductory
chapter is an sanitaryware product having mainly extraordinary
features like twin flush water saving product, soft close seat cover,
shower temple product. This product talk about giving an spa foot
massage and inbuilt Jacuzzi unit which give experience artificial
water waves and facility like radio and telecalling with six body jet
spray.
Price:
Prices of the product and services offered are competitive
compared to our competitors products and also provide value for
money to the customers. Because as we talked in the earlier
paragraph that features provided in the products are very unique
and are having low cost so finally company becomes best cost
provider in the market.
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Place:
As cera sanitaryware is having excellent distribution channel
empowered by 500 dealer’s network and 5000 retailers all across
India. To supplement the distribution network, it has 10 major
depots across India. It has 7 zonal sales & service offices,
supported by another 28 sales offices, 7 bath studios strategically
located in major cities across India. To capitalize on the growth
market for premium products, Cera has entered into an exclusive
marketing agreement with Italy's luxury brand Pozzi-Ginori to
market its designer sanitaryware in India.
Promotion:
Cera sanitaryware ltd has always been proactive in promotional
activities for increasing the brand awareness among the consumer
so the company has promotional scheme directed towards
consumer as well as its partner (dealer).
34
People:
As company is in service industry it needs to have strong
additional 3 Ps of the marketing mix starting from people. In
ceramic industry as goods are produced and prompt service is
given to the people i.e. employees need to be highly trained and
qualified. So requires good qualified and expertise employees to
this competitive industry.
Physical Evidence:
Cera sanitaryware is providing catalogs to their customers as a
physical evidence of purchasing the product. If customer wants to
see the physical product then company has its own display center
“cera bath studio” in metro cities of India.
Process:
This last step of marketing mix of cera sanitaryware includes
following points to be done for making the product available to the
customers:
35
• Data regarding details of prospect customers are first being
collected by sales personnel.
• These personnel then make calling and getting appointments
from prospects to explain product and services.
• Next step includes meeting and explaining product and
services.
• Then all the documents required for dispatching the product
to client premises are collected by the sales personnel.
• These all documents are then submitted to Head Office at
Ahmedabad.
• Then order is processed and cheque is collected and thus
order of the goods gets dispatched.
36
FINANCIAL ANALYSIS
Expenses
Material Consumed 45.69 33.05 25.63 20.11 16.31
Manufacturing 5.04 4.46 4.91 4.22 4.24
Expenses
Personnel Expenses 15.16 11.82 10.08 9.07 8.23
Selling Expenses 12.63 10.21 7.63 7.07 3.99
Administrative 9.04 8.04 5.99 4.42 4.08
Expenses
Expenses Capitalized 0.00 0.00 0.00 0.00 0.00
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Equity Dividend 0.67 0.48 0.43 0.40 0.32
Preference Dividend 0.00 0.00 0.00 0.00 0.00
Dividend Tax 0.11 0.07 0.06 0.05 0.04
Retained Earnings 12.28 6.85 2.90 1.66 1.16
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Balance sheet
Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04 Mar ' 03
SOURCES OF FUNDS
Owner's Fund
Equity Share Capital 3.04 2.69 2.69 2.69 2.69
Share Application 0.55 0.00 0.00 0.00 0.00
Money
Preference Share 0.00 0.00 0.00 0.00 0.00
Capital
Reserves & Surplus 44.12 25.58 20.23 18.63 17.47
Loan Funds
Secured Loans 24.42 16.70 8.36 6.90 7.87
Unsecured Loans 5.12 3.38 5.10 6.69 6.70
USES OF FUNDS
Fixed Assets
Gross Block 63.33 51.03 37.49 35.78 32.72
Less : Revaluation 0.00 0.00 0.00 0.00 0.00
Reserve
Less : Accumulated 13.89 10.44 7.80 5.84 3.87
Depreciation
Net Block 49.45 40.59 29.69 29.94 28.85
Capital Work-in- 10.01 0.31 0.89 0.18 0.00
progress
Note :
Book Value of 0.00 0.00 0.01 0.00 0.00
Unquoted Investments
Market Value of 0.00 0.00 0.00 0.00 0.00
39
Quoted Investments
Contingent liabilities 3.32 2.16 6.51 3.90 35.01
Number of Equity 60.75 53.75 53.75 53.75 53.75
shares outstanding (in
Lacs)
40
Ratios
RATIOS Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04 Mar ' 03
PER SHARE RATIOS:
Adjusted E P S (Rs.) 13.96 10.68 4.33 3.33 2.49
Adjusted Cash EPS (Rs.) 19.79 15.67 8.25 7.16 6.02
Reported EPS (Rs.) 14.92 10.98 4.45 3.00 2.64
Reported Cash EPS (Rs.) 20.75 15.97 8.37 6.82 6.16
Dividend Per Share 1.10 0.90 0.80 0.75 0.60
Operating Profit Per Share 31.19 23.18 12.46 10.65 8.65
(Rs.)
