Ceramic Industry- Main Page.docx

Study of Growth drivers in Ceramic Industry:A comparative study of China and India Dr Akhilesh Chandra Pandey *, Narendra Kumar* Department of Business Management,HNB Garhwal University (A Central University) Srinagar Garhwal, Uttarakhand,India Abstract: –This paper analyses the contribution of evolutionary process to economic organization activity to create and sustain competitive advantage of type ceramic industry considering the global scenario. The competitiveness of firms in a dynamic environment it poses a lot of threat to the industry but it also pushes the industry to adopt newer avenues to benchmark to grow in a sustained way. The study focuses the various challenges and the opportunities in the ceramic industry in India. The study is based on the empirical analyses of the actual organizational characteristics, resulting from evolution and environmental adaptation, related with the creation and sustention of a set of competitive advantages identified by the top managers and related with innovation, demand, networks and competence of the industry. The investigation concludes for the relation between industry evolution and competitiveness.

Keywords: Introduction: The history of tiles reveals that the first clay tiles were produced seven to eight thousand years ago in the area now known as the holy land of . Many sources independently verify that the actual known history of tiles can be traced back as far as the fourth millennium BC (4000 BC) to Egypt. In those days, in Egypt, tiles were used to decorate various houses. Clay bricks were dried beneath the sun or baked, and the first glazes were blue in color and were made from copper. During that period ceramics were also known to be found in Mesopotamia. These ceramics bore decorations, which were white and blue striped and later posed more varied patterns and colors. Later on, in china too, the great center of ceramic art, a fine, produced during the Shang-yin dynasty (1523-1028 BC). The usage and art of making and decorating ceramic tiles had spread and by 900 A.D., decorative tiles had become widely used in Persia, Syria, and Turkey and cross North Africa. As transport and communication developed, tile usage and its expansion in other territories increased. By the end of the 12th century, use and manufacture of Ceramic Tiles had spread across Italy and Spain and into the rest of Europe. Till that time they were mainly used to decorate the floors of Cathedrals and Churches. The skill had eventually vanished from Europe in the 16 th century following the reformation. But the decorative wall tiles art had survived in Holland. A form of tile making had also evolved among the natives of North and South America at some point. The first decorative tiles to appear in Colonial North America were imported from Northern Europe, mainly England who adopted the technology from the Dutch. The tiles were too expensive for utilitarian purposes in the Colonies and were found almost exclusively in the homes of the wealthy people. Through the centuries, tiles decoration was improved upon, as were methods of tile manufacture. In the early days, the tiles were hand-made, each tile was hand-formed and hand-painted, and thus each was a work of art in its own right. Ceramic tile was used almost everywhere on walls, floors, ceilings, fireplaces, in murals, and as an exterior cladding on buildings. Today Ceramic tile throughout the world is not hand-made or hand-painted for the most part. Automated manufacturing techniques are used and the human hand does not enter into the picture until it is time to install the tile. They are used in an almost infinite number of way and you don’t have to consider yourself wealthy to own them. In commercial building, where both

