Tiles titan Asian Granito India Ltd (AGIL) has drawn up plans for its next leap of growth. The Rs 1187-crore company is aiming to surpass Rs 2,000 crore in revenues by March 2022 and emerge as a Rs 6,000-crore conglomerate by 2030, with 10% profitability.
“AGIL was established in 2000 and has now become the country’s leading home decor brand. In such a short time, we have achieved 40 times growth in our production capacity, from 2,500 sqm per day in 2000 to over 1 lakh sqm per day at present. We have now set a roadmap to attain the next phase of growth,” says the company’s CMD Kamlesh Patel (KP), as he is joined by managing director Mukesh Patel (MP) to discuss AGIL’s game-plan in an exclusive interview with SH.
By Mrinmoy Bhattacharjee
How are you planning to take the company into the future?
KP: We are focusing on an asset-light and capital-light business model to become a strong retail brand in domestic and export markets, and achieve a leadership position in key segments. Our company is also focusing on high-end products such as premium GVT tiles, quartz, and marbles. We are strengthening our portfolio of value-added products such as GVT tiles, marble, and quartz to optimise the mix and enhance our margins. This is backed by our judicious investments in capacity expansion for value-added products, and R&D to introduce more innovative and path-breaking designs. To become a complete bathroom solutions provider, AGIL has ventured into the sanitaryware segment in April this year, and very recently forayed into bath fittings and accessories. We are aiming to become a strong retail brand which will derive 50% of its sales from retail business through over 500 showrooms.
To capitalise on the mega opportunities ahead, we have taken a series of initiatives. One of the major decisions is to appoint heads for each business vertical, for achieving a sharper focus on strategy execution. This is in contrast to the earlier mechanism of having a CEO overlooking the entire operation. We are already witnessing the impact of this change in the form of improved performance and faster decision-making.
What does your shift towards asset-light and capital-light model entail?
MP: We wish to evolve as an agile and responsive marketing organisation. We want to be the leader when it comes to brand building, network expansion, R&D and innovation, and customer satisfaction. Therefore, we will go for outsourcing arrangements for the production of commodity products that offer low margins. With such arrangements, the company will need lesser capital for capacity expansion and will be able to focus on building muscle in branding, distribution, and R&D and innovation.
To emerge as a ‘complete bathroom solutions’ provider, you have gone beyond tiles and forayed into sanitaryware, bath fittings and accessories. What strategy are you devising for this new business?
KP: AGIL’s expansion into sanitaryware is in line with our strategy to become a strong retail brand and achieve a leadership position. We have launched 160 SKUs in sanitaryware including washbasins, water closets (WCs), urinals, etc, and will be expanding the range gradually.
The bathware division will commence commercial operations by December this year, by launching 12-15 series of faucets, showers, and accessories. The series will be expanded gradually to include premium ranges. The division will build a network of 500-plus dealer touch-points through 50 distributors over the next 12-18 months. We expect AGL Bathware to become a Rs 150-200 crore brand in the next 4-5 years.
B2B sales have been your major revenue contributor. Now, you also want to become a strong retail brand. What prompted you to play the B2C game?
MP: Earlier, more than 75% of our revenue was generated from the B2B segment. But, we are gradually reducing the share of B2B sales to improve our margins and earnings. You see, B2B remains important for us. But considering the increasing disposable incomes in India, and that more and more people are opting for branded products, we are now focused on B2C. Our vision is to be a leading consumer-facing brand. So our emphasis is on increasing retail sales to 50% of the total turnover. Currently this break up is 40% retail and 60% project sales.
How will you execute the retail plan?
KP: B2C will be an important growth and margin driver for us. We are intensifying our efforts to expand our foothold in the segment and deepen customer engagement. We have stepped up our marketing and brand-building investments to augment brand visibility. We will continuously invest in bolstering the Asian Granito distribution network.
During 2018-19, we have expanded our network to 6,500-plus touchpoints including 289-plus exclusive showrooms, 13 company-owned company-operated (CoCo) display centres, and 1,300-plus dealers across the country. And we are intensely focused on strengthening this further. We are leveraging our franchisee-owned franchise-operated (FoFo) format to reach into smaller towns with a population of over one lakh. The company has set a target to increase touchpoints to over 10,000 and expand the network of exclusive showrooms to 500 within the next couple of years.
What kind of a market spread does Asian Granito have?
KP: The brand has a strong presence across all regions with 30% of domestic revenues coming from the west, 31% from the south, 27% from the north, and 12% from the east.
What is your branding and marketing strategy?
MP: We have rolled out a few exciting branding campaigns – Chala De Jadoo, Beautiful Life, Sapne Hue Apne – on a wide range of platforms through electronic and digital media. Besides, the new ranges are promoted by launching amongst trade partners; creating awareness for end-users through digital platforms; and by inviting interior designers and architects to events and our company display centres. Additionally, we are leveraging radio and magazines to enhance our brand awareness and build aspirational values.
How are you supporting your channel partners? What programmes have you planned for them?
MP: We support our channel partners with activities and services that smoothen their secondary sales. We organise mason and contractor meets in their areas. And we support them with marketing collaterals and give them incentives of international travel for achieving various business targets.
You have said that you are ‘focusing’ on R&D. How is that happening?
KP: We have strategically invested in the cutting-edge technology to differentiate on the basis of design. By pioneering the use of digital printing and nine-colour printing technology, we have built an exciting and enriching portfolio of digital tiles. We have one of the largest numbers of digital machines in the industry.
We have not only developed designer tile surfaces but have also developed application-based surfaces and finishes that are easy to maintain. So now we have de-boss, emboss, lustre effect, polish, matt, silk, rustic, rocker, full-body colour, and many more.
A structural shift has been observed in customer preference towards branded products, better design portfolios, and value-added products. Hence, our design team continuously works towards rejuvenating the portfolio with unique and appealing products that can address the aspirations of our customers. Such efforts have helped us in pushing forward our marketing activities and programmes. Our expertise in technology, research, design and quality has been our differentiator among the competitors. It is this expertise that underpins our operations and consistent growth. Today, we are happy to say, our company has around 1,400 designs across segments.
How are your exports doing? Which markets are you targeting?
KP: We are the fifth-largest exporter in the Indian ceramic industry and the number one from Gujarat. Our company exports a wide range of products including GVT, ceramic floor, digital wall, vitrified, parking, porcelain, glazed vitrified, outdoor, natural marble, composite marble, and quartz tiles. We export to over 58 countries across the US, Canada, Europe, Africa, and Australia.
Currently, exports account for around 9.5% of the company’s consolidated net revenue and were at over Rs 100 crore in 2018-19. We plan to increase the quantum to 15% of total turnover. We see huge opportunities for tiles and quartz in developed markets and are enjoying improved realisations due to our product mix. The recent imposition of anti-dumping duty by the US on China will provide us further opportunities to grow the export base. Going forward, our focus is on capturing untapped overseas markets and strengthening the global reach. And we expect to have a presence in over 100 countries within the next 3-4 years.
The results are already coming in. In Q1 2019-20 the exports were 27% of total sales, as against 13% for the same period last year.
