Sanitary ware industry in India - An in depth study.

1. - A BRIEF OVERVIEW
BY : VIKRAM DAHIYA

2. INTRODUCTION
• SANITARYWARE MARKET IN INDIA HAS GROWN RAPIDLY DURING THE LAST
5-6 YEARS, WITH KEY PLAYERS DOUBLING THEIR PRODUCTION
CAPACITIES.
• THE ORGANIZED SECTOR COMPRISES MORE THAN HALF OF THE TOTAL
MARKET BY VALUE. THE MAJOR THREAT FOR THE INDUSTRY IS FROM THE
UNORGANIZED SECTOR, WHICH PROVIDES PRODUCTS AT LOW PRICES.
• IN TERMS OF MARKET VALUE, ORGANIZED PLAYERS LEAD THE MARKET
BUT ON THE OTHER HAND IN TERMS OF VOLUME, UNORGANIZED PLAYERS
HOLD THE MAJOR SHARE.
• HOUSING AND INSTITUTIONAL SECTORS ARE THE MAJOR GROWTH
DRIVERS. AT PRESENT, HOUSING DEMAND IS RAPIDLY RISING AND WITH
INCREASING PURCHASING POWER PEOPLE HAVE STARTED TAKING
INTEREST IN PREMIUM SANITARYWARE PRODUCTS.

3. INDUSTRY KNOWLEDGE
• INDUSTRY IN INDIA TOGETHER IS ESTIMATED TO BE
VALUED AROUND 427 MILLION USD IN 2014.
• THE SANITARY WARE SEGMENT IS ESTIMATED TO BE
VALUED APPROXIMATELY 124 MILLION USD IN 2014 WHILE
THE BATHROOM FITTINGS SEGMENT IS ESTIMATED AT
APPROXIMATELY 303 MILLION USD IN 2014.
• CAGR AROUND 12.5 – 15 %
BETWEEN 2012-2018

4. MAJOR BRANDS

5. PRESENT SCENARIO
• THE SANITARY-WARE MARKET HAS BEEN GROWING AT A CAGR OF
12.5% SINCE 2010, AND THIS TREND IS EXPECTED TO CONTINUE
THROUGH 2016. ORGANISED SEGMENT CURRENTLY COMPRISES 60%
(APPROXIMATELY) OF THE SECTOR.
• THE BATHROOM FITTINGS MARKET IS FORECAST TO GROW AT A
CAGR OF 15% UNTIL 2016. THE ORGANISED SEGMENT MAKES UP
ALMOST 45% OF THE MARKET, AND IS GROWING FASTER THAN THE
INDUSTRY AVERAGE.
• WHILE THE ORGANISED SECTOR FOCUSES MAINLY ON MIDDLE CLASS
AND AFFLUENT SEGMENTS IN URBAN AREAS, THE UNORGANISED
SECTOR HAS, BY AND LARGE, TARGETED THE MASS END OF THE
URBAN MARKET AND THE RURAL AREAS.
• WITH RELATIVELY STRONG DEMAND GROWTH IN INDIA OVER THE
LAST FIVE YEARS, VARIOUS MNCS HAVE ENTERED THE MARKET.

6. TRENDS IN THE SANITARYWARE AND THE
BATHROOM
FITTINGS MARKET
• COMPLETE BATHROOM SOLUTIONS: DUE TO THE RISING POPULARITY
OF CONCEPT WASHROOMS AND COORDINATED SANITARY-WARE,
FITTINGS AND ACCESSORIES, SOME MANUFACTURERS ARE OFFERING A
ONE-STOP SHOP SOLUTION FOR ALL SANITARY-WARE AND FITTINGS
REQUIREMENTS. THE IN-STORE EXPERIENCE HAS GROWN IN
IMPORTANCE, AND MANUFACTURERS HAVE ESTABLISHED 'EXPERIENCE-
CENTERS', WHICH ARE ONE-STOP SHOPS WHERE A CUSTOMER CAN VIEW
A VIRTUAL VERSION OF THEIR BATHROOMS, POST RENOVATION.
• INCREASING PRESENCE OF FOREIGN PLAYERS: INITIALLY, DOMESTIC
PLAYERS DOMINATED THE MARKET IN THIS SEGMENT. HOWEVER, FOREIGN
PLAYERS ARE GAINING POPULARITY AS MORE AND MORE CUSTOMERS
WISH TO PURCHASE IMPORTED PRODUCTS. THERE HAVE BEEN SOME TIE
UPS BETWEEN FOREIGN PLAYERS AND DOMESTIC PLAYERS IN THIS
SEGMENT.