beauty and durability are considerations, ceramic tiles will be found, particularly in lobby areas and restrooms. In fact most modern houses throughout use Ceramic tiles for their bathrooms and kitchens and in every vital areas of the premise. Ceramic tiles are also the choice of industry, where walls and floors must resist chemicals. And the space Shuttles never leave Earth without its protective jacket of high-tech, heat resistant tiles. CERAMIC TILES INDUSTRY IN INDIA: Ceramic tile industry can be classified into three segments – wall tiles segment, floor tiles segment and vitrified & porcelain tiles segment. At present, in India the market share of these segments are 42%, 46% and 12% respectively. Ceramic tiles are produced both in organized as well as in unorganized sector. In India, share of organized sector is around 55% of total production. The organized sector is characterized by the existence of a few large players, such as, H & R Johnson, Kajaria Ceramics, Bell Ceramics, SPL, Spartek and Murudeshwar Ceramics to name a few. In the domestic market of ceramic tiles H & R Johnson is the leader followed by Kajaria Ceramics, with market shares of 21% and 13%, respectively. Ceramics also known as fire clay is an inorganic, non-metallic solid article, which is produced by the art or technique of heat and subsequent cooling1. Ceramics is a diverse industry and contains several categories of products, including sanitary ware, refractories2, cement, advanced ceramics and ceramic tiles3.Ceramic products like crockery, sanitary ware, tiles etc play a very important role in our daily life. This is because, apart from their decorative look, ceramic products are primarily hygiene products. This is also one of the chief reasons for their wide usage in bathrooms and kitchens in modern households to medical centers, laboratories, milk booths, schools, public conveniences etc.The ceramic industry has a long history, with the first instance of functional pottery vessels being used for storing water and food, being thought to be around since 9,000 or 10,000 BC. Clay bricks were also made around the same time. The ceramic industry has been modernizing continuously, by newer innovations in product design, quality etc. Global Scenario There are three major regions in the world, namely, Asia, Latin America and European Union (EU), that produce and export ceramic tiles in bulk. In 2002, they had jointly produced more than 87% of the global output. World production of ceramic tiles was 5904 million sq.mt. in 2002. China was the largest producer with a total production of 2100 million sq.mt. Spain and Italy were the 2nd and 3rd largest producers with production of 651 million sq.mt. and 606 million sq.mt. respectively. India ranks at 8th position with production of 150 million sq.mt., which is around 2.5% of global production. In terms of exports, Italy ranks 1 st with an export volume of 438 million Sq. mt. in 2002. Spain is the 2 nd largest exporter with an export volume of 356 million sq.mt. Italy and Spain produce the best quality tiles in the world and export in large volumes to USA and European countries. In 2002, China became the third largest exporter of ceramic tiles with an export volume of 100 mn sq mt. In recent years, China’s export has increased at a much faster pace than others and the country has registered an export volume of 100 million sq. mt. from a level of 24 million sq. mt. over just 3 years (2000 – 2002). In terms of imports, USA is the largest importing country with a share of 13.6% of global import. Germany and France are 2 nd and 3rd largest importers of ceramic tiles with 8.1% and 7.5% share of world import, respectively.

In 2010, there is a significant increment in global import ceramics, among which the import of daily used ceramics has increased by 60.16 billion US dollars, and year-on-year growth is 19.89%, accounted for 16.87 in overall ceramic import. These data strongly prove a great demand still existing in the ceramic market. Being the first and second place in ceramic import of the world, the US and EU have been respectively importing from 106 / 149 countries and regions, from which China is still the largest country of origin of ceramic import with increasing accounted percentage for US and EU. The US imported 19.05 billion USD from China, and year-on-year growth is 33.5%. The EU imported ceramic 24.72 billion USD from China. Growth of year-on-year is 20.58%, accounting for 56.19% in total ceramic import of EU. Regardless either daily used ceramic or other type ceramic, proportion of each significantly grows in globe and all largest import and export countries, among which the increase by up to 73.81%.

Daily used Ceramic

Import

Export

USD(Billion)

Change(%)

Account for(%)

Global

60.16

19.89

16.87

USA

11.37

30.85

25.15

EU

14.63

18.19

33.24

Germany

4.2

10.75

14.91

Global

58.35

15.04

14.06

USA

n/a

n/a

8.06

EU

7.6

6.23

10.57

Germany

4.57

4.72

12.83

Global

98.81

27.44

27.71

USA

11.87

73.81

26.25

EU

9.56

21.38

21.72

Germany

7.64

27.11

27.11

Global

121.85

24.09

29.35

USA

11.7

39.59

76.82

EU

22.29

2

31.01

Germany

18.28

7.66

51.36

Other type Ceramic

Import

Export

China is the largest producer & Exporter in Asia.

Top 10 Manufacturing Countries Ranking

Country

1 2 3 4 5 6 7 8 9 10

China Spain Italy Brazil Indonesia Turkey Mexico India Iran Vietnam World

Production (million Sq. mt) 2100 651 606 508 230 162 159 150 1.5 105 5904

% of world Production 35.6 11 10.3 8.6 3.9 2.7 2.7 2.5 1.8 1.8 100

Top 10 Manufacturing Countries (million Sq. mt)

Top Exporting Countries Rankin g

Country

Exporting Countries (million Sq. mt)

