Allaying fears of demand being hit hard in the face of COVID-19 disruption, Somany Ceramics, one of India's largest retailers of floor tiles, has stated that the demand has not been hit as hard as it was feared. It is of the belief that smaller and unorganised players will be squeezed out of the market owing to cash crunch and lack of production.
According to 18 May Edelweiss report, demand has been better than expected - 50% as compared to 10% expectation - since Somany's showrooms opened way back on 6 May 2020. Also the company's shares rallied over 8% on 21 May. The report further added that the conversion rate is up to 80% as compared to 50% earlier. It is expected that demand from retail segment is likely to remain healthy as individual home buyers/owners are eager to complete the construction of their homes, whereas projects are likely to suffer from the liquidity squeeze and labour shortages. Tier II and tier III cities are better placed as they have lesser number of reported cases and limited labour availability issues.
Branded players such as Somany Ceramics, Kajaria, Nitco and the likes are offering cash discounts to receive payments. The small and unorganised lot who form a major chunk of the sector do not have the bandwidth to offer such luxury. The dealers and distributors too are finding the scheme offered by the branded players attractive and are accordingly making payments to them at the cost of the smaller and unorganised lot. This will certainly help the branded players to eat into the shares of the unbranded players.
The demand for premium-end tiles too will be met by the domestic players, as architects' visits to China and other European nations for is possibly ruled out for a year or so. This certainly implies that the crisis at hand is an opportunity for India's branded ceramic players to regain their market share and reposition themselves.