OBL is intensifying its capex drive while increasing presence in uncharted areas in a bid to accelerate growth
Having completed the final leg of integration of Bell Ceramics into Orient Ceramics in the first quarter of FY2016, the Delhi-based tile maker is now focused on charting an aggressive growth plan. The company not only seems to be reaping the fruits of synergy, but is also chalking out a roadmap for ramping up capacity while expanding its reach in the market.
Speaking on these developments at Orient Bell Limited (OBL), its executive director and CFO K M Pai informed, “The integration process involved merging of two ERP databases, merger of dealers and depots and recreation of customer masters, reallocation of territories and remapping of sales persons. The sales operations were suspended for ten days for the same.” He further opined, “Integration into a single brand would help us to effectively leverage our brand spend and increase the efficiency of manpower and administration spends.” The company has even changed its website from www.orientbell.com to www.oblcorp.com. However, the product information has not yet been posted to the new website and it merely points to the old website.
While OBL was also trading tiles sourced from domestic manufacturers, it didn’t have a significant stake in the vendor companies to be able to assert any sort of control in manufacturing proceedings. However last year it inked its first JV by acquiring 19.5% stake in a ceramic tile company based in Morbi, Gujarat for setting up a new unit. “We are putting up a greenfield plant with an initial annualised capacity of 4.6 msm of polished and glazed vitrified tiles. We expect the commercial production to start in this February,” Pai stated, adding that OBL plans to add another line in the said plant, which will increase capacity by another three msm.
In the meanwhile, the company is working on expanding capacity in its own facility at Hoskote, near Bengaluru. “The expansion in Hoskote is already in process and machineries are under evaluation and it will take one more year and will add three msm in capacity.” These planned capex, once operational, will eventually increase OBL’s capacity to about 35 msm per annum.
OBL is actively scouting for partners for additional JVs. “Now we are focusing on expanding capacity through the JV route. While having equity in the company gives us control on manufacturing, a JV is also a good option from investment point of view. While in the new JV project every line will cost us about Rs 10 crore, for in-house expansion it costs us around Rs 60-70 crore per line,” Pai revealed.
On the retailing front, the company is strengthening its reach while enriching the tile buying experience by increasing the number of exclusive display centres – Orient Bell Tile Boutique (OBTB). In the first quarter itself seven OBTBs were added across five states – two each in UP and Delhi and one each in Goa, Assam and Chandigarh, taking the total count to 94 including eight company-owned boutiques, at the end of Q1 FY16. “We have already signed agreements for another 100, which will come up soon. They are mostly concentrated in tier-I and tier-II cities and now we are looking at tier-III.”
On the sales and marketing front, OBL is rolling out a programme to address architects and interior designers. “For impressing these influencers, we have a dedicated team which actively arranges meets and various other BTL activities.” Pai stated that the company is also taking part in prominent trade exhibitions to reach out to potential customers.