1 2 3 4 5 6 7 8 9 10

Italy Spain Chain Brazil Turkey Indonesia UAE Mexico Malaysia Portugal World

438 356 100 72 72 50 39 33 29 22 1385

Export as a % of world Consumption 8.1 6.6 1.8 1.3 1.3 0.9 0.7 0.6 0.5 0.4 25.5

Top Exporting Countries (million Sq. mt)

Ceramic Tiles Industry Statistics India's Share of Global Production Global Industry Growth Rate Indian Growth Rate Organized Industry Turnover Share of Wall Tile Share of Floor Tile Share of Vitrified and Porcelain Tile Investment in the Last 5 Years

2.50% 11% 8% Rs. 16.56 billion 42% 46% 12% Rs. 16 billion

Estimated R&D intensities in different Ceramic manufacturing industries in India Year

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Insulator R&D Total Expenditur Sales e (Rs (Rs crores) crores) 0.4 105.88 0.37 106.63 0.42 119.19 1.36 124.76 0.86 135.28 0.33 100.37 0.26 96.35 0 0 0.63 155.02 0.79 142.86 0.99 172.29 0.79 411.58 1.26 426.88 1.23 310.51 0.79 304.55 0.54 226.69

R&D Intensity (%) 0.38 0.35 0.35 1.09 0.64 0.33 0.27 0.41 0.55 0.57 0.19 0.3 0.4 0.26 0.24

Other Ceramic products R&D Total R&D Expenditure Sales Intensity (Rs crores) (Rs (%) crores) 0.57 565.41 0.1 0.97 659.98 0.15 1.55 760.58 0.2 1.51 905.62 0.17 1.05 1193.31 0.09 0.87 1628.4 0.05 2.06 1766.37 0.12 0.44 1588.55 0.03 0.8 1714.29 0.05 0.39 2052.75 0.02 0.93 2377.59 0.04 0.4 2960.44 0.01 1.29 3614.18 0.04 1.58 4311.94 0.04 1.95 4768.55 0.04 2.78 3624.65 0.08

India in the world trade The value of global ceramic product exports (including tiles, sanitary wares and crockery items) was around US $ 19385 million in 2002. India’s export value was around US $ 100 million, which is only a minuscule in global export. India majorly exported to countries, such as, Saudi Arabia, UK, UAE and Sri Lanka. The value of India’s import was around US $ 50 million in 2002 and India mainly imported from China, Germany and UK. Thus, the value of India’s total trade of ceramic products was US $ 150 million, which is only 0.77 % of the global ceramic trade. To increase India’s participation in the global trade, recently a Market Access Initiative has been undertaken by CAPEXIL, which aims to increase export of select group of ceramic products to certain markets such as the USA, Mexico and the UK. The products that have been identified under the MAI project include ceramic insulators, ceramic building wares including tiles and sanitary wares, ceramic household articles and advanced ceramics. Industry Highlights: Ceramic tiles are furnishing materials apart from being utility or hygiene products- despite an overall slowdown of the economy this sector continues to grow at a healthy

12 % per annum.Moreover ,the Investment in last 5 years have aggregated over Rs. 2000 crores ( or INR 20 Billion ) and production during 2003-04 stood at approx. 200 million sq mts.In India the Growth of the unorganized sector accounted for 44% of total production, which bears testimony of the attractive returns from this industry.It is revenue earning industry in which excise mops up over Rs. 150 Crores (or INR 1.5 Billion ) annually from the organized sector itself.India Ranks in the top 7 in terms of production in the world. .Market share of India has risen from a little over 1.7% to 2.7% in terms of ceramic tile production.With proper planning and better quality control our exports (presently insignificant) contribution can be significantly increased. Background: Apart from their decorative looks, Ceramic Tiles are primarily hygiene products and that is how our broad spectrum of consumers view the product. This is fairly evident from its usage ranging from bathrooms and kitchens in average Indian Households to medical centers, lab, milk booths, schools, public conveniences and countless other centers dotting our surroundings. A Ceramic tiles is basically a “utility product” and that remains our promotional slogan. 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 important hygiene. What Spain does with tile today, the rest of the world does tomorrow! This is not just a slick adman’s line. Spanish tiles have always blazed a trail in design and innovation. Now the formats have changed and styles have become much more evident from new rectangular formats. Nevertheless , this decorative aspects of a Ceramic tiles has forever been in the forefront. Heavy shurning out of bolder and colorful designs by the industry are testament that most households regard a ceramic tile as an “adornment” for an otherwise “ drab look” of their old flooring or an unfurnished wall. Overview of the Industry: A ceramic tile as a product segment has grown to a sizeable chunk today at 3.8 million tons production per annum. However, the potential seems to be great, particularly as the housing sector, retail sector, IT & BPO sectors have been witnessing an unprecedented boom in recent years. The robust growth of 12-15% consistently over the last few years. Today, India Figures in the top 7 countries in the world manufacturing ceramic tiles. The key drivers for the ceramic tiles in India are the boom in housing sector coupled by government policies fuelling strong growth in housing sector. The retail boom in the Indian economy has also influenced the demand for higher end products. Overall the bullish growth estimates in the Indian economy has significantly influenced the growth of the Indian Ceramic tile industry. The main product segments are the Wall tile, Floor tile, and Vitrified tile and porcelain tile segments. The market shares are 35%, 53% and 12% respectively for wall, floor tiles, Vitrified tile /porcelain tiles. The tiles are available in a wide variety of designs, textures and surface effects. They cater to tastes as varied from rustics to contemporary marbles designs in super glossy mirror finishes. Both, traditional methods of manufacturing. Some of the latest trends in manufacturing methods can be seen in India.

