How Asian Granito India has emerged as one of the largest ceramic players of India

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March 1, 2018 4:32 AM

Patel recalls how proximity to Rajasthan helped source the main raw material, namely China clay, and soon the wholly manual unit got set up with ‘paternal financing’ of Rs 7 lakh each by the fathers of both partners and a bank loan of Rs 26 lakh; they commenced manufacturing 300 boxes of tiles per day.

ceramic, ceramic in india, asian granito, ceramic industry in indiaIt’s a busy time for India’s rapidly growing Rs 30,000 crore ceramic industry

It’s a busy time for India’s rapidly growing Rs 30,000 crore ceramic industry, buoyed as it is by game-changing initiatives like Smart Cities, Swachh Bharat Abhiyan and Housing for All by 2022, which, along with real estate reforms being pushed by the government, are expected to catalyse growth in a big way. Not surprisingly, the rejuvenated industry—already snapping at heels of China’s and Italy’s dominant position in the global market—is sniffing an opportunity to expand its turf even further. Vibrant Ceramics, the mega marketing expo—modelled after the now legendary Vibrant Gujarat biennial investment blitzkrieg scripted by Prime Minister Narendra Modi during his tenure as Gujarat chief minister—held in Gandhinagar in November last year attracted buyers and sellers by the droves. A one-of-its-kind initiative that aimed at unifying and synergising key players, the event succeeded in creating a buzz not only for the quantum of potential business opportunities it unleashed, but also for the display of savvy marketing skills by the largely unorganised Morbi ceramic cluster which accounts for almost 90% of the country’s production. In fact, prospective buyers were airlifted to the manufacturing facilities of this small Gujarati town—a four-hour drive away from Ahmedabad—by helicopters kept on standby and funded collectively by local manufacturers.

Although there are over 700 ceramic players in Gujarat alone, Asian Granito India Ltd (AGL) stands head and shoulders above the rest as a brand that has made it big in a short span of 16 years. The metamorphosis from a puny David to the colossal Rs 1,100 crore Goliath is no mean achievement in an intensely cut-throat industry. What makes AGL a leader of the pack is the fact that it has been able to retain its David-like fleet-footed agility and the ability to grapple with opponents, both big and small. Kamlesh Patel, the CMD of AGL, is not only self-effacing, but a son-of-the-soil to boot. The trappings of success seem to have left him relatively untouched, as is evident from his functional office devoid of any opulent displays of wealth. He regales me with anecdotes as we walk towards his favourite Gujarati thali joint, the Grand Thakar, which, incidentally, is located in the same complex as AGL’s corporate headquarters in the upmarket Satellite area of Ahmedabad. Confesses Patel, a die-hard foodie who loves Gujarati cuisine, with a sheepish grin as we enter our chosen luncheon venue, “I have been a great fan of the Grand Thakar, a popular eatery and hotel in Rajkot, which has a huge fan-following amongst the movers and shakers of the Morbi ceramic industry. In fact, it was on my suggestion that the group decided to open an outlet in Ahmedabad in 2016.”

For me, this reflects a rare and uncanny propensity to go after what he desires. AGL’s meteoric rise, too, is a testament to the inborn business acumen of its 48-year-old founder CMD. Son of a small-town medical practitioner in Idar village of Sabarkantha district, who wanted his son to follow in his footsteps, Patel was a proverbial rebel who dreamt of making it big as an industrialist and chose to graduate in business administration. “In 1994, after completing BBA, I started a small ceramic tile manufacturing unit called Kedia Ceramics in Sabarkantha, in partnership with my cousin Mukesh Patel. At that time, the area only had small cup-saucer manufacturing facilities and we decided to produce ‘4 inch by 4 inch’ and ‘8 inch by 4 inch’ tiles instead to cater to local requirements.” We are interrupted by a bevy of waiters bearing trays and vessels who rapidly begin heaping our thalis with assorted Gujarati delicacies. It’s a veritable onslaught of taste buds as we begin to savour bite-sized puran polis, puran puris, dhoklas and kachoris served to us with an accompaniment of myriad chutneys, sweet dal, Gujarati kadhi and a variety of exotic vegetarian dishes.
Patel recalls how proximity to Rajasthan helped source the main raw material, namely China clay, and soon the wholly manual unit got set up with ‘paternal financing’ of Rs 7 lakh each by the fathers of both partners and a bank loan of Rs 26 lakh; they commenced manufacturing 300 boxes of tiles per day.