7. CONTD…
• WATER CONSERVATION TECHNOLOGY: BATHROOMS CONSTITUTE THE
PRIMARY SOURCE OF WATER AND WATER USAGE. WITH INCREASING
ENVIRONMENTAL AWARENESS, CUSTOMERS ARE MOVING TOWARDS
ECO-FRIENDLY SANITARY-WARE AND BATHROOM FITTINGS THAT
HELP IN THE CONSERVATION OF WATER. THESE ECO-FRIENDLY
PRODUCTS OFFER A 20% SAVINGS IN WATER AS COMPARED WITH
OTHER PRODUCTS. SOLUTIONS SUCH AS HIGH EFFICIENCY FLUSHING
SYSTEMS, INFRARED CONTROLS, AND SENSOR TAPS AND SHOWERS
ARE GAINING POPULARITY.
• RISE IN PREMIUM SEGMENT PRODUCTS: INDIAN CUSTOMERS ARE
GRADUALLY PURCHASING MORE PREMIUM AND HIGH TECHNOLOGY
PRODUCTS FOR THEIR BATHROOMS DUE TO INCREASE IN THE
SPENDING POWER. THE PREMIUM SEGMENT IS ESTIMATED TO
COMPRISE ABOUT 10 TO12% OF THE TOTAL MARKET.

8. BUSINESS MODEL –FAQS
• Q1. WHAT IS THE SIGNUP INVESTMENT FOR DEALERSHIP/DISTRIBUTION FOR PROMINENT COS IN THE SEGMENT
DEALERSHIP = 2-3 L | DISTRIBUTORSHIP = 5-10 L
DEPENDS ON THE BRAND
• Q2. WHAT IS THE MARGIN FOR DEALER AND CNF FOR DIST/STOCKIST
DEALER - MAX. 8%
C&F FOR STOCKIST - 3 TO 5%
• Q3. HOW MANY LEVELS ARE THEIR IN THE CHANNEL (FOR E.G. DIST, STOCKIST, DEALER, RETAILER ETC)
COMPANY -> C&F OR DISTRIBUTOR -> DEALER
• Q4. WHAT IS THE MOQ
AGREEMENT DIFFERS FROM COMPANY TO COMPANY
• Q5. WHAT ARE SOME OF THE PAIN POINTS
IF THE BRAND IS ESTABLISHED, THEN NO PROBLEMS.
NEW BRAND -> DEPENDS ON THE SALES TEAM AND PRODUCTS

9. CONTD…
• Q6. HOW MUCH DOES AN AVERAGE DEALER AND DIST DO IN A MONTH FOR THE
BRAND
DEALER EG : GROHE -> 10 L | DISTRIBUTOR -> 1 CRORE
AGAIN DEPENDS ON THE BRAND AND COMPANY
• Q7. WHAT ARE THE INCENTIVES GIVEN BY COS ON WHAT KIND OF SALE.
INCENTIVES ON SALES -> FOREIGN TRIPS, GOLD, ELECTRONIC ITEMS,
CASH, TURNOVER DISCOUNT, QUANTITY DISCOUNT.
• Q8. WHAT IS THE CREDIT PERIOD FROM DEALER TO DISTRIBUTOR
DEALER - 15 DAYS TO 2 MONTHS
• Q9. WHAT IS THE CREDIT PERIOD FOR DISTRIBUTOR FROM CO.
MULTINATIONAL COMPANIES - ADVANCE PAYMENT, GENERALLY
• Q10. WHAT ARE THE KIND OF DISCOUNTS OFFERED BY DEALER TO END CUSTOMERS.
EXAMPLE SCHEME - 1 FREE ITEM ON BUYING 10 ITEMS

10. CERA – AN EXAMPLE OF BUSINESS
MODEL MARGINS

11. GROWTH POTENTIAL
• THERE IS A SIGNIFICANT GROWTH POTENTIAL IN THE LOW-COST OR
ENTRY-LEVEL SEGMENT.
• ONE IN EVERY FIVE URBAN HOUSEHOLDS, AND AN EVEN HIGHER
PROPORTION OF RURAL HOUSEHOLDS, DO NOT HAVE A BATHROOM OR
LATRINE EMPHASISING ON THE TREMENDOUS POTENTIAL TO EXPAND
WITH RISING INCOMES AND PUCCA HOUSES.
• COMPARED WITH OTHER COUNTRIES, REPLACEMENT DEMAND IS LOW IN
INDIA, AND ACCOUNTS FOR ONLY 7% OF THE MARKET
• OTHER FACTORS SUCH AS INCREASING DISPOSABLE INCOMES, HIGHER
STANDARDS OF LIVING, AND INCREASING EXPENDITURE ON BEAUTIFYING
HOMES AND USING PREMIUM PRODUCTS PROVIDE A FURTHER IMPETUS TO
THE GROWTH OF THIS SEGMENT.

12. THANK YOU !!!