Book Value (Excl Rev Res) 77.42 52.45 42.40 39.34 37.09
Per Share (Rs.)
Book Value (Incl Rev Res) 77.42 52.45 42.40 39.34 37.09
Per Share (Rs.)
Net Operating Income Per 175.32 148.90 113.37 94.17 77.21
Share (Rs.)
Free Reserves Per Share 72.02 47.45 37.40 34.34 32.09
(Rs.)
PROFITABILITY RATIOS
Operating Margin (%) 17.79 15.56 10.98 11.31 11.20
Gross Profit Margin (%) 14.46 12.21 7.53 7.24 6.64
Net Profit Margin (%) 8.49 7.33 3.90 3.16 3.40
Adjusted Cash Margin (%) 11.25 10.47 7.23 7.54 7.75
Adjusted Return On Net 18.02 20.37 10.20 8.46 6.71
Worth (%)
Reported Return On Net 19.27 20.92 10.49 7.61 7.11
Worth (%)
Return On long Term Funds 23.49 25.63 17.02 13.83 10.01
(%)
LEVERAGE RATIOS
Long Term Debt / Equity 0.41 0.40 0.27 0.36 0.46
Total Debt/Equity 0.62 0.71 0.58 0.63 0.72
Owners fund as % of total 61.48 58.45 62.99 61.06 58.04
Source
Fixed Assets Turnover Ratio 1.68 1.57 1.63 1.41 1.27
LIQUIDITY RATIOS
Current Ratio 1.39 1.23 1.20 1.19 1.31
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Current Ratio (Inc. ST 0.99 0.80 0.79 0.80 0.83
Loans)
Quick Ratio 0.93 0.69 0.72 0.69 0.66
Inventory Turnover Ratio 6.73 6.13 6.12 5.85 4.78
PAYOUT RATIOS
Dividend payout Ratio (Net 8.62 9.35 20.50 28.22 25.63
Profit)
Dividend payout Ratio (Cash 6.20 6.42 10.90 12.39 10.97
Profit)
Earning Retention Ratio 90.78 90.40 78.93 74.60 72.83
Cash Earnings Retention 93.50 93.46 88.94 88.18 88.75
Ratio
COVERAGE RATIOS
Adjusted Cash Flow Time 2.46 2.38 3.04 3.53 4.51
Total Debt
Financial Charges Coverage 8.44 9.30 6.79 4.99 3.18
Ratio
Fin. Charges Cov.Ratio (Post 6.54 7.20 5.32 4.00 3.18
Tax)
COMPONENT RATIOS
Material Cost Component(% 45.68 45.65 44.07 39.55 34.75
earnings)
Selling Cost Component 11.86 12.75 12.52 13.95 9.60
Exports as percent of Total 2.40 3.03 4.08 5.59 6.58
Sales
Import Comp. in Raw Mat. 12.31 11.29 10.33 10.59 12.82
Consumed
Long term assets / Total 0.48 0.50 0.47 0.50 0.54
Assets
Bonus Component In Equity 0.00 0.00 0.00 0.00 0.00
Capital (%)
42
Explanation-
43
Dividend payout ratio:
The ratio indicates the relationship between dividends distributed
and net earnings of the firm. This ratio shows the fact that
company is paying low dividend compared to the previous years.