The investments in the last five years are approx. Rs 2000 cores. The industry also enjoys the unique distinction of being highly indigenous with an abundance of raw materials, technical skills, infrastructural facilities despite being fairly capital intensive. A total of 5,50,000 people are employed, 50,000 directly and 5,00,000 indirectly. The potential is huge considering the per capita consumption of ceramic tiles in India. Currently it is at 0.15 sq.m per person in comparison to over 2 for like countries like China, Brazil and Malaysia. Current status of the Industry: The ceramic tiles industry in India has followed similar trends internationally which have been characterized by excess capacities and falling margins. 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 costs while 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). Rising disposable incomes of the growing middle class and 40 million units of housing shortage hold out a great potential.A major change that took over the ceramic tiles industry, was 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 category 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. This coupled with a spate of expansions by many players make the industry look very promising in the future. The Indian Industry has developed an export market although at the lower end. In volume it constitutes less than half a percent of the global market. (Presently India does not figure in the list of major exporting countries). But this reality could change as Indian exports are rising at the rate of 15% per annum. The top-end of the global export market is presently dominated by Italy (40.8%) and Spain (26.4%).

CERAMIC TILE INDUSTRY STATISTICS: 1.

World production:

6900 Million sq.mt.

2.

India's Share:

340 Million sq.mt.. 5

3.

World ranking (in production):

4.

Per capita consumption:

0.30 sq.mt.

6% 5.

Global Industry Growth Rate:

6.

Growth Rate (India Domestic Market):

7.

Organized industry turnover (India):

15%

Rs 3000 crores

Glazed Wall Tile share: 40% Glazed Floor Tile share: 46% Unglazed VitrifiedTile share: 8% Glazed Porcelain Tile Share: 6% Unorganised Industry Turnover Rs 3500 crores Glazed Wall Tile share: 57% Glazed Floor Tile share: 35% UnglazedVitrifiedTile share: 6% Glazed Porcelain Tile Share: 2% 8.

Investments in last 5 years:

9.

Organized sector: Share of Production: No. of units: Revenue (excise duty):

10.

56% 16 Rs 300 crores

Unorganized sector: Share of Production: No. of units: Revenue (excise duty):

11.

Rs 2000 crores

Job Potential:

44% 200 (approx..) (70% based in Gujarat region) Rs 350 crores per annum or less 50,000 direct 500,000 indirect

