The Rs 760-crore Somany Ceramics is increasing its dealership base in the non-metros and smaller cities, after facing saturation in demand in the top few metros in the country.
Speaking to Business Line , Mr Abhishek Somany, Joint Managing Director, Somany Ceramics, said, “Today most of the metros have become saturated markets and we have been getting most of the growth (at 30 per cent) from the smaller cities. This has made us add near 300 more dealers in the non-metros.” Somany has increased the number of its dealers from 11,050 to 11,450; all the additions are in the non metros this year.
Besides, it has also added most of its larger showrooms (Somany Exclusive) in the non-metros where rentals are cheaper. “The majority of our larger retail stores under Somany Exclusive are in the non-metros while the smaller formats under Somany Studios are in the big metros as rentals are expensive,” added Mr Somany.
In fact, the slowdown in the construction industry has led to lower demand in the metros. “Last year the builder segment for us grew at 15 per cent while this year it has come down to 12 per cent,'' said Mr Somany.
However for the Rs 14,000-crore tiles industry, input costs have been on the rise with price of raw materials such as clay and natural gas increasing. According to Mr Somany, “Apart from the usual costs increasing for tiles manufacturing, labour charges and transportation costs have also gone up. We have increased prices by nearly 12 to 14 per cent in the past six months and will be increasing by another 5 to7 per cent going forward.'' Tiles are sold per square feet and prices range from Rs 25 to Rs 100 depending on the make and finish.
New corporate clients
Somany Ceramics is also adding new corporate clients to its roster. “We have recently added the Tata Motors account and will be supplying tiles for their showrooms across the country,” said Mr Somany. Other corporate accounts include the likes of Adidas and Nike whereby the company will be supplying tiles for their respective showrooms. However, its largest clients continue to be the government sector considering the company supplies the PWD (Public Works Department) and the LIC (Life Insurance Corporation) belonging to the Government.
The New Delhi-based company recently picked up a 26 per cent stake in Vintage Tiles, a Gujarat-based tiles manufacturing company. It is now open to forging more such strategic tie-ups.
“We will forge more joint ventures and strategic stake buys in tile companies but these would be in terms of manufacturing plain vanilla products and tiles for the mass markets through the acquired facilities. However, we will restrict our own manufacturing facilities to make more value-added and premium tiles,” specified Mr Somany.