In 2010, when we acquired Bell Ceramics we had a capacity of 1.45 cr sq
mtr p.a. with one plant in North India and were predominantly a
North-based company. In FY 2011- 12, we became a Company with a
capacity of 2.9 cr sq mtr p.a., three pan-India plants and truly a
company with a nationwide footprint.
What gives me a sense of achievement is that even as the Indian tiles
industry grew at around 15% in 2011-12, your Company grew 86.77% on the
strength of the Bell acquisition. Even if we exclude the Bell brand
sales in 2010-11, our growth was an impressive 36%.
This noteworthy accomplishment is the result of the Company selecting
to grow its business through organic and inorganic means. Your Company
finished the year under review with three plants across North, South
and West India, an installed capacity that is the largest consolidated
by any single tile Indian manufacturing company. We also finished the
year under review with a growth in our market share from about 8% to
We acquired Bell Ceramics in December 2010 which had an enterprise
value of around '' 115 cr. What makes us unique is that we went ahead
and acquired an entire listed Company and merged it successfully to
form Orient Bell Ltd. This is the only such acquisition in the history
of Indian tile industry.
Bell represented a perfect fit for a number of reasons:
- Bell possessed two strategically
located manufacturing facilities at Dora (Gujarat) and Hoskote (rural
Bengaluru), which complemented our existing facility in Sikandrabad
(Uttar Pradesh). We acquired the company as an extensive national
footprint that would enhance our operational flexibility and enable us
to service demand in a quick and cost-effective way.
- The Bell brand enjoyed a strong recall; particularly in South and
West markets, which complimented our existing presence in North and
- By adding Bell''s production capacity, we became India''s largest in
house manufacturering capacity owners.
- There was hardly any overlap between the distribution networks of
Bell with Orient, thereby significantly enlarging our dealer network.
We acquired Bell Ceramics with the objective to create a company that
would be larger and stronger than the simple aggregation of the two
constituents. Our results for 2011-12 indicate that our decision has
- Sales grew 80.87% to 26.16 mn sq. mtr.
- Gross income increased 86.77% to Rs 585 cr.
- Average realisations increased 9% to Rs 233 per sq. mtr.
- EBIDTA margin strengthened 28 basis points to 8.71%.
- Net profit grew 37.87% to Rs 13.47 cr.
The tile is now an established product on account of its superior
value-for- money proposition considering cost, aesthetics, durability
There is a growing scope for this product for good reasons: there is a
progressive consumer extension beyond the conventional mosaic, there is
a growing aspiration to invest in better homes and offices. A
relatively small increase in the outlay of tile investment can generate
a significant improvement in flooring and wall tiling quality, as the
use of technology has widened product offering to designs, finishes and
shades that could not even be conceived as recent as a couple of years
There is no doubt that the growth of the tile sector is linked to the
growth of infrastructure. The strong drivers for infrastructure and
tile sector growth are rising middle-class population and increasing
levels of lifestyles, which in turn, drive residential housing,
shopping complexes, food business, educational institutions, hospitals
and hotels, among others.
The advent of digital printing on tiles will further expand the market
size by carving away share from other surface covering products like
marble, wood, stone etc. and, at the same time, widen design offerings
to customers while reducing investment in inventory.
At Orient Bell, we are favourably positioned to capitalise on
prospective growth due to the following reasons:
- Although family-owned, we are a professional, merit-led enterprise,
having attracted some of the best competencies, enhanced corporate
transparency and created an institution around our core values of
integrity, quality, customers, agility, partnership and performance.
- We possess a nationwide footprint through our presence in Uttar
Pradesh (servicing North and East India), Karnataka (servicing South
India) and Gujarat (servicing West India), three of the fastest growing
regions in India today.
- We possess a complement of brands and brand extensions that enhance
- We are unique in our industry to have a design studio in Castellon,
Spain, which is considered the mecca of international tile design and
- We enjoy a vibrant distribution network comprising five Orient Tile
Boutiques, over 2000 direct dealers and over 8000 sub-dealers, making
it possible for us to reach most parts of India in a cost-effective
way. While the North contributes the largest chunk to our revenue at
41%, East, West and South constitute 17%, 9% and 33% of our revenues,
- We turned a loss-making Bell around; full year benefits of all the
improvements that were done during the year will be visible from
- We possess an innovative product pipeline. We filed patents for
''Forever Tiles'' and ''Germ Free Tiles'', which will help open new
markets. We have demonstrated that at our company, tile functionality
and aesthetics go hand-in-hand. We are the only company in India to
file a patent for ''Germ Free Tiles'' and perhaps the only ceramic tile
Company in the world to possess two patent-pending products.
Going ahead, we expect to reinforce our business through an aggressive
business plan, diversified offerings, balance between risk and reward,
growth in India and abroad, integrated services that differentiate us
from competitors as well as investments in capabilities that reinforce
a high- performance culture.
This blueprint is expected to translate into the manufacture of digital
tiles across 60-70% of our total production by end-2012-13 and entire
production in two years, launch of five more owned Orient Tile
Boutiques, more than 50 smaller Orient Tile Boutiques (OTBs) and Bell
Tile Boutiques (BTBs) as well as the launch of more innovative
In doing so, we are poised to enhance our high-value tile sales and
generate a topline of over Rs 700 cr., strengthen our margins and
enhance value for our stakeholders.
I thank my fellow Board members for their wholehearted support and my
entire workforce for their total commitment during this challenging and
exciting period. It is our assurance that we will remain dedicated to
the creation of stakeholder value.
With good wishes!
Mahendra K. Daga
Chairman and Managing Director