Strong product sales beginning the second quarter this fiscal and bagging several projects in the overseas markets: these are some of the signs of tile manufacturer Nitco stepping out of the shadows of the Covid-19 pandemic. Speaking to BusinessLine , Vivek Talwar, Managing Director, Nitco, says the company is confident that its world-class products, backed by innovative designs, will be a key differentiator in a challenging market and as the company reinvents itself to the realities of the new normal. Excerpts:

China remains one of the biggest makers of tiles globally. How have sentiments changed in the near past?

Indian manufacturers have been getting queries from the European Union and the US for tiles seeking to replace China as a supplier. Also, the US-China trade war is a golden opportunity for India to expand its global trade It will spur the manufacturing sector and invigorate the investment climate.

Have the recent anti-dumping duties imposed on Chinese products helped?

Yes, it has helped India emerge as a major source for several export market players. While Indian tile quality is getting better, design competency of the country too, is improving.

Nitco is clearly a front-runner given our wide range of designs. We have the expertise of global designers. We use materials of global standards. We understand design orientation and standards across global markets.

What steps do you expect the government to take to make India a global manufacturing hub of tiles?

In the forthcoming Union Budget, we expect the Finance Minister to bring tiles in the 12 per cent GST slab, down from the 18 per cent currently, as it’s no more a luxury item. Natural gas is one of the cleanest fuels and is the major cost component (18-20 per cent) for the tile industry. But natural gas is out of the GST regime and is subject to different VAT rates of states. This is putting the industry using natural gas at a disadvantage.

Tell us about the transformation taking place at Nitco.

Aligning with the new business realities, we’re moving away from tile manufacturing to surface designing. We believe in hiring the best designers across the world, using technology, and delighting our customers. After the last few tough years, we are now in the process of opening a series of high-tech design showrooms to meet the changing lifestyles.

We have bagged some good order. We are part of the Temple of the Vedic Planetarium (TOVP) project, being constructed at Mayapur, West Bengal. We have bagged a large export order from a US retailer, giving us entry into over 1,000 stores in the US. In Bangladesh’s Rooppur nuclear power project, we were preferred due to our high quality of products, compared to the local manufacturers. We are the sole supplier for Gautam Buddha International Airport in Nepal because of our unique design capabilities. Besides, we have won a contract to supply tiles to the Royal Oman Police (ROP) Academy.

What are your plans going forward?

Currently, it's not quite feasible to go showroom-hopping. That's why, with NITCO Le Studio, the showrooms come to you! You can simply call us and we will arrange a video call with your nearest showroom, wherein you can go through the entire Nitco collection virtually.

Tell us of Nitco’s earnings performance in the last few quarters?

We were able to prudently manage the cost structure that helped us curtail operating losses despite pandemic-induced sales de-growth in the first quarter. EBITDA during Q2 stood at negative ₹7.50 crore compared to negative ₹14.20 crore in Q1 and negative ₹11.90 crore in Q2 2019. In fact, collection from domestic business improved significantly during the quarter and this helped us improve our cash flow. In H1 of FY21, our net cash flow from operations stood at ₹4.5 crore due to efficient working capital management.

And the business sentiment for Q2...?

In Q2 this fiscal, Nitco saw a significant rise in sales volume. From July 2020, sales volume picked up significantly with a three-fold jump in tiles’ sales volume as compared to Q1. In fact, the sales volume in September was the highest in the financial year. Sequentially, tile sales volume in October rose 6 per cent over September. October sales of tiles year-on-year volume reached almost 90 per cent. Last year we opened 31 franchise stores; this year we plan to open over 50 franchise stores. We are also planning to increase Marble & Mosaico retail footprint.