Aspired to give a stiff competition amid the Indian ceramics market, Abu Dhabi listed, Rak Ceramics is all set to invest around Rs 400 cr on retail and capacity expansions in India. The company is planning to double the number of its experience centers and showrooms along with setting up the manufacturing units in western and northern region of the country. All its future stores will be operated through franchisee model. On the occasion of introducing its brand identity in Mumbai, Sarat Chandak, CEO, Rak Ceramics revealed future strategies of the company to Indianretailer.com.
Complimenting the change of brand identity, what will be the company’s future strategy?
Currently we are at number 8 in the Indian market and aiming to scale up to number 5 in the next three years. Therefore to achieve this level, we are doubling our existing production capacity from 8mn pieces a year to 10 mn pieces a year.
What will be the investment plans?
For increasing the production capacity and the retail footprint, we are investing around Rs 100cr to Rs 400cr depend upon our product acceptance in the market. Also, we are planning to invest in setting up manufacturing units in western and northern part of the country.
We have also made investment of Rs 450cr in Kakinada, Andhra Pradesh in 2006 and did capacity expansion in 2009. There we manufacture top of the line sanitary wear products. Our single largest capacity in the world is at single location that is in Dubai at Ras al-Khaimah.
What is the retail presence of Rak Ceramics in India?
Currently, we have 14 consumer experience centers and 56 dedicated display showrooms pan India. We do have a network of 750 dealers out of which, we have about 100+ stores in the pipeline. We don’t sell our products from our experience centres.
The retail contributes to 70 percent of our total revenue and the rest 30 percent is by institutional buyers. Hence, going forward, we are looking at incremental growth of 55 percent YOY.
Are you planning to increase the number of experience centres through franchising?
In the next 18 months, we are trying to double the number of our experience centers through franchising across South, West, North and North-East region. For each experience centre, the investment will vary from Rs 8 lakh to Rs 25 lakh followed by different formats.
How does the brand stand apart from other brands?
Our global experience and edge in technology is certainly going to create a differentiator for us when we talk about high end products. In India, we do have experience of handling different consumer needs and product profile of more than a decade. We were the pioneer in using latest technology. We are here to make the Indian consumer experience our global expertise in this industry.
What are your marketing plans?
Tiles and sanitary wear as a product category needs a lot of consumer experiences created for which we are creating pan India network of showrooms even in tier II and III cities. We will also do digital promotions.
We are trying to align with best of the architecture schools in India to promote the technology innovations that we do. Also we are aligning with architect fraternity, interior decorators and real estate developers to work along to create a signature line for experience for our consumers in India.
According to you what will be the demand drivers for ceramics business in India?
The government’s macroeconomic push like housing for all, toilets for all, RERA Real Estate Act which is going to help the real estate development and to be implemented from April 2017 and GST is going to create a level playing field for unorganised and organised players.
How much does India contribute to the Rak Ceramics global revenue of $1bn?
India contributes 8-9 percent of our total global revenue.