The Hindu Business Line : Nitco Tiles designs strategy to boost sales, improve margins

Chennai, Sept. 28 Despite innovation and variety, the lack of adequate/impressive display has forced the tiles industry to stay circumscribed in a circle of ever-decreasing prices and limited designs. To break this deadlock, Nitco Tiles has initiated a two-pronged strategy whereby it is setting up company-owned showrooms called Le Studio Nitco and talking to dealers, current and prospective, for Le Studio Express, which will take the form of Nitco zones in a part of the store.

Speaking to Business Line, Mr Nitin Sawale, General Manager (Marketing), Nitco Tiles, said that as only a few tiles of each variety were displayed in stores, even the trade community – builders, architects, interior decorators and contractors – which influenced the end user market was not able to visualise the finished product. Intense competition and market players’ hesitation to expand variety added to the problem. This led to most products being me-too products, putting design on the backseat and bringing prices to the fore. “So even if we have the innovative capability and our products are superior, we are not able to command a premium,” explains Mr Sawale.

He says that while other industries associated with real estate and construction, such as marble and laminated flooring, are booming, the tiles segment was seeing a drop in its prices, from as much as Rs 100-150 per sq. ft to Rs 40 per sq ft. The ROI for dealers in the tiles industry is very high as they have to spend money on the display, outlet rent and maintenance, and there was scope for greater returns if the fall in prices could be stopped, he said.

Nitco will now assist interested dealers in creating a Nitco zone with design and a part of the finances. A decorator will design the layout and the company will deploy an employee at the Express outlets to assist customers. The zones will assist in display and the consequent sale of high-end tiles and improve margins, Mr Sawale said.

Over the last 7-8 months, Nitco has set up 10 company-owned showrooms in the metros and mini-metros. It aims to have 100 Express outlets in place by next September.

For the Rs 480-crore Nitco, tiles vitrified and ceramic contribute about 70 per cent of the revenue. Its marble slabs business contributes about 20 per cent, with the pavers division and Mosaico division contributing smaller amounts. It is the top listed company in the segment by value and volume, Mr Sawale said, adding that the Rs 2,300-crore tiles market faced severe competition from the unorganised segment, which accounted for as much as 30 per cent of the industry’s size.

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