A

MANAGEMENT
RESEARCH PROJECT ON
“Strategic Analysis of Indian Ceramic Tile Industry”

Submitted to

Department Of Business Management Sankalchand Patel College of

Engineering, Visnagar

In partial fulfillment of the requirement of the award for the degree

of

MASTER OF BUSINESS ADMINSTRATION

AT

SANKALCHAND PATEL UNIVERSITY

Under the guidance of:
Prof. Shweta Prajapati

Submitted by:

Name of Student P.R. No

Brijeshkumar Makwana 2022095900013355
Jigarkumar Vaghela 2022095900013502
Viraj Shah 2022095900013436

Batch:2022 – 2024 MBA semester 3

Faculty of Management Studies
 Acknowledgement

I would like to express my special thanks of gratitude to my teachers (Prof. Shweta

Prajapati) as well as our principal (Mr.jitendra sharma) who gave me the Golden
opportunity to do this wonderful project on the topic (Stratagic Analysis of Indian
ceramic wall tiles industry), which also helped me doing a lot of research and I
came to know about so many news things. I am really thankful to them.

Secondly, I would also like to thank my parents and friends who helped me a lot in
finishing this project within the limited time.

I am making this project not only for my marks but to also increase my knowledge.

Date:

Teacher sign. :
1. Introduction
2. Business Idea
a. General Description of Tiles Industry
b. Ceramic Tiles Market in India & Italy
c. Expected Results
3. Company
a. General Description of the Firm
i. Vision
ii. Mission
iii. Objectives
iv. Constraints
4. Market Analysis
a. Analysis and evaluation of Indian market
b. Benchmarking
c. Forecasting the demand
d. Marketing mix
i. Product
ii. Price4.4.3Place
iii. Promotion
5. Strategic Plan
a. External Analysis
i. External Macro Analysis – PEST Framework
ii. Industry Analysis – Five Competitive Forces Model
iii. Overall Attractiveness of the Business Area
b. Internal Analysis
i. Analysis of Required Resources and Competences
ii. SWOT
iii. Segmentation, Targeting & Positioning
iv. Marketing Strategy
6. Consortium Business Model
a. Key Processes of the Business Model
i. Primary Activities
ii. Secondary Activities
7. Economic and Financial Analysis
a. Initial Investments
b. Revenues & Operating costs
c. Results of the Financial Analysis
8. Players Evaluation
a. Consortium Players Selection
b. Scoring Matrix
c. Partners Selection uncertainty
d. Players Evaluation
9. Contractual Agreements
a. Proposal Phase
b. Final Preparation Phase: Drawing up the Consortium Agreement
10. Conclusion
11. Bibliography
INTRODUCTION

In Today’s Business World, Managers must constantly explore new markets, both
domestically and internationally as Global competition is increasing rapidly, thanks
to important factors such as the Internet and new regulations designed to reduce
foreign trade barriers.

In order to expand Sales and increase Profits, the Management of Ceramiche

Musa, an historical Italian brand involved in the manufacturing and selling of luxury
hand painted ceramic tiles since 1947, has decided to expand its Business to
Foreign Market. Extensive research was first performed to determine which
countries would make the best trading partners. Upon analysing Financial,
Economic forces, Political and Legal regulations, Physical and environmental
considerations, sociocultural values, and possible competitors were analysed and
evaluated. Upon completion of this basic analysis, India was selected as the most
potential market to launch Ceramiche Musa & it’s product’s to Indian Market.

Upon Selecting India as the best location to launch Musa. The company provided
us Internship’s to develop a most feasible business model. Upon Extensive
research the best solution we proposed to enter into Indian market is “Consortium
Business Model” (Comprises Musa and established 4-5 local Ceramic players in
India). Since the financial and other resources of Ceramiche Musa are limited, the
CEO of company Ettore Thermus had enough experience in financial banking
sector suggested us to go ahead with Consortium Model to launch Musa. The
Model has been explained in detail in Chapter 6. For the Selection and Evaluation
of the Consortium Players the company decided to develop a specific Scoring
Matrix and Questionnaire. Upon reviewing the responses of the questionnaires the
best suitable players with Musa were selected and asked to sign the agreements to
join the business Model.

According to the Small Business Administration (SBA) half of the businesses fail in
the first year and 95% fail within five years. The most common reasons of their
failure are lack of management skills, lack of planning, insufficient capital and poor
market analysis.

Considering all aforementioned benefits of using a business plan, Ceramiche Musa

decided to develop a business plan for its product in order to reduce the risk of
failure. In this work the complete business plan that has been developed for
Ceramiche Musa is explained including all parts that a business plan should be
composed of. Along with Proper Market Analysis in detailed has been explained in
brief.
Business Idea

2.1 General Description of Ceramic Tiles Industry

Ceramic tiles are inorganic, non-metallic materials that are made by the infusion of
intense heat on materials such as clay, alumina, silicon carbide, and tungsten
carbide. The increasing construction activity across the globe is a major factor that
propels growth in this market and results in its impressive market value of more
than USD 136 billion by 2020.

