Asian Granito India Ltd. (AGL) has emerged as one of the largest ceramic companies in a short span of 22 years. Its capacity has grown 40 fold making it the fastest growing Ceramic Wall & Floor Tile, Glazed Vitrified Tiles, Polished Vitrified Tiles, Engineered Marble,Quartz and Bathware Company. It has 9 ultra-modern plants across Gujarat which is spread over 3,20,000 Sq.mt.The company exports to more than 100 countries. It is the first ever Indian tile company to launch the largest showroom in Johannesburg, South Africa.
The company offers a wide range of products including, ceramic floor, digital wall, vitrified, parking, porcelain, glazed vitrified, outdoor, natural marble, engineered marble & Quartz, etc. It has recently entered in sanitaryware and launched the CP Fittings and Faucets division to provide ‘Complete Bathroom Solutions’ under brand AGL. Gradually in more than two decades long journey AGL has forayed and even reached leadership status like introducing innovative digital printing technology. Its state-of-the-art design technology successfully addresses the aesthetic and performance requirements of designers, architects, constructions companies and homeowners across India. From ceramic tiles, Nanotech, Roto-Drum to New Digital Technology, AGL leads the way in creating the most diverse array of designs across the entire tile and marble product range.
It has an extensive marketing and distribution network which comprises 6500+ Touch Points including 311+ Franchise-Owned Franchise Operated (FOFO) showrooms and 12 Company-Owned Company-Operated (COCO) Display centres besides more than 2700 Distributors, Dealers and Sub-Dealers covering each and every state of the country and the globe.
It wasn’t easy but two young, dynamic, and enthusiastic entrepreneurs Kamlesh Patel and Mukesh Patel very silently debunked myths that a fledgling company from a small town region in Gujarat can lead the change in the industry by achieving the unthinkable and creating new benchmarks – a fact which was acknowledged in the Vibrant Gujarat Summit 2015. The achievement opened huge potential for its phenomenal growth as AGL attracted the attention of global market leaders and big users simultaneously. Since then the company has come a long way.
With Indian Economy & Market in a free-wheeling chat the two dynamic entrepreneurs – Kamlesh Patel and his elder brother Mukesh Patel, the brains behind the company, shared various ongoing ventures, their vision and future plans.
FY22 Financial Highlights
- NET SALES was higher by 21% over previous fiscal’s same period
- EBITDA was at Rs.124.6 crore (EBITDA Margin at 8%)
- Net Profit stood at Rs.91.8 crore (PAT Margin 5.9%)
- Export was at Rs. 204.9 crore
- It was highest ever yearly sales and Net Profit
- Return on Equity improved to 10 per cent (growth of over 500 bps from 4.62 per cent on FY19)
- Return on Capital Employed improved to 12% (from 10.64% in FY19)
- Expects to cross Rs 2,000 crore sales in FY24
- ‘DEBT FREE’ STATUS on the standalone basis
- Aims to be ‘Debt Free’ on the consolidated basis soon
The Rights Issue, which came two months back, has triggered huge expectations. Please brief about the mega expansion plans at Morbi.
To begin with let me tell you in brief about our growth trajectory. In 22 years, after it was established, Asian Granito India Ltd. (AGL) has emerged as one of the foremost luxury surfaces and bathware solution brands in India. In a very short span of time the company has achieved 40 times growth in its production capacity, from 2,500 square meters per day in the year 2000 to 98,000 + square meters per day and ranks amongst the top ceramic tiles companies in India. With an objective to strengthen the company’s leadership position and market share, we have lined up mega expansion plans in the India’s ceramic hub –Morbi, Gujarat.
First initiative -the company is setting up three state-of-the-art manufacturing facilities at Morbi in Value Added Luxury Surfaces & Bathware Segments including GVT Tiles, Sanitaryware and SPC Flooring. Second initiative – the Company is setting up one of the World’s largest Display Centres covering an area of approximately 1.5 lakh sq. feet at Morbi to showcase Group’s entire product range under single roof. To make the above mentioned mega initiatives a success, the company has achieved a successful closure of Rights issue of Rs. 440.96 crore. With the successful completion of these two ambitious plans we expect to generate peak sales of Rs.700 crore per annum from the three plants and also feel display centres will contribute Rs.500 crore of revenue.
