H&R Johnson consolidates operations in South

By Our Staff Correspondent

MUMBAI, MARCH 5. H&R Johnson (India), the country's largest ceramic tiles manufacturer, has announced plans to consolidate its leadership position in the South. It is converting its entire wall tile plant at Kunigal in Bangalore to manufacture floor tiles.

The Kunigal facility's floor tile capacity will be 2.3 million sq. metres per annum and the cost of conversion is around Rs. 6 crores. The company had earlier converted a part of the plant to manufacture floor tiles and had received good response to its products.

The single biggest advantage of the conversion is that the company will be able to service this growing market by reducing lead time and increasing the product range. According to Mr. Vijay Aggarwal, Managing Director, H&R Johnson, for the current year, the company's production of floor tiles and wall tiles is in the ratio of 55 per cent and 45 per cent. However, the mix could be altered depending on demand

The company has a regionalisation strategy in place to meet local demand with local supply. H&R has geographically diversified manufacturing locations - Pen in Maharashtra for the western region, Kunigal in Bangalore and Karaikal in Pondicherry for the Southern region and Dewas in Madhya Pradesh for the northern, central and eastern regions.

Elaborating on the importance of this strategy, Mr. Aggarwal said, ``Just like in cement, the freight cost is an important factor. So, moving a product from the north to the south of the country would account for 15-18 per cent of the total product cost.''

H&R Johnson also plans to produce exclusive and customised designs for the South. Mr. Aggarwal said, ``This will help us in giving value added products at affordable prices to our consumers in the South and a wide variety of choice.''

Along with the newly acquired wall tile plant at Karaikal, Pondicherry, H&R Johnson would soon be the largest manufacturer in the southern region with a capacity of 4.1 million sq. m. annually. This includes the new floor tile capacity at Kunigal (2.3 million sq. m.) with the third fire decoration plant with a capacity of two lakh sq.m. and the Karaikal facility whose capacity is 1.6 million sq.m.

The company has also planned new capacity additions at its Pen plant which is being expanded at an investment of Rs. 75 crores and will be completed this month. This includes expansion of the capacity by 50 per cent and that of marbonite by 100 per cent. On completion, the capacity of the Pen plant would be 8 million sq.m and that of marbonite 4 million sq.m. Following this, the Karaikal facility would be expanded.

The total capacity of the company would be nearly 21 million sq.m making it one of the largest manufacturers of ceramic tiles in the world in two years time. It's current total capacity stands at 16 million sq. m.

The industry is now in an overcapacity situation. In spite of this, the company is today running all its plants at 100 per cent capacity. ``Our cost of expansion is low. Our sales have grown at a CAGR of 25 per cent over the last few years. So the overcapacity in the market will not affect us in any way,'' said Mr. Aggarwal. In 1999-2000, the company's sales rose by 30 per cent to Rs. 278 crores from Rs. 214 crores in the previous year. The company is expecting a turnover of Rs. 340 crores by March 2001.

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