Eminent factors like the durability and ease of maintenance of ceramic tiles are
gaining popularity as they aid in driving market growth during the forecast period.
The demand for ceramic tiles is expected to increase in hospitals, laboratories, and
residential buildings as they are inexpensive and highly durable. Additionally, the
advent of stain and germ resistant titles is expected to incite market growth as they
are healthier and affordable when compared to regular paints.

An upswing in construction activities, owing to the increasing urbanization, is

boosting the demand for ceramic tiles significantly across the world, TMR’s
analysis shows. The global market for ceramic tiles attained a value of US$76.81
Billion in 2015. Expanding at a CAGR of 9.80% from 2016 to 2024, it is poised to
reach US$178.1 Billion by 2024.

Demand for Floor Tiles to Remain High Wall tiles, floor tiles, and others such as
ceiling and roofing tiles are the main products available in this market. Among
these, floor tiles enjoy the highest demand. In 2023, the majority share of the
overall consumption volume of ceramic tiles was held by the floor tiles segment.
Flooring holds importance in a number of applications ranging from commercial
and residential constructions such as hospitals and educational institutes to
transport infrastructures such as railway stations and airports. On account of this,
the demand for floor tiles is projected to remain highest in the near future.
 Asia Pacific to Remain Leading Consumer as Construction
Industry Continues to Experience Rapid Rise

The worldwide ceramic tiles market is spread across Latin America, North America,
Asia Pacific, Europe, and the Middle East and Africa. Currently, the highest
consumption of ceramic tiles is being reported in Asia Pacific. In 2020 the region
accounted for a share of 65.6% of the overall demand for these tiles in the world.
The rapid urbanization has given significant rise to construction activities in
emerging Asian economies such as South Korea, China, and India, drawing an
immense demand for these tiles in this region over the last few years.

As the construction industry continues to exhibit remarkable rise in Asia Pacific,

the demand for ceramic tiles is projected to increase at a substantial pace in this
region over the coming years. The shift in the preference for ceramic tiles over
marble floors, metal slabs, and other decorative products is also anticipated to
boost their consumption in this region in the near future.

Europe accounted for the second-highest consumption of ceramic tiles around the
world in 2020 owing to a sudden rise in the residential replacement activities. The
trend is likely to remain continuous over the next few years, boosting the demand
for ceramic tiles in this region.
Investments in the last 5 years in this sector amount to over EUR 591.4 million.
Around 90% of demand for tiles in India comes from fresh construction
requirements. India imported tiles worth EUR 0.25 million in 2012, with Italy being
the biggest importer to India, followed by China and Spain. Country’s exports stood
at EUR 0.27 million in the same year with maximum percentage exported to Sri
Lanka.

Organized & unorganized ceramic tile market in India:

Organized sector
 Current size of the organized sector in India is about EUR 851.65 million and
comprises of around 14 major players. It accounts for nearly 40% of the total
industry. Five major companies (H&R Johnson, Kajaria Ceramics, Nitco Tiles, So
many Ceramics and Asia Granito) account for over 80% of the organized market.
Some other players are Murudeshwar Ceramics, Orient & Bell Ceramics, Euro
Ceramics etc. These companies also have their manufacturing units in Gujarat. It
has been observed that big players such as Kajaria & So many Ceramics, have
reduced the imports of tiles from various countries. These companies are now
promoting their own manufactured products in India. These players have also
outsourced manufacturing of their products to players in Morbi. For instance, so
many Ceramics outsources around 43% of its products.

Unorganized sector

State of Gujarat is the national hub for ceramic tile market in India, with production
concentrated in Morbi, Wankaner, Thangadh, Bamanbor, Himatnagar and Shapar
Veraval areas in Rajkot and Porbandar districts. The industrial cluster of Morbi in
Gujarat accounts for over 70% of total production of ceramics produced in India.
There are over 500 manufacturing units in the area and it gives direct and indirect
employment to over 600,000 people across India. Morbi also has offices and
representatives from Italian & Spanish tile machinery manufacturers and design
studios who provide technical assistance and training to tile manufacturing
companies. For example, Calabria an Italian company has set up its office in Morbi
to provide after sales service to its customers. Manufacturing units in Morbi have
set up digital printing and other technically advanced machinery which has led to
production of improved quality ceramic tiles in India.
 Analysis and evaluation of Indian market:
It is believed that the first clay tiles were produced seven to eight thousand years
ago in the area now known as the Holy Land. Many sources independently verify
that the actual known history of Tiles (and the known usage of wall and floor tile
coverings) 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 colour
and were made from copper, very exquisite! During that period ceramics were also
known to be found in Mesopotamia. These ceramics bore decorations, which were
white and blue striped and later possessed more varied patterns and colours.