That’s good news but can you elaborate its direct impact on the topline? What are the other ongoing projects?
To answer the first part of your question we are certain the expansion plans will take the company closer to its vision to achieve Rs. 6,000 crore in topline in the medium to long term.
Our other ongoing as well as planned initiatives also come under the ambit of expansion. First and most ambitious one is in the GVT space. To capture the vast opportunities in the GVT space, Future Ceramic Pvt. Ltd., a wholly owned subsidiary, is setting up a new manufacturing facility to manufacture value added large format glazed vitrified tiles at Morbi, with an installed capacity of 5.94 million sq. mtrs. per annum. Total estimated cost for setting up the new manufacturing unit is around Rs. 174 crore.
Second, to strengthen and scale up Sanitaryware segment, AGL Sanitaryware Pvt. Ltd., another wholly owned subsidiary of AGL, plans to establish in-house manufacturing unit of Sanitaryware products. It is setting up manufacturing facility at Morbi, with an installed capacity of 0.66 million pieces per annum. Estimated cost for setting up the proposed new unit is around INR 46 crore. The plant is expected to generate revenue of around Rs. 100 crore at optimum capacity.
The third major plan is associated with the product portfolio. AGL Surfaces Pvt. Ltd., again a wholly owned subsidiary of AGL, plans to manufacture innovative new age Stone Plastic Composite (SPC) flooring. It is incorporated as part of the Company’s strategy to expand product portfolio and presence in high growth oriented export markets through value added offerings. The manufacturing facility is proposed to be set up at Morbi with an installed capacity of 2.97 million sq. mtrs. of flooring per annum. Total estimated cost for setting up the new manufacturing unit in ASFPL is around INR 33 crore.
Please tell more about the display centre you are setting up?
Yes, that’s again a kind of first for the industry. We are setting up one of the World’s largest display centre at India’s Ceramic Tiles hub – Morbi to showcase AGL Group’s entire product range under single roof i.e. Tiles, Sanitaryware, Bathware, Quartz & Engineered Marble, SPC, etc. The five-level display centre is conceptualised in 1.5 lakh square feet of area and aims to showcase AGL Group’s production, technological excellence and best in class sourcing caliber at single place and is also expected to enhance Company’s brand and reach. Each one of the five floors will have ample space to showcase the entire range.
Please share details of the recent launch at AGL Master Stroke 2022?
AGL Master Stroke 2022 is the biggest ever product launch event by the company till date. Company launched latest collection of exquisite and elegant range of premium tiles, large slabs, sanitaryware, faucets and bathware products at AGL Master Stroke 2022. It also displayed 1800 plus designs, 900 panels, 30 live mock ups at the mega launch showcased in 75,000 sq feet. We also organised a dealer-distributor meet for the mega launch at the Jio World Centre in Mumbai on July 15-16. Over 900 dealers and distributors across the country participated in the product launch, dealer meet and witnessed company’s world-class collection.
The Company also launched ‘AGL Artware’ – designer faucets and sanitaryware collection brand, ‘Fresco’ – an elegant range of mosaic & subway tiles and ‘Menteca’ series – premium Italian marble range during the two day grand launch. We have also launched 250 plus Large Slabs, 200 plus Mosaic & Subway Tiles, 120 plus Sanitaryware and Faucets collection at ‘AGL Master Stroke 2022’. Mobile Application ‘AGL Tiles’ was also launched during the event with an aim to provide one-stop solution including product catalogue, latest & new launches, order and support services.
I can proudly say that we received an overwhelming response and interest from our trade partners, stakeholders and dealer-distributors for the new collection, features, and designs launched during the event. Large slabs and mosaic tiles collection witnessed the highest eyeballs during the event and was the main attraction of the launch.
Any move to increase the number of AGL TILES WORLD?
In the last few years, we have taken various initiatives to increase its retail presence with a vision to become the most preferred tiles brand. The Company has been aggressive in strengthening its dealer-distributor network, AGL exclusive showrooms, company display centers as a part of this retail strategy which has gained further momentum post demonetization and GST. Today company has expanded its distribution network to 6,500+ touch points, including 311+ Franchise-Owned Franchise Operated (FOFO) showrooms and 12 Company-Owned Company-Operated (COCO) Display centres. The number is going to see further increase as the company has set a target to reach 500 exclusive showrooms and 10,000 retail touch points in the next 2-3 years. The expansion in the retail segment is in line with the vision of the company to have 50% of the sales from the retail segment.