Review of Literature Ruiz ,Rubén and Concepción Maroto (2010) Flexible Manufacturing in the Ceramic Tile Industry, The ceramic tile industry has evolved greatly in the recent years to the almost complete automation of the production line. After a decade of improvements in the manufacture, today.s plants are capable of mass produce tiles with little human intervention. However, the planning and scheduling of the orders has not changed much and scheduling the client.s orders in the shop remains as a manually solved problem. This problem is now even worse as orders become

smaller, due dates have shortened and more and more different products are to be offered to the client to remain competitive. Traditional scheduling methods are not easily applicable for the new market situation. In this work we evaluate the capabilities of the professional software to obtain feasible schedules in a reasonable amount of time by using already implemented heuristics such as the genetic algorithms. T~OMAS W. SMOOT( ) Clay Minerals in the Ceramic Industries,The physical, chemical and mineralogical characteristics of clays used in the ceramics industries are briefly outlined. Clays used include ball clays, fireclays, high-alumina clays of the diaspore and burley types, and three-layer types. The high temperature phases and bonding characteristics are briefly reviewed as are the uses of these various clays in the structural clay products, whitewares and refractories. The importance of clays in the past for ceramics and, in particular, refractories is reviewed and evaluated for future importance.

Consolidation Strategy in Ceramic Tiles: The ceramic tiles industry, whose future depends on the construction industry, has been seeing a lot of activity recently. A consolidation of sorts in under way with the established players geared up for a boom in the construction cycle. The size of tile industry is around Rs. 1,800 crore, comprising wall tiles, floor tiles and fully vitrified tiles which was growing at 15-20% about five years ago but slumped to 5-8 % subsequently and revived to 12 % during 1999-2000. The proportion of floor title production is less in comparison with wall titles. The floor title segment is growing as a better substitute of mosaic titles as well as it offers better options than marbles and granites. Earlier, the industry was hit by excise duty of 24 percent which constituted 16 per cent CENVAT and 8 per cent SED. However, this has been rationalized with the removal of the 8 per cent SED. The unorganized sector players, who were not active in the floor tiles segment earlier, are now present in a big way especially in the one square ft category. Also, the major players are switching to larger sizes in floor titles as had happened in wall tiles earlier. The industry is capital intensive with a requirement of working capital cycle of at least seven and half month of sales. Location of a plant vis-à-vis the market and raw material sources are important as freight is an important component of price. The factories of tile manufacturing are mainly concentrated around raw material sources which include china clay, feldspar, flint and talc. The players are resorting to increasing product-mix with innovations. After Sun Earth Ceramics (SECL) acquired the tile plant of Madhusudan Ceramics and H&R Johnson (Indian)

acquired Eid Parry’s plant in 2001, in the same year it has been seen SECL acquire two European companies- the Romanian Sanex and Monalc of Spain for Consideration of $5 million. Sanex has a capacity of 7.2 million sq.m. of tiles while Monalc 2.7 million sq.m. of tiles a year. According to Mr. Dileep Chindwin, Zonal Manager,Schablona “we need to create a big market. Through our own exports we could only touch southern Europe. We needed to acquire skills too, which we got through the Spanish company and also an access to the west European market. Eastern Europe offers tremendous opportunities and assets there are going very cheap. SECL has increased the capacity at Alibag to 11.5 million qs.m. annually by December 2001 and expects a turnover of around Rs. 825 crores this year. All this is the result from the major increase in vitrified tiles capacity. H& R Johnson ( India) has a dominant presence with a 26 per cent plus market share. It acquired EID parry’s ceramic tile plant at Karaikal, Pondicherry which cater to the high-end segment and the export market . it launched premium vitrified tiles – Marbonite and has set up a new 1.5 million sq.m. per annum floor tile plant at Bangalore. At the other end of the spectrum, the company launched Exel tiles to take on the unorganized sector. The company’s pen plant had implemented an expansion scheme at an investment of Rs. 75 crores which has become operational from March 2001. Many companies has plants in Maharashtra, Bangalore, Pondicherry and Indore According to strategy of the ceramic companies they are adopting regionalization strategy, that is , meeting local demand with local supply. This strategy has worked well for the company as this is the industry which is similar to the trend in the cement industry. The industry is also freight sensitive and this regionalized strategy helps in reducing the freight as regional demand can be met by the respective manufacturing center. When H&R had entered the premium bathroom fitting segment it, tied up with Delta of the U.S. for a range for Germany for luxurious shower cubicles and Vitra of Turkey for Sanitary ware. It is importing these products and the suppliers will manufacture the products on an OEM Basis. The products are targeted at the premium segment and are marketed under the brand – Milano. The rationale behind this, that the companies have noticed wide product gaps in the existing range of bath room products available in the market. the company is trying to address the need by marketing an exclusive product range and are leverage our inherent strengths in distribution. Kajaria Ceramic has a technical collaboration with Tdagres, Spain. The company has a focus on export and is tapping new region. It has two facilities in Rajasthan and U.P the company is targeting Gujrat now by giving more focus on its industrial townships. The company’s new plant at Bhiwadi became fully operational last year and has doubled its capacity from 80’000 to 1.50 lakh tpa. Somani Pilkington (SPL) has a 16% market share in the organized sector. The company entered into a technical agreement with Leonardo Ceramic of Italy for the manufacture of vitrified porcelain tiles. With a total capital outlay of Rs. 100 crores spread over three years,