This indicates that it is retaining its profit to take care of the
growth factor. The less the dividend payouts, the more is the
company retaining its profits which can be seen from the balance
sheet.
Current ratio:
This ratio is commonly used to measure the short term solvency of
the firm. Here, every current liability of Re 1 is backed by the
current assets of Re.1.39. This indicates the ability of the company
to meet its obligations. It shows the working capital position is
sound.
Quick ratio:
The main difference between the current ratio and quick ratio is of
the inventory, the comparison of two ratios leads to the important
conclusions relating to the inventory hold-ups. Here the company’s
quick ratio is not in a desirable position as it should be in ratio of
1:1 as per the convention. The reason is because of the huge
inventory piling up in the working capital, though the current ratio
is showing improving signs.
44
Financial charges coverage ratio:
The ratio indicates the extent to which earnings can decline
without resultant financial hardships to the company because of its
inability to meet annual interest cost. Here, the company’s ratio has
shown tremendous improvement in the year 2006 and 2007
compared to previous years. This shows the company’s ability to
suck the fixed financial charge liabilities through its profits.
Conclusion-
• CSL's revenues are expected to increase at 67.77% CAGR
over FY06-09.
• OPMs of the company are expected to increase from 15.45%
in FY06 to 16.13% in by FY09 due to increasing revenues
from the trading activities where the margins are high.
• CSL is expected to have a healthy interest coverage ratio due
to higher EBIDTA margins.
• The company is expected to maintain a low debt-equity ratio
due to its ability to generate high cash earnings.
• Return on Networth is expected to increase from 23.06% in
FY06 to 29.07% in FY09, whereas the Return on Capital
Employed is expected to increase from 17.19% in FY06 to
20.47% in FY09.
45
• Currently, the stock trades at 6.33 x FY09E earnings and at
4.63 x FY09E EV / EBIDTA. The valuations of the company
look extremely attractive, looking at the growth opportunities
and the companies’ plans towards it.
SECTION D
PEST ANALYSIS
46
It is useful to consider to what extent environmental influences
have been particularly important in past and the extent to which
there any impact which may make any of these more or less
significant in the features for the organization and its
competencies. In order to answer some of the key question about
forces that work in macro environment, a PEST analysis indicating
the importance of political, economical, social, technological
influences on the organization carried out.
Macro Environment
Political Factors
Economical Factors
Socio-Cultural Factors
Technological Factors
Political Factors
47
years. This is thus going to create a lot of demand for this
industry in the years to come.
1000
benefit the sanitaryware industry also.
500
FDI Inflows- Sector -wise
Economical Factors
Interest Rate:
As housing sector is the main driving force for the sanitaryware
industry. So the increase or decrease in the home loan rates will
have the direct impact on the sanitaryware industry of India.
Demand for residential properties tends to be highly price-
sensitive. Though the underlying demand for housing is huge,
increasing property prices will result in postponement of
purchasing decisions. The growth in housing demand has been
stymied by high property prices. However, home loan rates, akin to
the general interest rates have been steadily climbing in the past
12-15 months. Increase in loan rates will further dampen the
demand for real estate construction. As the interest rate on home
loan rose from 7% in 2004 to 12% by March 2007, affordability of
49
weaker sector to buy houses has gone down sharply. Because of
the rise in interest rates, the equated monthly installment (EMI) on
a 20-year home loan went up by almost 50%. At the same time, as
the real estate prices also rose sharply during the same period,
houses become almost out of reach for the low-income group
people.
Inflation:
The inflation rate has the direct impact on any industry. As the rate
of inflation goes up, it reduces the purchasing power of people.
