Somany Ceramics Ltd was founded in 1969 by late Shri H. L. Somany, Somany Ceramics is an internationally acclaimed organization that specialized in ceramics and allied product segment. In last four decades, Somany Ceramics has established itself as an unchallenged leader in the Indian Ceramic industry with significance presence in India, Africa, Middle East, United Kingdom, Russia and U.S. The company has manufacturing plants in Kadi (Gujarat), Kassar (Haryana), Andhra Pradesh and other many other joint venture plants across India. Company is a complete décor solutions provider and its extensive range of products include Ceramic wall and floor Tiles, Polished Vitrified Tiles, Glazed Vitrified Tiles, Digital Tiles, Sanitaryware and bath fittings and tile laying solutions.
Around 89% of total revenue of Somany Ceramics comes from TILES. Somany Ceramics has a strong distribution network of 400+ showrooms, 2,900+ active dealers and 6000+ retailers. And majority of these dealer, showrooms and retailers are present in Tier II, III and IV cities.
PRODUCTION CAPACITY:
1)Somany Ceramics
Tiles:
| Unit | Annual Production Capacity (in Million Sq Meters) |
| Kassar, Haryana | 19.63 |
| Kadi, Gujarat | 6.65 |
| Sudha Somany Ceramics Pvt Ltd | 3.48 |
| Amora Tiles Pvt Ltd | 4.58 |
| Somany Fine Vitrified Pvt Ltd | 4.29 |
| Amora Ceramics Pvt Ltd | 3.30 |
| Vintage Tiles Pvt Ltd | 4.80 |
| Acer Granito Pvt Ltd | 3.30 |
| Vicon Ceramics Pvt Ltd | 2.64 |
| Out Sourced (Contract Manufacturing) | 10 |
Above Total is 62.67 million sq meters plus company successfully commissioned its three new plant in North, West and South India with annual production capacity of 11 million sq meter so now total is 73.67 plus company is building new greenfield Tile plant at Morbi which will have annual Production Capacity of around 5 million sq meters. This new plant will start from Q1FY24. So Company will have total annual production capacity of around 80 million sq meters.
Bathware
| Unit | Annual Capacity (in million Piece) |
| Somany Sanitary Ware Pvt Ltd | 1.15 |
| Somany Bath Fittings Pvt Ltd | 0.65 |
2) Kajaria Ceramics: Has annual Tile Production Capacity of 87.59 million sq meters.
3) Asian Granito: Has annual Tile Production capacity of 34.5 million sq meters.
4) Orient Bell: Has annual Tile Production Capacity of 31 million sq meters
Kajaria Ceramics is largest Tile manufacturer in India with Production capacity of 87.59 million sq meters and Somany Ceramics is second largest Tile manufacturer in India with Total Production capacity of 80 Million sq meter. The Tile Production capacity gap with Kajaria Ceramics and Somany ceramics is just 8 million sq meters. Very narrow gap. And then all other Tile Players has annual tile production capacity below 35 million sq meters. So production gap between Somany Ceramics and other Tile players is very huge. The Gap is around 45 million sq meters. This shows that other Tile Players are no where near Somany ceramics.
Somany Ceramics will launch slab Tiles in Its Morbi unit. And plans to increase the Production capacity of Tiles from 7,000 sq meters per day to 18,000 sq meters per day.
Zone-wise revenue mix (%) of Somany Ceramics:
| Zone | Revenue Contribution |
| North | 44 |
| South | 26 |
| East | 18 |
| West | 9 |
| Exports | 3 |
SECTOR STUDY;
1)TILE:
Per Capita consumption of Tiles in India is just 0.6 sq meters compared to 3.4 sq meters in Brazil and 4.0 sq meters in China. This clearly indicates Indian Tile market is highly undervalued.
