H & R Johnson (India) (HRJ), 60 year old pioneer of ceramic tiles in India, is on a comeback trial. H & R Johnson (India), which is now a division of Prism Johnson Ltd was once upon a time synonymous with floor tiles. However, the company could not retain its leadership position in tiles, bath and kitchen segment partly due to lack of vision or you can say, inability to read market sentiment. Also, some of government policies didn’t help the company to sustain its supremacy in the market either. By 2010, things had started drifting apart for the company and eventually the company lost its numero uno position to Kajaria Ceramics.
The company was unable to read the market sentiment and was slow to recognise the changing trend in the market. As a result, when the industry was moving towards vitrified tiles, HRJ continued with its old product mix which in turn resulted in loss of market share to competitors.
Also, problems relating to power supply added to its cup of woes. HRJ suffered on account of lower power and fuel availability in the state of Andhra Pradesh and Karnataka where 40% of its manufacturing units are located.
However, these issues have been now sorted out as the company has installed three coal gasifiers in the AP plant (2 plants), winning bids for onshore micro gas wells and natural gas pipeline connectivity completed for Karnataka plant. With these measures, the company has ensured that there won’t be any supply disruption in future due to non-availability of power.
After tackling supply side issues, HRJ is now concentrating on managing demand creation and market share enhancement. The company is planning to achieve demand generation through continuous development of new products, as the tile industry is highly competitive and design plagiarism hurts pricing. Influencer engagement and opening of large format display centres is also one of the tactics employed by the company to attract customers. HRJ has opened four large format display centres in Guwahati, Chennai, Kolkata and Coimbatore.
Despite these measures HRJ’s product mix is slightly weak compared to its competitors. Currently GVT (Glazed Vitrified Tiles) tile contributes 6-7% of its volume versus 20-25% for its peers, Kajaria Ceramics and Somany Ceramics. GVT tiles command more than 30% premium over the mass market products. HRJ recently launched premium and high margin GVT products to get even with its competitors.
Though the competitors of HRJ are keenly watching the efforts of the company to regain its market supremacy, for the time being they are not unduly perturbed by it. According to them HRJ is still in mass consumption segment and not a serious player in premium segment where margins are higher and the consumer preference is shifting from mass consumption products to premium products.
However, environment for TBK in India in terms of government policies and programs wouldn’t have been better than this with many of the policies aimed at creating level playing field between organised and unorganised players. Swachh Bharat Mission, Smart City Mission and Housing for All programs are all aiding the industry to achieve and sustain higher growth. Also, in Andhra Pradesh and Telangana where HRJ is predominant, demand from affordable houses will be more front ended than other States, as houses in these states are built with shear wall technology, which has reduced execution period to 15 months vs 24 months.
Thus, time is absolutely perfect for HRJ to re-strategise its marketing efforts and only thing need to be watched is how it will be implemented and will be received in the market.