Also in order to control the inflation the government goes for
tightening monetary policy which leads to increase in the interest
rate. This ultimately affects the sanitaryware industry as the
50
increase in the rate of inflation also leads to the increase in the
housing loan rates. Inflation based on the wholesale price index
(WPI) zoomed to over three-year high of 7.41% for the week
ended March 29, 2008. This does not give the very good news to
the sanitaryware industry.
51
quarters slipped to 11.1 per cent from 14.1 per cent. Trade, hotels,
transport and communication sectors, however, managed to retain
the growth rate at 11.6 per cent during April-December 2007. The
growth rate of this sector was 11.8 per cent in the corresponding
period in the previous fiscal year.
52
and increase in per capita consumption of ceramic products in the
coming future.
Housing
The Indian housing industry is highly fragmented, with the
unorganized sector, comprising small builders and contractors, and
accounting for majority of housing units constructed. The
53
organized sector comprises large builders and government or
government-affiliated entities. The Tenth Five Year Plan envisages
a growth of 381% in the total investment made in the housing
segment. Such growth is envisaged owing to the housing shortage,
currently faced.
Commercial
Office Premises
Another major booster for the growth of real estate is growing
demand for office premises especially by booming IT industry
including BPO sector. It is expected that India would continue to
be one of the preferred destinations for setting up back office
operations. Consequently, the growth in the sector will translate
54
into substantially higher demand for commercial space, adding to
the overall investment in real estate activities.
Shopping Malls
Over the last decade, urbanization has increased. The boom in the
service sector in India in the recent years, has not only pushed up
the disposable income of the urban population, but has also made
them more brands savvy and status conscious. This increase in
disposable income along with more brand awareness results in
increase in sales of branded goods. The increasing income level
and changing life style and consumer approach towards branded
goods is expected to translate into higher demand for shopping
mall space. This will lead to strong growth in mall development
activities. It is further expected that while mall development
activity was initially restricted to a few major cities like Mumbai,
Chennai, Delhi, Noida, Banglore and Gurgaon it will now onwards
extend to other cities like Surat, Jaipur, Vadodara Kolkata, Pune
and Ahmedabad etc. thus causing a boom of real estate activities in
those cities.
55
Multiplexes
Another growth booster for real estate activities is growing
demand for multiplexes. The growth in multiplexes is being driven
by the following factors: Multiplexes typically have 250-400 seats
per screen as against 800-1000 seats in a single screen theatre,
which gives multiplex owners additional flexibility, enabling them
to optimize capacity utilization further, growth of multiplexes is
being driven by favorable government policies. The income tax
benefits have resulted in most major players announcing multiplex
projects in smaller towns. The aforesaid growth of multiplexes is
expected to push the growth of the real estate related activities.
Hotels/Resorts
With the increase of disposable income in the hands of Indian
middle class, the ability of spending a larger portion of their
income on tours and travels is going up. This factor, coupled with
the changing lifestyle of Indian population, has created demand for
quality hotels/resorts across this country. In addition, India is also
emerging as a major destination for global tourism which in turn
pushing up the demand for hotels/resorts across India. This
increasing demand for hotels/resorts across India, is offering
another opportunity for real estate development.
56
Builders
Real estate developers and builders are also changing their
profiles. They have started becoming more organized, with a clear
focus on building superior infrastructure, using the best quality
materials. They are emphasizing on international standards and
consciousness for better quality raw material. Technology has
evolved in the construction business, so using them, as part of the
process has been very vital in these competitive environments. The
banks have also played an important role in the process, by
increasing the availability of funds, which has helped evolve a new
breed of developers, thus providing opportunity for real estate
development.
IT Parks
The development of IT parks has also resulted in demand for
sanitaryware industry. It is estimated that for every 1 lakh square
feet of space occupied by IT-ITES parks there is an immediate
demand created for 7 lakh square feet of residential property thus
providing a market for sanitaryware industry.
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Socio-Cultural Factors
Household Income:
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The above chart shows that middle, upper middle & rich
households are going to increase considerably from 2004-05 to
2014-15 which does show very good demand for sanitaryware
industry in the future.