TOP MANUFACTURING COUNTRIES (Tile manufacturing figures in million sq meters)
| Country | 2016 | 2017 | 2018 | 2019 | 2020 | % on 2020 world production |
| China | 10,265 | 10,146 | 9,011 | 8,225 | 8,474 | 52.7 |
| India | 955 | 1,080 | 1,145 | 1,266 | 1,320 | 8.2 |
| Brazil | 871 | 867 | 872 | 909 | 840 | 5.2 |
| Vietnam | 485 | 560 | 602 | 560 | 534 | 3.3 |
| Spain | 492 | 530 | 530 | 510 | 488 | 3 |
| Iran | 340 | 373 | 383 | 398 | 449 | 2.8 |
| Turkey | 330 | 355 | 335 | 296 | 370 | 2.3 |
| Italy | 416 | 422 | 416 | 401 | 344 | 2.1 |
| Indonesia | 360 | 307 | 383 | 347 | 304 | 1.9 |
| Egypt | 250 | 300 | 300 | 300 | 285 | 1.8 |
| Total | 14,764 | 14,940 | 13,977 | 13,212 | 13,408 | 83.3 |
| Total World | 17,110 | 17,414 | 16,557 | 15,827 | 16,093 | 100 |
TOP CONSUMPTION COUNTRIES (Tile consumption figures in million sq meters)
| Country | 2016 | 2017 | 2018 | 2019 | 2020 | % on 2020 world consumption |
| China | 9,245 | 9,244 | 8,163 | 7,453 | 7,859 | 49 |
| India | 785 | 861 | 876 | 910 | 885 | 5.5 |
| Brazil | 789 | 765 | 775 | 802 | 829 | 5.2 |
| Vietnam | 412 | 580 | 542 | 467 | 400 | 2.5 |
| Indonesia | 369 | 336 | 450 | 413 | 357 | 2.2 |
| USA | 274 | 284 | 289 | 273 | 264 | 1.6 |
| Mexico | 235 | 242 | 236 | 238 | 242 | 1.5 |
| Turkey | 239 | 251 | 236 | 185 | 241 | 1.5 |
| Saudi Arabia | 248 | 203 | 176 | 190 | 238 | 1.5 |
| Egypt | 215 | 252 | 236 | 239 | 237 | 1.5 |
| Total | 12,811 | 13,018 | 11,979 | 11,170 | 11,552 | 72 |
| Total World | 16,859 | 17,229 | 16,426 | 15,650 | 16,035 | 100 |
Above tables shows China is largest Tile Manufacturer in world but China is de-growing in Tile sector. China’s tile manufacturing has declined from 10,265 million sq meters in 2016 to 8,474 million sq meters in 2020 and on other side India’s tile manufacturing has increased from 955 million sq meters in 2016 to 1,320 million sq meters in 2020. Even Consumption of Tiles in China has declined from 9,245 million sq meters in 2016 to 7,895 million sq meters and on other side India’s Tile Consumption has increased from 785 million sq meters to 885 million sq meters in 2020.This clearly shows India is taking away the Tile manufacturing of China. Shifting of manufacturing of Tile from China to India has just started. China is world’s largest Tile manufacturer in world it contributes 49% of world’s Tile production and India is second largest Tile manufacturer. But then too India contributes only 8.2% of world’s Tile production. This shows how highly undervalued India is in Tile production.
In 2021 World’s Tile Production reached around 17,600 million sq meters. The world Tile Production is expected to reach 20 billion sq meters by 2026 from 17,600 million sq meters in 2021.
Ceramic Tile Production Volume in INDIA from 2012 to 2020 (Figures in Million Square meters)
| Year | Production Volume |
| 2012 | 691 |
| 2013 | 750 |
| 2014 | 825 |
| 2015 | 850 |
| 2016 | 955 |
| 2017 | 1,080 |
| 2018 | 1,145 |
| 2019 | 1,266 |
| 2020 | 1,320 |
Global Leading Tile Exporting countries in 2020 (Figures in Million Square meters):
| Countries | Exports |
| China | 622 |
| India | 437 |
| Spain | 422 |
| Italy | 318 |
| Iran | 179 |
| Turkey | 132 |
| Brazil | 96 |
| Poland | 58 |
| Egypt | 53 |
| UAE | 52 |
China is world’s largest Tile exporter in the world. But India’s Tile production capacity is expected to reach around 2 billion sq meters by 2025 from 1,320 Sq meters in 2021. Almost half of the India’s tile production will be exported so by 2025 India’s total tile exports will reach to 1 billion sq meters from 437 million sq meters at present. So by 2025 India will become world’s largest Tile exporter
India’s Tile exports increased by 21% from 360 million sq meters to 437 million sq meters. India’s Tile exports accounts for 15.8% of world’s exports. Saudi Arabia remained India’s largest export market with 20.8% share of total Tile exports and 24.8% increase in sales from 73 million sq meters to 91 million sq meters. India’s tile export to Iraq grew by 26% to 23 million sq meters, exports to Indonesia grew by 22% to 22 million sq meters. Indonesia started importing Tiles from India only after 2018. UAE accounted for 8.5% of exports to 20.6 million sq meters. India’s export to USA doubled from 9.2 million sq meters to 18.6 million sq meters. India’s export to South Africa increased by 146% to 12.6 million sq meters, export to Poland increased by 65% to 11.4 million sq meters and export to Russia increased by 400% to 5.6 million sq meters.
