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Published on: Nov. 30, 2020, 8:35 a.m.
Nitco's strategic turnaround
  • Projects like Iskcon's Temple of the Vedic Planetarium show Nitco's design capability

By Arbind Gupta. Assistant Editor, Business India

Nitco Ltd, a leading tile manufacturing and surface design company, is in the process of re-inventing itself. The company, primarily known for making a wide range of tiles, as also mosaic and marbles, has come up with a completely new strategy, where it has significantly brought down its manufacturing exposure and is focussing on sales and marketing, by leveraging its brand image.

In other words, the company is transforming itself, from a manufacturing entity to an asset-light model, where it is now projecting itself as a comprehensive wall-and-surface solution provider, with focus on design and innovation aspects, as against sheer products. 

The company was facing a financial crisis few years ago and had gone through two failed CDR (Corporate Debt Restructuring) schemes. Then, in 2018, JM Financial Asset Reconstruction Co pitched in and acquired a 30 per cent stake in the tiles major, as a part of the company’s debt restructuring process. 

Now, Nitco is ramping up its sales (distribution) and marketing capabilities in a significant manner, even as it is bringing down its resource allocation to manufacturing, and sourcing most of its product portfolio from third parties. However, in the high-value segment of marble and mosaic, the company continues to maintain its manufacturing efforts. Also, it has ramped up its capability, by adopting a greater degree of automation and innovation. 

“We are heading towards a major transformation,” says Vivek Talwar, Managing Director, Nitco. “We now follow a new strategy, where we are all set to leverage our brand image by converging most of our resources to ramp up our sales and marketing capabilities in a big way. Besides, we are following an asset light model, where we will outsource tiles making, which is our main portfolio. In the high-margin mosaic and marble business, we will continue to retain our manufacturing base, with much better efficiency and innovation”.      

This model has already started showing positive results in the last few quarters, as the company has not only improved its sales in the B2C front, but also built up an impressive presence across the B2C space. It has bagged orders for prestigious projects, such as Jio’s BKC Centre, Mumbai (the largest ever Convention Centre in Asia);  Iskcon’s  Temple of the Vedic Planetarium; Gautam Buddha International Airport, Nepal; Royal Oman Police Academy, Oman; and Rooppur Nuclear Power Plant Project, Bangladesh. 

So much so that Nitco is now emerging as an important surface designer after completing several prestigious projects. Apart from Jio Centre at BKC, it has undertaken to equip Antalia (the residence of Mukesh Ambani) too. The tile maker has also partnered with architects and developers across the world for surface designing projects. Some of the projects it has been involved include GVK Mumbai Airport (largest inlay in India); Villa in Pokhra, Nepal; and IKEA store in Hyderabad. 

The company has been involved in several commercial and residential projects of reputed developers and is undertaking a few projects of the Prestige group in Bengaluru. Besides, it has worked in a few office projects of Google and Amazon.

Exports and US markets

Nitco has an edge over its peers in the designing space, as it leverages the modern Italian technology and sources superior marble from select quarries in Italy and other locations, which enables it to supply international standard products. The company owns 11 exclusive display centres under the brand name 'Le Studio', and 95 exclusive showrooms, operating as franchisees, known as 'Le Studio Express'.

The tile maker has recently become India's first and the only brand to become a preferred tile brand supplier for one of the large counter retail entities in the US. The company secured a large export business order on the strength of its design and quality, resulting into an entry across over 1,000 stores in the US. The US retailer is a large counter retail enterprise, specialising in sales of hardware, home improvement and seasonal interior decoration products, catering mainly to the home improvement professionals, construction and Do-it-Yourself (DIY) concept clients.

It operates retail chain stores across the US and Canada and is amongst the top five in the home improvement retail industry in the US and the world. The venture has successfully commenced with store sales from September 2020. Nitco exports to 40 countries, including the US, Canada, Australia, Singapore, the Middle East, Bahrain and Africa.  