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Population Growth:
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The above chart suggests that India will overtake China in terms of
population by 2030. This shows that India’s population is rising
very fast. This population will give boost to the housing sector.
And housing is one of the main driving forces to the sanitaryware
items. Thus rising population will also add to the sanitaryware
industry of India.
Technological Factors
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campaign “Your bathroom is a room too… “Which made the
customers sit up and think on their priorities in furnishing their
home? Cera is also credited with branding of sanitaryware in India.
The continuous advertising from its launch made Cera a brand and
consumers started asking for not just sanitaryware but by brand
name, also an elevation from a mere utility product to a lifestyle
product. also Cera is first to use natural gas for firing Ceramic
product in production .
CERA has now added other bathroom products like Shower
Cubicles, Bath Tubs, Bath Fittings etc., to its range of products,
thus progressing towards its vision to become a complete
bathroom solution provider.
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internationally renowned consultants in the ceramic field to
upgrade its production processes, yield and finished goods quality.
Product innovation has been CERA’s forte. One after the other,
Cera launched not only new designs, but even new innovations in
India. The first was bath suites—a unique design concept
consisting of WCs, wash basins, bidets and accessories, giving the
bathroom a distinct personality. A series of bath suites—Crowne,
Concard, Capri, Cornet, Comet, Clair, Cognac, Celebrity, Celeste,
etc.—were launched in quick succession. Cera is also credited with
launch India’s first monoblock EWC, Cologne and now has an
array of one piece EWC & wash basins to its kitty.
• TWIN-FLUSH TECHNOLOGY
Water scarcity has always been a concern in most parts of India.
When there is shortage of water, can we not think of conserving it,
by sending less water per flush down the drain? This concern was
brainstormed by our technical and research personnel, designers
and quality assurance and marketing personnel and thus the
concept of twin action flushing was born. We found that in most
households, a WC is used more as a urinal and still it was using 8
to 12 liters of water for each flush. Our team then came up with the
idea of half flush along with full flush. A household can save
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substantial quantity of water by installing twin flush. Even where
water is available in abundance, we advise twin flush because the
cost of electricity for pumping extra water to overhead tank can be
saved. In India, ever since we pioneered the twin action coupled
closets two years back; it has caught the fancy of all architects,
plumbing consultants, trade, customers and even competitors. One
after the other, all manufacturers commenced twin action.
Beam casting: in beam casting iron beams are used for proper
casting in which less manpower is required in a way it is semi auto
technology.
Battery casting: in Battery casting iron beams are used for proper
casting in required in a way as it is automatic technology. This
casting doesn’t required manpower. So production capacity is
higher due to this technology.
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COMPETITIVE FIVE FORCE MODEL
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Five interactive competitive forces collectively determine an
industry’s long term attractiveness: present competitors, potential
competitors, the bargaining power of suppliers, the bargaining
power of buyers and the threat of substitute products. This mix of
forces explain why some industries are consistently more
profitable than others and provides further insights into which
resources are required and which strategy should be adopted to be
successful. The strength of individual forces varies from industry
to industry and, overtime, within the same industry.
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Rivalry among existing players
Variable Degree of Rivalry
Low Moderate High
No. of Players
Growth of Industry
Degree of
differentiation
Price competition
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Growth of Retail & Entertainment sector through the
development of new shopping malls multiplexes etc.
Increasing demand from the IT & ITeS SEZ and growing
Corporate Township Project.
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aware of the branded products in this market and prefer to have
products of unorganized players which are very cheap in terms
of quality and price.
Thus the price competition is huge factor and very high.
The sanitaryware manufacturers in the unorganized sector
continue to enjoy duty exemptions, which is not conducive for
healthy competition. CSL faces a lot of competition from the
unorganized sector in Gujarat which is a cause for concern to
the company.
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Variable Degree of Bargaining
Low Moderate High
Access to information
Switching Cost
Awareness
No. of sellers
• Switching Cost: There are many players in this industry. So, the
buyer has the wider choice of selecting his Brand which can
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best fit to his/her expectations and Budget with good Quality
product. Here the switching cost is low for the Consumer. So,
we have concluded that the bargaining power of the buyer in
this case is higher.