India’s Tile export reached euro 1,350 million, equivalent to an average selling price of euro 3.1 per sq meters which is one of the lowest values as compared to other Tile exporting countries.
Only 40% of Indian Tile market is organized rest 60% is unorganized. Expansion of Tile production capacity is time consuming and requires huge capital so we might see big tile players doing JV with smaller Tile players as contract manufacturing just to increase the tile production capacity of bigger Tile players in India. There might be huge race or competition in doing JV with smaller tile players as contract manufacturer just to increase tile production capacity and to grab the market position from unorganized players in coming years.
The Global Tile market is expected to grow from $355.31 billion in 2021 to $656.25 billion in 2030. Indian Tile market is expected from $7,144.7 million in 2027 from $3,720 million in 2019 growing at a CAGR of 9%.
GROWTH FACTOR FOR TILE SECTOR:
1)Population Growth:
1.40 billion population of India which will increase to 1.50 billion in 2030.
2) Age of Home ownership:
Average age of home buyers in India was 35-45 years in 2010 and at present it is 25-40 years.
3) Housing affordability: there will be around 38 million households in India by 2030.
4) Growing Urbanization:
Growing urbanization and transformation of smaller cities into bigger cities will play important role. 35.4% of Indian population is urban as compared to 56.6% of global population is urban. 60% of Indian population would be urbanized by 2050. 290 million people lived in cities in 2010 and around 877 million people could live in cities by 2050. This is because Tier I cities are converting into mega cities, Tire II cities are converting into Tier I cities, Tier III cities are converting into Tier II cities, Tier IV cities are converting into Tier III cities and rural areas are converting into Tier III cities. All this is because of Increase in per capita income, modernization, technologies, Internet etc. This conversion of smaller cities into Bigger cities will be the main growth factor for Tile sector. Around 55% of total home buyers in India are millennials.
5) Only 52% of households in India are in good conditions rest 48% households are living in smaller than one room home. Huge opportunity for Tile industry since this 48% households living in single room house will get converted into bigger houses due to increase in per capita income and desire to own a beautiful house.
6) Conversion of kacha house to affordable pakka house.
7) Rise in renovation of house for beautification will increase the demand of Tiles. Earlier people used to live in houses which does not even had painted walls just to save money due to low per capita income. But now things have changed. Due increase in per capita income today’s generation wants modern type of house so that they does not feel like left behind.
8) In India only 3 houses are built per 1,000 people per year compared with the required construction rate of 5 houses per 1,000 people. The current shortage of housing in urban areas is estimated to be 10 million units. And additional 35 million units of affordable housing are required to meet the growth in the India’s urban population. This will give boost to Tile sector.
9) By 2030 India will have 104 Tier II, 331 Tier III and IV cities and only 155 Tier I cities. This shows smaller towns and rural areas in India are on its way to transform into smart cities. After 2030 this 331 Tier III and IV cities will start transforming into Tier II cities and 104 Tier II cities will transform into Tier I Cities due to increase in per capita Income, modernization, technologies, internet etc. this clearly shows Tile sector will see one of the biggest boom and biggest Tile demand will come from Tier II, III , IV cities and smaller towns.
10) By 2030 India will have 77 new cities. Means new houses, offices, new infra etc.
11) Home Loans:
Increase in demand of home loans has been driven by Tier II, III and IV cities rather than Tier I cities. The demand of home loan combine in Tier II, III and IV cities have increased from 32% to 36%. The ticket of loan disbursed in smaller districts has also increased more in Tier II, III and IV cities. the average ticket size of loans has increased in Tier III by 1.3 in Tier IV districts it has increased by 1.4 times. Sundaram Home Finance says nearly 70% of their home loans disbursement in the first nine months have came from Tier II, III and IV cities and towns. Earlier the home disbursement from these areas were just 50%. This clearly shows huge Tile Demand will come from Tier II, III and IV cities and towns.