SPL has already invested in the equipment for manufacturing the product. SPL has also considered exports to Srilanka, West Asia and Mauritius.

Ceramic Tiles industry in China: In China, the ceramics manufacturing industry includes four sub-industries – sanitary ceramics manufacture, special ceramics manufacture, domestic ceramics manufacture, manufacture of garden ceramics, artistic ceramics and other ceramics. In 2009, the production of domestic ceramics in China exceeded 15.01 billion, 23.23% increase over 2008; the production of sanitary ceramics was over 145 million, rising by 16.69% YOY; the production of ceramic wall and floor tiles totaled 5.38 billion m2,going up by over 15.41% YOY.Ceramics produced in China are exported to near 200 countries and regions in the world. The annual production and export value of ceramics in China both rank the world Top. In 2009, Chinese ceramics production took up about 2/3 of the global total production and the number of ceramics producers in China exceeded 2,000. In 2008, due to the financial crisis, Chinese ceramics industry underwent demand decline, significant reduction of export and considerable growth of inventory. Ceramics producers suffered great losses. In 2009, the production and operation of Chinese ceramics industry took an upturn. The total output value maintained growth. Given the close relation between the ceramics industry and the trend of macro economy, the economic recovery is of great significance to the development of the ceramics industry. The assets of Chinese ceramics industry mainly concentrate in Guangdong, Shandong, Jiangxi, Hebei, Hunan, Jiangsu, Fujian, Henan and Zhejiang, etc. The regions ranking among the Top by sales revenue are Guangdong, Shandong, Jiangxi, Hunan, Henan, Fujian, Jiangsu, Hebei, Guangxi and Zhejiang. The regions with relatively high profit include Shandong, Jiangxi, Guangdong, Henan, Hunan, Fujian, Shanghai, Jiangsu and Zhejiang. The concentration of profit is higher than that of assets and sales revenue. The demand of the downstream sectors for ceramics directly influences the supply and demand relation of the ceramics industry. The launch of “ceramics going to the countryside” policy will enlarge the ceramics demand in the domestic market. Internationally, the export of ceramics will increase rapidly with the gradual recovery of the global economy. In recent years, China’s status in the international ceramics market is raised continuously. The total production and export value of Chinese ceramics show an upward trend. Domestic ceramics still play a dominant role with the export proportion exceeding 30%. The export proportion of building ceramics was raised to rank the second. The export of artistic ceramics, sanitary ceramics and other ceramics all show gratifying growth momentum. China Ceramic Industry Report, 2010-2011

Ceramic industry is a typical daily consumption industry, which is less affected by the economic cycle. China's ceramic industry, as a traditional competitive industry of the country, maintained a CAGR of 18.6% in 2005-2010, and accounts for 70% of the global ceramic output, with total output value exceeding RMB 170 billion, annual output and export value both ranking No.1 in the world. In Jan.-May 2011, China's ceramic industry achieved sales and total profit of RMB 72.75 billion and RMB4.76 billion respectively. China ceramic industry presents distinct regional concentration. In 2010, in terms of sales revenue, the top 4 provinces were Guangdong, Shandong, Jiangxi and Henan, whose total revenue and total profit accounted for 67.8% and nearly 80% of the nation's total respectively.