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In manufacturing industry it is very difficult to clearly define the
key supplier. So, we have considered below Raw material
providers as the suppliers for the Manufacturing firm. They are
providers of the Raw materials which is use in this ceramic
product is basically Clay: Ivory color ,Than Clay, Bikaner clay,
Felspar, Quartz, , calcite, china clay, Tulk, Zinc oxide, Barium
Carbonate , Zirconium Silicate which is approved after R & D
Testing .
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• No. of Suppliers: There is very limited no. of suppliers. To get a
platform for the business they have a very Moderate choice.
Company’s is having minimum 3-4 Raw material provider for
its Product requirement and some imported product are
imported from china.
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Threat of substitute products and services:
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Threats of New entrants:
The increasing imports of sanitaryware and the likely
commencement of new sanitaryware plants in the country by the
multinationals can cause a threat to the growth of the Company.
Few companies like ROCA, KOHLER, RAK, TOTO, and
AMERICAN STANDARD have already taken steps to enter the
market.
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highly labour intensive, non-availability of standardized raw-
materials (every manufacturer has to source raw materials from
mines and have its own quality assurance systems), low market
size (the market currently is estimated to be just around Rs7bn)
and innumerable number of unorganized sector players who thrive
partly on government policy of levy-exemption and partly on
evasion of taxes.
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• Growth Potential: It is likely to see the high growth potential in
the industry as the Housing sector is booming and the more and
more people come to invest in the Realty sector .This shows the
high amount of Growth opportunity for the existing players.
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CONCLUSION OF PORTER:
By studying the above model, we drawn the following
conclusion:
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SWOT ANALYSIS
STRENGTHS:
• India’s first to use natural gas firing.
Direct connection of natural gas from GAIL has certainly
helped CERA in better margins. However, this is only one of the
several advantages. CERA has captive power plant using natural
gas. CERA also has wind turbines. Thus CERA is not dependent
on government electricity board for its power requirements.
Others will take a long time to catch up.
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• Wide product range.
Capitalizing on a strong brand image and an evolving market for
bathroom products, CSL expanded its product range to other
related products like shower panels, shower cubicles, shower
temples, bath tubes, whirlpools, bath fittings etc., which makes it a
total bathroom solutions provider.
WEAKNESSES.
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OPPORTUNITIES
• Rising domestic demand for tile, sanitaryware and table
ware
• Large export potential in sanitaryware in Middle East, Africa
and Central Asia.
• Exploit local expertise in related sectors, clusters
technologies.
• Facilitate supply chain collaboration.
THREATS
• Low priced import from china
• Changing consumer preferences
• Large surplus capacities in the international market.
• Increasing regulatory pressures.
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ANALYSIS OF BCG MATRIX
Parryware Other
Hindusta
n
Cera
MARKET SHARE
Parry ware-35%
Hindustan- 32%
Cera- 20%
Others- 13%
Others include -AMERICAN STD, KOHLER, ROKA, RAK
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PRODUCT LIFE CYCLE
Industry Position
For the last 6-7 years, the sanitaryware industry in India has shown
dramatic growth with major players doubling their production
capacity. The demand for high value sanitaryware in India is
growing very fast. Indian Sanitaryware industry is witnessing a
boom growing at a 12-15% growth for the last couple of years.
There are generally mixed forecasts regarding the potential for the
housing market, an essential driver of replacement and new
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bathrooms. The baths and Sanitaryware market will continue to
grow over the period 2006 to 2010. The new trend is that
consumer’s tend to associate themselves with quality and well
designed products. This has also increased the demand in the
organized sanitaryware products.