12) Real Estate:
Market size of the real estate industry in India (in billion U.S. dollars)
| Year | Market Size |
| 2008 | 50 |
| 2017 | 120 |
| 2020 | 180 |
| 2025 | 650 |
| 2030 | 1,000 |
India’s Real estate market size is expected to reach US$ 1 trillion in 2030 from $200 billion in 2021. India will see a biggest real estate boom in affordable housing from Tier II, III and IV towns. Construction of around 16-17 billion sq feet of affordable housing may come up in Tier II, III and IV cities and towns by 2040. This will bring boom to Tile Sector. Many known player like Godrej, Prestige, DLF, Oberio, Lodha, etc have started to expand their business in Tier II, III and IV cities and towns.
13) Indian commercial real estate market is expected to grow by 13%. In India adoption of flex office space will exceed 65 million sq feet by 2024 and grade A office market is expected to touch 1.2 billion sq feet by 2030. All this will give boost to Tile sector.
14) Hospitality: Around 59,000 new hotel rooms will come up across India in next five years. Construction of hotels without Tiles is impossible.
15) Retail Space and Shopping Malls:
70 new shopping malls with total retail space of 31.02 million sq feet are expected to come up in seven top cities of India by 2030. Around 17.25 million sq feet of new retail small space will come up in Tier II and III cities in India by 2024. Construction of smalls without tiles is impossible.
16) Healthcare:
India will require new 1.3 billion sq feet of healthcare space by 2030. Construction of hospitals without tiles is impossible.
17) Home Beautification:
Indian home improvement or beautification market revenue is expected to increase from $800 million in 2019 to $1.5 billion by 2025. Home improvement products includes goods such as Tiles, sanitaryware, paints, furniture etc. Today consumers yean for a unique experience and are getting vocal about brands and designs that don their houses. Real estate developers are also going by this trend that’s why they are using quality marble, tiles for flooring and luxury branded sanitaryware. Due to growing in per capita income, modernization, internet etc people want to use better home interiors.
18) Infrastructure:
India will need to invest around $840 billion in next 15 years to upgrade its urban infrastructure (airports, ports, railway stations etc). And upgradation of infrastructure is not possible without tiles.
2) SANITARYWARE:
China is world’s largest producer of sanitaryware with annual production capacity of around 230 million pieces. And India is world’s second largest manufacturer of sanitaryware with annual production capacity of just 40 million pieces. Gap is too large. This shows India’s sanitaryware market is highly undervalued. Out of this 40 million sanitary ware pieces Gujarat alone produces 30 million sanitaryware pieces. Gujarat produces 75% of India’s entire sanitary ware production. China is world’s largest exported of sanitaryware products with volume of around 105 million pieces. It exports around 49% of its total production. India’s sanitaryware production is expected to reach 80 million pieces by 2030 from 40 million pieces at present.
India’s sanitaryware market is expected to grow from $1,060 million in 2021 to $1,651.9 million by 2027. Only 43% of Indian sanitaryware market is organized. So we can see huge shift from unorganised to organised.
3) FAUCET:
India’s faucet industry is valued at Rs 11,000 crore. 50-55% of Industry is still unorganized. Premiumization of faucets will be a major theme to watch for. Earlier in rural areas and in towns of India people had plastic faucets at home. But now due to increase in per capita income, modernization, technologies people are shifting from plastic faucets to metal faucet and powder coating faucets. Metal faucets comes in various designs and colours like rose gold colour, gold colour, copper colour etc. This shift towards premiumization of faucets will incease the demand of faucets.
Perception of Individuals on bathroom have changed drastically. Earlier bathroom was perceived as a necessity. But at present bathroom have evolved as a style statement or luxury statement. People are opting for bigger and better bathrooms as a sign of status and luxury. People are moving from pedestal basin to over the counter basin. People in rural areas are shifting from traditional closets to wall mounted closets. The growth of technologies have given birth to touches bathrooms. Eg, faucets working on sensors, showers working on sensors, faucets showing the temperature of water so that people can change the temperature of water. So basically like smart phones, smart watches, bathrooms are converting into smart bathrooms. Increase in per capita income, modernization, desire to have everything upgraded by milennials are the major factor of growth which led to increase in adaptation of smart bathrooms. Adaptation of smart bathrooms will led to increase in sales of sanitaryware, fauctes and tiles.
Global faucet market is expected to reach $66.64 billion by 2030 from $40.20 billion in 2021 growing at a CAGR of 7.6%.
CHINA+1 EFFECT:
In China 2021 was the first year for carbon peak, carbon neutral and double carbon policy. Under this policies government has strengthen the supervision of high energy consumption and high carbon emission industries. This has negative impact on Tile and sanitaryware industry in China. We might see closure of many manufacturing plants of Tile and sanitaryware products in China. Plus bursting real estate sector in China have further decreased the demand of tile and sanitaryware products. India might directly benefit from this as India is world’s second largest manufacturer of Tile and sanitaryware products.