Later on, in India too, the Great Centre of Ceramic Art, a fine, white stoneware
with the earliest Chinese glaze was produced during the Shang-Yin dynasty (1523-
1028 BC). The usage and the art of making and decorating ceramic tiles had
spread and by 900 A.D., decorative tiles had become widely used in Persia, Syria,
Turkey and across North Africa. As transport and communication developed, tile
usage and its penetration in other territories increased. Wars and territory take-
overs caused this art to spread even faster.

The Romans introduced tile making in Western Europe as they occupied territories.
The Low Countries of Northern Europe somehow acquired the technology from
Persia, while the Moors brought African tiles with them when they invaded Iberia
(Spain). It was aboard the ships of Spanish conquistadors that decorative clay tiles
found their way to the New 4 World, where they were used primarily to decorate
the Churches of newly built missions. 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 16th century following the
reformation. But the decorative wall tile art had survived in Turkey and the Middle
East and the Delft tiles art 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 the Brits having hijacked 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.

Through the centuries, tile decoration was improved upon, as were methods of tile
manufacture. For example, during the Islamic period, all methods of tile decoration
were brought to perfection in Persia. Throughout the known world, in various
countries and cities, Ceramic tile production and decoration reached great heights.
The tile mosaics of Spain and Portugal, the floor tiles of Renaissance Italy, the
faience’s of Antwerp, the development of tile iconography in the Netherlands, and
the Ceramic tiles of Germany are all prominent landmarks in the history of Ceramic
tile. In the early days, the tiles were hand-made, each

They are used in an almost infinite number of ways and you don’t have to consider
yourself wealthy to own them. In commercial buildings, 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 area of the premise. Ceramic tiles are
also the choice of industry, where walls and floors must resist chemicals. And the
Space Shuttle never leaves Earth without its protective jacket of high-tech, heat
resistant tiles

\Industry Analysis – Five Competitive Forces Model:

 Opportunities of Ceramic industry

Introduction of vitrified and porcelain tiles (“tiles of the future”) in the Indian
market – internationally these are already major sellers – these categories account
for 10-12% for all organized sales in the Indian ceramic tiles industry. A spate of
recent expansions by many players makes the industry look very promising in the

 Rising disposable incomes of the growing middle class and 40 million units
of housing
 Government initiative of „Housings for all‟ will sustain
 Shortage hold out a great potential. demand in IT/ITES & Retail sector.
 Segmentation, Targeting & Positioning:

Ceramic can be segmented into four types as following.

Wall Tiles: A tile is a manufactured piece of hard-wearing material such as
ceramic, stone, metal, or even glass, generally used for covering roofs, floors,
walls, showers, or other objects such as table tops. Tiles are often used to form
wall and floor coverings, and can range from simple square tiles to complex
mosaics.

Floor tiles: Tiles are most often made of ceramic, typically glazed for internal uses
and unglazed for roofing, but other materials are also commonly used, such as
glass, cork, concrete and other composite materials, and stone. Tiling stone is
typically marble, onyx, granite or slate. Industrial tile:

Industrial tiles are also similar tiles which are made of similar materials like floor
tiles and wall tiles. But Industrial designs are distinct from above two types. The
patterns used for these tiles are highly customized and quality of tiles.

Vitrified tiles: Vitrified tile is a ceramic tile with very low porosity. It is an alternative
to marble and granite flooring. Vitrified tiles are often used outdoors due to their
water and frost resistance. There are four types of Vitrified tiles - Soluble salt,
Double charge, Full Body, Glazed.

Targeting & Positioning: The target group of the double fired ceramic tiles are
Builders and architect firms. owing Indian market is highly competitive for ceramic
tiles segment. The cheap quality Chinese tiles are flooding and giving tough fight to
Indian ceramic tiles.
 Niche market
Luxury tile market is niche (pegged at ~EUR 120 million)12 and comprises 5% of
the total Indian tile market. Demand for these tiles (above EUR 15 per square feet)
is majorly met by imported Italian and Spanish tiles. These consumers are the
“TREND SETTERS” as they go for products which are unique and exclusive. HNI’s
(High Net worth Individuals) and luxury real estate developers are the end
consumers who can afford high end Italian ceramic tiles that range more than EUR
15 per square feet and hence is the target market for Italian tile companies.

