Mumbai: The tile industry, despite being on a massive expansion spree, has sought antidumping duty on import of glazed wall and floor tiles.
 
The domestic market for the glazed tiles is estimated at about Rs 5,000 crore and the demand has shot up by over 40 per cent annually over the last three years with rapid growth in the construction industry.  
 
The Union Government in 2003 imposed antidumping duty on import of vitrified tiles due to persistent demand from the domestic industry.
 
However, a few Chinese manufacturers were exempted after they represented their case to the ministry that they were selling above the normal price.  
 
There are 40-50 organised players and over 250 in the unorganised sector, according to the Indian Council of Ceramic Tiles and Sanitaryware (ICCTS).
 
Profit erosion
 
The Council Chairman, Nenshi Shah, said though the antidumping duty on imported vitrified tiles brought relief to local manufacturers, import of ceramic wall and floor tiles in large quantities has led to erosion of the profit margins of domestic manufacturers.  
 
The dumping affected local players who had invested substantially to ramp up their capacities.
 
Nenshi Shah said in the last two to three years, over Rs 5,000 crore worth tiles were imported from China and the Gulf countries and it had forced local players to drop prices by 15-20 per cent.  
 
The Council had represented their case to the commerce and finance ministries and have been asked to provide additional data on the impact.
 
Increasing capacity
 
Most tile manufacturers are increasing their capacities to keep pace with stupendous growth in the realty sector.
 
Euro Ceramics has embarked on capacity enhancement at a cost of Rs 575 crore. Funds for the purpose is to be raised by offloading a minority stake to Malabar Wasserstein Special Opportunity Fund and its affiliates for Rs 60 crore.
 
About Rs 166 crore has been raised through the qualified institutional players (QIP) route at Rs 270 per share.  
 
Paresh Shah, Director, Euro, said his company was more into the vitrified segment as margins were better and only 20 per cent of its production was glazed tiles.
 
Nitco capacity expansion
 
Nitco tiles have decided to double its production capacity at a cost of Rs 85 crore, though by and large it works with a manufacturing agreement with a few Chinese companies for import. Nitco is also improving its marble cutting facilities with high-end machines at a cost of Rs 35 crore.  
 
Sales for 2006-07 were Rs 430 crore and growth has been almost 50 per cent year-on-year.   ?We make 20,000 square metres (tiles) a day now, said B.G. Borkar, Chief Financial Officer, Nitco Tiles.  
 
Other manufacturers such as Kajaria Ceramics and H&R Johnson were said to have raised funds for expansion.