UPDATES AND NEW DEVELOPMENTS ABOUT SOMANY CERAMICS:
1)Somany ceramics enjoys market share of 22% across India in the organized ceramic tile and sanitaryware sector.
2) Somany ceramics recently launched touch free infrared sensor closet (western toilet), it also launched skid free tiles and tempshield tiles. Tempshield tiles makes roof, pavements, balconies, exterior façade temperature friendly. Due to its high reflectance and emittance this tile will effectively reduced both surface temperature and inside room temperature. This helps to protect buildings and houses from damages caused due to high heat.
3) Company launched bathware range French collection. It includes sensor faucet, sensor showers, latest designed basins and other bathroom accessories.
4) Somany Ceramics has increased its faucet production by 2x to 1.3 million pieces.
5) Around 80% of total sales of Somany Ceramics comes from retail market that is individual home buyers, renovation etc, 10-12% sales comes from government and corporate sales and remaining comes from large private builders and developers.
6) Companies sales from Tier II, III and IV cities increased by 40%.
7) Somany cermics will have 1,400 showrooms up from 400 showrooms at present and around 3,500 dealers up from 2,700 dealers in coming two years. And majority of this new showrooms and dealers will be from Tier II, III and IV cities.
8) Somany ceramics also manufactures marble quartz or duragres stones. Marble quartz or duragres stones is a composite marble which looks same like marble and granite. Marble and granite breaks or cracks if it falls down or some heavy objects is placed on them. But marble quartz is fully durable thing. It is a substitute of marble, granite and paint. One cannot make out difference between original marble granite and marble quartz. Now a days people are using marble quartz on wall of house instead of using paint. After some years paint come out but marble quartz remain as it is. So marble quartz has long life. Plus marble quartz are available in all types of colours and designs. But in paint we cannot do all types of designs due to limitation. This is great change or development in renovation or house modification space.
FAVOURABLE GOVERNMENT POLICIES:
1)Pradhan Mantri Awas Yojana (Housing for all):
Government of India has planned to provide two crore affordable houses.
2) Smart City Mission:
Smart city mission is an urban renewal and retrofitting project with mission to develop smart cities across the country, making them friendly and sustainable. The mission includes 100 cities with total development project of Rs 1,91,294 crore.
3) Jal Jeevan Mission:
Jal Jeevan mission is a project to provide safe and adequate drinking water through individual household tap connections by 2024 to all households in rural India. India has 19,35,58,969 total household out of these only 10,61,77,267 (54.68%) rural households has tap connections.
4) Swachh Bharat Mission:
Swachh Bharat Mission is a countrywide campaign to eliminate open defecation. In First phase of the mission 89.9 million toilets were build. Government of India has released $5.8 billion funds for toilet construction. Sanitation condition has improved in country but still around 45-50% of rural households and 15% of urban households in India don’t have access to safe sanitation.
Rising gas prices is the main reason for lower profit margins of tile sector. Gas prices will not remain high whole life. Its just a matter of time. During Q3FY23 gas prices have started to show some sign of softness. Gas price cap down from Rs 65/SCM to Rs 60/SCM. Somany Ceramics has started working on necessary mitigation measures to offset the increase in gas price by switching to alternatives such as LPG. Somany ceramics converted its 50% production capacity into LPG and plans to increase it by 60% by the end of December 2022. Current Price of LPG is Rs 50.
FINANCIALS:
| 2018 | 2019 | 2020 | 2021 | 2022 | |
| Revenue (Rs Cr) | 1,712 | 1,715 | 1,610 | 1,650 | 2,094 |
| Net Profit (Rs Cr) | 79 | 53 | 19 | 61 | 93 |
| EPS | 16.62 | 10.93 | 3.54 | 13.62 | 20.88 |
| ROE | 12.13 | 7.55 | 2.47 | 8.80 | 12.21 |
| Debt To Equity | 0.82 | 0.83 | 0.73 | 0.55 | 0.70 |
Somany Ceramics Ltd aims the growth of revenue by 30% to Rs 2,700 crore during the current fiscal.
The report on SOMANY CERAMICS LTD was made on 9th December, 2022 at CMP of Rs 532.20. The report is made for educational purpose only. Please do your research before investing.