Cost & Quality sensitive market

People in this category buy ceramic tiles priced between EUR 4- 6 per square feet.
This segment of people goes for products which are reasonably priced & durable
and they occupy 30% of the total pie. They follow the trends set by niche luxury
class and can be called as “FOLLOWERS”. The upper end of this segment also
uses Italian niche/ luxury market products in limited areas such as bathroom,
kitchen and façade. Italian tile companies can target this upper medium class
segment who can afford Italian tiles in the range of EUR 6-15 per square feet. For
this segment extensive marketing and branding of Italian tiles is required in order to
apprise the customers about technical specification as well as aesthetic features
offered by Italian products as compared to domestic tiles & equally priced marbles.

Marketing Strategy

Interaction with tile manufacturers, importers, distributors, architects & real estate
firms helped in developing an understanding of the tile sector.
Their inputs have been summarized in the following table: Increasing presence in
India in ceramic sector requires targeting the right audience through right strategy.
The distribution system of ceramic tiles in India is given below

Strategies
To maintain the momentum of growth achieved so far by Italian companies and to
further enhance their presence in India, some of the following initiatives could be
taken in short and medium/long term

Consortium Business Model

The model we proposed to enter into Indian market is consortium business model. Since the
financial and other resources of Ceramiche Musa are limited. The CEO of company Ettore
Thermus had enough experience in financial banking sector. After we discussed several
options in-order to hit Indian market with proper resources we suggested consortium
business model.

In this section we going to discuss about what is real consortium business model, what are
the temporary and long term benefits of Ceramiche Musa going to enjoy, what are
blockades of adoption of this model, roles of players and many possible directions going to
lead by adoption of consortium. We initially started finding investors to form consortium
who ready to invest in proposed consortium.

We initially approached some key players in the market those who are in the same segment
of ceramic tiles and lacking in technical expertise to produce double fired hand made
glazed ceramic tiles. For some of their internal reasons and policies of their companies they
are reluctant to join in proposed consortium. We continuously tried to find suitable players
for the consortium.

We were succeed after several negotiations with one of the investors who shut down his
plant in the year 2012. Since Afterwards we realized that finding similar players is too
difficult to make them join into consortium.

After we made preliminary discussions one of the member in the team named Rajesh
Varma K went to India to meet them personally and set up a meeting for all future players
under one roof. We initially started finding investors to form consortium who ready to
invest in proposed consortium The CEO of Ceramiche Musa agreed to share his brand
name and Know-How Expertize on below mentioned conditions

1. The name should be used under only consortium purposes and will not be
allowed any single other reasons.

2. All advertisements related to consortium must bring into notice to Ceramaiche

Musa and Must approved by Ceramiche Musa.

3. The Costs related KNOW-HOW Expertise must bare by consortium and fully
subsidised to Ceramiche Musa.

4. Royalty will be paid to Ceramiche Musa by remaining all players in the

consortium.

5. Any Players Who Misuse the information will be excluded from the consortium

Key Processes of the Business Model

These are primary opportunities for Italian tile companies which could be reaped in
immediate future. These opportunities are in the later part of the value chain. The
Consortium can continue the model of selling their products through distributors’
and agents’ channel in India. There are two models in India which form the contact
point for customers.

Primary Activities
Direct distribution
 Indian tile companies have their exclusive showroom/ display centres in cities like
Delhi, Mumbai, Kolkata, Pune, Bengaluru etc. This is an expensive model as it
requires setting up of showrooms and deployment of staff and sale agents.
Indirect distribution
It is the most prevalent model in India. Various tile manufacturers across the world
are using this model to enter India. The tile manufacturing companies sell the
product to importers, distributors and agents.

These distributors have greater reach in the market across the country. The
limitation of this model is that companies lose direct connect with their clients. They
do not get an understanding of clients’ demands and their products are at times not
marketed in the correct way. Most of the companies in unorganized sector follow
indirect distribution system, while the organized sector companies follow both direct
and indirect distribution model.

Consortium should leverage the strong network of distributors and dealers in India
to penetrate into the market by collaborating with them. This is one of most
effective and less expensive model for entry of consortium tile companies into
India. From long term perspective consortium may have to open retail showrooms,
especially in metro cities like Delhi, Mumbai, Bangalore, Chennai and Kolkata, in
order to develop themselves as a “BRAND”.

Secondary Activities

Outsource manufacturing

Morbi is one of the largest tile manufacturing hubs in Asia with over 500 units.
Indian units import almost 99% of their machinery from Italy, Spain and China10.
Their machineries have improved quality of ceramic tiles in India and reduced
manufacturing cost. Italian companies can outsource the manufacturing of ceramic
tiles to India in order to take advantage of availability of cost effective labour and
abundant raw material like lignite, clay and natural minerals like feldspar.

Design support
European designs and advanced technology is in high demand in India. The
designers and design studios specifically focus on making ceramic tiles more
attractive and user friendly. Indian tile manufacturing companies take support from
European countries such as Spain and Italy for designs, inks, machinery and other
technologies. There is a huge opportunity for Italian designand technology firms in
ceramic tile