“In the last couple of years, our exports have seen a phenomenal growth (CAGR of 100 per cent),” says Talwar. “Now, there is a paradigm shift in the way the world look at China as their choice for tile sourcing. A majority of the tile importers across the globe are looking to switch to other sourcing destinations like India and, here, Nitco has a distinct edge, as it possesses the desired competency. We have the expertise of global designers in the company, the orientations and vendors, as also the type of material we use are all at the global standards”.       

Experts are of the view that post Covid-19, there will be a major shift as the global tile importers would look to other sourcing destination like India, Vietnam, Malaysia and Bangladesh. India, being the second largest tile producing and consuming market, will be their first choice for importing ceramic and porcelain tiles. India has rich natural resourcing for ceramic raw materials.  It has world class manufacturing facilities, adhering to international quality standards. There is a huge potential of foreign direct investment in India to make it the tile manufacturing hub.

“The challenges it faced in the past notwithstanding, Nitco as a brand has continued its journey,” says Subrata Basu, head, marketing, Nitco. “We had always produced design-oriented products and, therefore, ours was the leading brand, as far as price and premium were concerned. Also, our products offered larger fascination for architects. Till date, when Nitco designs products, architects love it, because of the natural orientation for the design.  The brand enjoys a global appeal. Right from the design, colour and texture, it has always tried to match the original material -- the marble or wood or stone. So, the finesse of creating that product probably makes it a differentiated company not only in India but also across the globe. We are receiving an encouraging response from the global community”.

Despite the pandemic-related challenges, in the domestic market, the company plans to open 10-12 new stores over the next 2-3 months across various states including, Haryana, Kerala, West Bengal, Punjab and Tamil Nadu. The Mumbai-headquartered entity has opened around 60 stores in the last few years. At present, the company has 120 active franchisee-run stores in the country. Nitco has started digital solutions for the customers on WhatsApp, in view of the ongoing lockdown across the country.  The company has always remained loyal to its core values of innovation, product quality and customer service. Nitco has a well established network of 500 active dealers and 2,000 active sub-dealers. 

Strength and durability

On the manufacturing and supply side, the company's units are strategically located in multiple states. While its marble division is located in Silvassa, Dadra & Nagar Haveli, its ceramic tiles division is located in Morbi, Gujarat. It has a fully automated plant in Silvassa, which is also one of the five such plants in the world and the only one in Asia, using the most modern Italian Technology (Breton) to process natural marble. It uses the best quality epoxy resin and imported fibre glass net in its plant to add strength and durability to the slabs of natural marble. The grinding-polishing line delivers the highest gloss level of above 30 per cent more than conventional polishing.

"Nitco is a well-established brand in the tiles, marble and mosaic space,” affirms Talwar. “Opening up more stores in various states over the next few months shall further strengthen our presence in these geographies, going ahead. These upcoming stores will enable customers to scour through a variety of our nature-inspired tiles at affordable price. While the economy came to a near standstill following the outbreak of corona-virus in April, things have begun to look better over the past few months. We remain optimistic that the pick-up in real estate and other construction-related activities will boost demand for tiles and other products going ahead,” he adds.

With all these developments in place, Nitco is gradually turning around. Its asset-light model and the wide array of efforts on the sales and marketing front, have started showing positive results. And, the company, backed by fresh ideas and capabilities, is all set to leverage its brand image in a big way. While efforts are in the place, it will be some time before the financial indicators start reflecting them. 

During 2019-20, the company saw a 22 per cent dip in income from tiles and related businesses to about Rs453 crore. Sales was lower mainly in the project business, as the company focussed on retail segment sales by creating a product strategy tuned to the interests of the consumers, as also growing sales network. The company reduced the exposure on project customers, considering the market and liquidity situation.  Going forward, as the macro- and micro-economic factors improve and the company manages to settle down to its new strategy and efforts, Nitco will be better placed to leverage its brand and other abilities.

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