Regarding the market segments, there are building ceramic, household ceramic, special ceramic, sanitary ceramic and artistic ceramic. Occupying relatively large proportion of the industry, household ceramic achieved operating income of RMB60.189 billion in 2010, up 31.6% YoY. With excellent profitability, special ceramic achieved total profit of RMB5.76 billion in 2010, a rise of 71.44% against the previous year. Although there are many ceramic manufacturers in China, the industry concentration degree is very low. The total operating income of top 10 enterprises merely accounts for less than 8% of the industry's total. Influenced by the weak foreign demand during 2008-2009 and relatively low gross margin of some products, most of the ceramic enterprises suffered losses, especially those household ceramic manufacturers. Currently, in spite of the stagnant circumstance of household ceramic industry, artistic ceramic, with high collection value, has relatively huge development potential. In 2010, the Great Wall Group, whose main business focuses on artistic ceramic, realized the operating income of RMB357 million, up 11.48% YoY, wherein, the foreign sales accounted for 85.66% of its total sales. Meanwhile, artistic ceramic export value of the Great Wall Group ranked only second to Tangshan Yali Ceramic Co., Ltd., a 100% Italian invested enterprise. Conclusion: Future Outlook: Presently, ceramic industry in India is witnessing encouraging trends in domestic demand,powered by sustained rise in housing construction and booming hospitality industry.The industry has also laid greater thrust on cost control measures, capacity expansion, and exploration of newer markets and introduction of newer designs. All these measures are expected to facilitate better growth in the industry’s revenues and profitability in future. Prospect of ceramic industry heavily depends on construction do well mainly due to the fiscal incentives given to the infrastructure development. The housing sector is also expected to grow because of the low interest rates on housing loans. The future outlook of the industry also seems to be positive because of the thrust on advanced ceramics, which has high potential in global markets. These products find application in electronics, automotive and aerospace industries. The global market for advanced ceramics is growing and countries like Japan and USA dominate this segment. Of late, Indian ceramic industry is focusing on advanced ceramic products to step up exports. The thrust on advanced ceramics, along with the booming construction activities, is expected to usher in a bright prospect for the ceramic industry in India. Indian tile industry has captured the attention of the world in the ceramic tiles segment as a foreign exchange earner and a global player. India is protected to figure in the top 5 countires manufacturing ceramic tiles by 2010. This is however is subject to policies favorable for the tile industry to complete with international players on an even ground.To compete with global players, our plants must have to be geared up to large plants like china and Turkey based on economies of scale. It will also help us in lowering the cost of production significantly. Besides, infrastructural support is a key factor that determines the speed of growth. The better the infrastructure, the better is the growth, in terms of consistent supply and reasonable rates are extremely important for the growth, in terms of consistency and sustenance, Supply of power and gas remain the key issues. Availability, consistent supply and reasonable rates are extremely

important for the growth of the ceramic tile industry. Also, the polices pertaining to Basic Customs Duty on import of Ceramic tiles and raw materials need to be reviewed periodically to prevent dumping of tiles from international suppliers. Rural thrust should be enhanced by favorable excise duty and MRP structure. There is abundance potential in terms of trend fashion and style it the distinctive segment of consumers which have not been taped by the tiles companies optimally. Challenges: 1. The growth in imports of comparable low-cost products from emerging economies. 2. Outsourcing of ceramics production outside of the EU. 3. High dependency on raw materials (including Non-EU ones). 4. Low ceramics re-use and recycling in manufacturing. 5. Soaring energy prices. 6. The EU is not on a level playing field in the global market in terms of Health and Safety, emissions and quality standards. 7. A marked decline in the ceramic tableware sub-sector. 8. Increasing production efficiency to comply with emissions regulations, when kiln technology is already mature. 9. Proportionately high administration costs of emissions regulation for SMEs. 10. Tariff and non-tariff international barriers to trade. 11. Continuous innovation to prevent imitation from foreign competitors. 12. Substitutability of ceramics with less energy-intensive 13. innovations that are more environmentally friendly. Prospects: 1. Major global player in ceramics production, especially wall and floor tiles. 2. A competitive advantage in producing value-added ceramics. 3. Few very dominant producers contributing to intra-EU competitiveness. 4. High number of SMEs that can serve a wide range of markets. 5. Globalization has created greater specialization, which has suited SMEs. 6. Increasingly diverse, consumer-driven market. 7. Unique products through high levels of continuous innovation. 8. Some high value ceramics products are difficult to imitate. 9. Skilled and experienced workforce. 10. Majority of trade within Europe, hence close to most markets. 11. Upward trend in employment productivity. 12. Scope for environmental product innovation and opportunities.

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