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CORPORATE GROWTH STRATEGY
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Current products new products
Market penetration Product development strategies
strategies • Product improvements
(CERA) • Product-line extensions
• Increase market share • New products for same
• Increase product market
usage
• New applications
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Recommended corporate strategy for the CERA:
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SEVEN-S MODEL
About 7 S models:
The 7 S models is a tool form managerial analysis and action that
provides a structure with which to consider a company as a whole,
so that organizations problems may be diagnosed and a strategy
may be developed and implemented.
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progress on one without making progress on all. Thus, to improve
your organization, you have to master system thinking and pay
attention to all of the seven elements at the same time. There is no
starting point or implied hierarchy-different factors may drive the
business in any one organization.
With these aspects, we have analyzed all the 7-S for Cera
Sanitaryware Ltd. to know the effectiveness of the company. These
7-S areas follow:
1. Structure:
It is very clear that a well-defined Organizational structure
gives the employee a perfect view of to whom they have to
report and from whom they are going to receive orders. Thus,
a structured organization is very effective. The same with
CERA. They have well defined all the level of the company’s
organizational Structure .Thus making no confusion for any
employee and speed up the working level.
2. Strategy:
Strategy as we all know has a tremendous importance in
success of any organization. This is because strategy of any
company talks about the game plan that they are going to
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have for the development of the organization and also how to
compete in the market against rivalry. But when we talk
about developing strategy, it is easier task compared to
executing these strategies. This is because when its time to
implement strategy, it need to have a lots of coordination
among all the employees and organizational resources. Thus,
CERA have well defined strategies and are implementing
with very good speed. Also they are focusing on
downloading vision and mission in the mindsets of each and
every employee and they have the products catering to all
segment of its Target Market so that they become clear that
what company wants in the future to aggressively Propel the
Growth and where it want to go, so they can go in the right
direction.
3. System:
System as a whole should also be analyzed for checking any
organizations effectiveness. Because when we talk about
system, it includes all the functional and procedural aspects
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of the organization. CERA has fairly implemented
procedures and functions because when we talk about CERA
they have well defined strategy and structure and all Aspect
of Functional Area are being very well executed. So
company is having very well organized system.
4. Style:
Style refers to action taken by top Management to exist in the
market with Charismatic Leadership. Here, CERA’s top
management has done a good job in getting differentiation in
perceiving the CERA Brand which stand for “Value for
money product” among the Consumer and Quality is
synonymous with CERA is all hard effort of the Top
Management Particularly by their Chairman Vikram Somany.
This gives the company a different brand personality in the
mindset of the customer about CERA.
5. Staff:
As CERA is in the manufacturing industry, for its success it
needs to have an excellent power of Human Resources. This
is because in any organization behavior of people, Excellent
service -oriented people, their talking pitch and their ability
to tackling & Problem solving Approach to the customers
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makes difference in the organization. Thus, CERA has
achieved this by employing a well trained staff.
6. Skills:
When we talk about skills, we talk about those activities,
which organizations apply to be best and for which they
become known for. Here CERA is well known for providing
excellent product features at comparatively affordable prices
so kind of giving value for money to the customers. And for
this effectiveness it needs to have well trained employees.
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SECTION E
Findings:
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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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Suggestions:
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BIBLIOGRAPHY
Books:
1. Crafting and executing strategy. Arther A. Thompson Jr. A.J
Strickland, john E.Gamble. 14th edition
2. Marketing Strategy. Walker, Boyd, Mullins, Larreche .fourth
Edition
3. Marketing Research. David J. Luck, Ronald S. Rubin Seventh
Edition
4. Indian financial system; M Y Khan; 3rd edition; tata mcgraw hill.
5. personnel manangement; ashwathappa; 3rd edition.
Magazine:
1 Faqs for u, issue 2007
2. Business world issue 2007
3 4P’s Business and Marketing issue 2007
News paper:
1 The Economic Times
2 The Business Standard
3 The Financial Express
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Reports:
Cera annual report for the year 2006-07
Software:
CMIE (Prowess)
Web Site:
www.indiainfoline.com
www.cii.com
www.surfindia.com
www.cera-india.com
www.livemint.com
www.iccta.org
www.scribd.com
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