Grappling with poor domestic demand, tile makers eye export
After a turbulent June quarter, tile and
ceramic dealers are back in business, according to recent channel checks by
brokerages. Management commentaries of listed tile firms also state that
capacity utilizations in July reached around 70% of their pre-covid levels.
Demand for tiles is directly correlated to realty sales
But demand for
tiles is directly correlated to realty sales and the ongoing lull paints a
dismal domestic demand scenario. So, tile and ceramic makers are likely to bet
on exports to boost near-term volumes. As per dealer channel checks, export
markets are recovering at a faster pace than the domestic market.
Export demand is strong
In a post-earnings
conference call, Somany Ceramics Ltd’s management said export demand is strong,
as many countries are looking at sourcing from nations other than China. There
is pent-up demand post the opening of certain markets. Exports demand is
healthy from the US, Europe, Australia, New Zealand and Indonesia, the
According to rating
agency Icra Ltd, export sales of tiles and ceramics stood at ₹800 crore in the
first two months of fiscal 2021. “They, however, jumped to around ₹2,500-2,700
crore for June and July 2020 and the monthly average for FY2020 stood close to
₹830 crore,” it said in a 7 September note.
competitiveness of Indian tile manufacturers has improved in recent years,
aided by technology and various government initiatives. Recently, India imposed
an anti-dumping duty of $1.37 per square metre on vitrified tiles imported from
China—the world’s largest producer of tiles. Analysts say that Taiwan and South
Korea are expected to take similar actions on imports of Chinese tiles.
GCC’s anti-dumping duties on Indian tiles and ceramics, a dampener
imposition of anti-dumping duties by the Gulf Cooperation Council (GCC) on
Indian tiles and ceramics could be a dampener. Saudi Arabia is the biggest
ceramic exports market for India. It is followed by UAE, Indonesia, Mexico and
“GCC has highest
share in exports at 37% from India during FY20. Imposition of duty is envisaged
to exert pressure on pricing and profitability from Q2FY21 as well as impact
overall credit profile of the entities, which have a higher geographical
concentration to GCC member countries,” CARE Ratings Ltd said in a report.