“As the only player in the region, the demand for our product was good and we sold our production in advance,” he reminisces. In those initial days, the brothers scoured the length and breadth of the countryside for markets, travelling in trucks and tempos with their samples, and personally delivering consignments. “None of us had studied ceramic engineering. Our knowledge of the industry was gained on the job as we constantly learnt from our mistakes and those of others. Now we have ceramic flowing in our veins,” Patel laughingly admits. By the time the shrewd Patel duo decided to sell off their first venture to a local player, the unit had helped them rake in a cool Rs 2.4 crore. This capital was leveraged to mobilise a seed funding of Rs 6 crore and a bank loan of Rs 12 crore, which was used to set up AGL’s first ceramic floor tiles plant. An astute observer of the market, Patel had, by then, identified a growing demand for floor tiles. No one at that time was making ‘12 inch by 12 inch’ floor tiles and AGL commenced production of tiles of this dimension after the acquisition of old machinery from an Italian tile manufacturer. But while daily production was a modest 2,500 square metres, operating the imported equipment was the first major challenge he faced, as none of the operators hired knew how to utilise it. “We were reporting a staggering 90% breakage initially, which was a major setback for us,” Patel reflects. “It was literally a make-or-break situation and we faced an existential dilemma of either giving up or mastering the machines.” He chose the latter and the rest, as they say, is history, etched in ceramic.

An IPO in 2008 enabled it to raise rs 70 crore for expansion and diversification of its product range. Today, AGL has eight state-of-the-art manufacturing units spread across Gujarat and around 100 exclusive showrooms across the country. An extensive marketing and distribution network of over 5,300 dealers and sub-dealers has enabled it to make inroads into all the states. With an insatiable appetite to conquer new markets, Patel has been aggressive on the exports front, too. A frequent traveller, especially to the world’s leading ceramic markets of Italy and China, he confesses that while earlier his visits were confined to acquiring cutting-edge technical know how, knowledge of materials and designs that made the two countries “the Mecca and Medina of the ceramic world,” these days he travels to understand market dynamics. “While Italy still has an edge in terms of design, it is China that has emerged the leader through mass production and cost cutting,” he concedes. “But India is catching up fast, jumping from a global 30th rank to the second-largest manufacturing country after China,” he exults. “That’s because we’ve learnt to operate with economies of scale, while simultaneously acquiring better skills and innovating.”

In AGL’s case, growth has also meant expansion of product portfolio. From ceramic tiles to double charged, glazed and polished vitrified tiles and, lately, marble and quartz, the company has simultaneously debunked the myth that design leadership is the forte of foreign players alone with a palette of stunning designs. Listed on BSE and NSE, the company is one of the most profitable in its segment with a capacity of 1 lakh square metres a day, a turnover of Rs 1,100 crore in FY17, and an export presence in 53 countries. Our meal is over, fittingly rounded off with delicious basundi and irresistible meetha paan. As a parting note, Patel reveals why even though Morbi has the biggest ceramic cluster in the country, there are only a handful who have made it to the big league. “Most ceramic manufacturers keep splitting companies on account of internecine squabbles between partners; this never lets them consolidate into bigger entities. My cousin and I, however, chose to stick together and that’s what helped us to consolidate and grow.” It is this success mantra that is working its magic in the market. AGL’s new advertising jingle fittingly puts it: “Chala de Jaadoo.”

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