Since a lot is happening in the sector and in the associated space, where you envision seeing the company after 3 years? Also please briefly let us know the journey so far.
It all started with a dream. A dream to create World’s most sustainable building materials company. With that dream in mind, passion for success and hard work, founding stone was laid for Asian Granito India Ltd. Started as a small 30-employee venture, Today, AGL Family has grown to a team of over a 6,000 who are committed to making the brand a Global leader. Today, we have emerged as India’s leading Luxury Surfaces and Bathware Solutions brand. AGL products are synonymous with reliability, adaptability, innovation, quality consciousness and the company has created a strong brand identity, well recognized globally and loyal customer following across segments.
Ranked amongst the top ceramic tiles companies in India, AGL has achieved nearly 40 times growth in its production capacity, from 2,500 square meters per day in the year 2000 to 98,000 + square meters per day, as on date. It was acknowledged in the Vibrant Gujarat Summit 2015 also. Today, we have 9 state-of-the-art manufacturing units spread across Gujarat and 311 exclusive showrooms, 12 display centers across India. Further, the Company has an extensive marketing and distribution network pan India as well as in exports to 100 plus countries. Company reported net consolidated turnover of Rs. 1563.8 crore in 2021-22.
We are progressing as per the well-defined growth roadmap and committed to complete all our expansion on or before deadline. With commercialisation of the proposed plans, AGL is expected to strengthen its position as an Integrated Luxury Surfaces and Bathware Solutions Brand and up the Group’s margin profile in near to medium term. Company’s Enhanced Strategic Integration Programme (ESIP) is targeted to expand the margins and place the company further up in the league table of Luxury Surfaces and Bathware Solutions Players.
Your ROCE has been very impressive so is the sales maintaining above almost 12 per cent at CAGR. Please share financials?
Over the last few years, we have gradually shifted from B2B to B2C business model, focusing on Asset Light and Capital Light model for expansion. In the process we have been successful in becoming strong retail brand in the domestic as well as exports markets and achieve leadership in key business segments. We also have taken strong measures to improve our margin. In this direction further focus on the high-end products such as premium GVT Tiles, Nanoc Crystal, Quatz and Composite marbles have improved company’s margin profile.
The strategic growth initiatives, operational efficiencies, financial prudence, geographical and product expansion along with low capex has started to showing results with growth in the revenue and margins for the company. Even during and post Covid also the company management was able to turnaround the operations very fast.
We have taken many important initiatives in the recent past with a focus to reduce debt, strengthen the core business of tiles and building materials with an aim to moving towards asset light and capital light business model. Today, company has achieved ‘Debt Free’ status on the standalone basis and aims to be ‘Debt Free’ on the consolidated basis too in the next few years.
Our Return on Equity in FY22 has improved to 10 per cent – growth of over 500 bps from 4.62 per cent on FY19. Similarly, Return on Capital Employed too has improved to 12% in FY22 from 10.64% in FY19.During the last 3 years, despite the economic and business challenges company has registered above industry growth rate. Net Profit of the company in FY22 was reported at Rs. 91.8 crore (Net Profit margin 5.9%) as compared to Net Profit of Rs. 20.6 crore (Net Profit margin 1.7%) – 3 Year CAGR of 64.5%. Net Revenue and Net Worth also reported healthy CAGR of 9.6% and 26% respectively. EBITDA also improved to Rs. 124.6 crore – 3 year CAGR of 13%.
How far you have reached to the target of achieving Rs 2,000-crore turnovers and what is the share of retail sales?
I’m happy to confess that FY22 was a landmark year in the journey of the company. Led by healthy volume growth and higher realization, company reported its highest ever yearly sales and Net Profit for the year ended March 2022. Thanks to the efficient product mix and strategy to pass the escalated costs, company was able to strengthen its market share and presence in the domestic and global markets. The Company expects to continue the growth momentum in the years to come and expect to cross Rs 2,000 crore sales in FY24.
For FY22, company has reported net sales of Rs.1563.8 crore, higher by 21% over previous fiscal’s same period. EBITDA for Year ended March 2022 was reported at Rs.124.6 crore (EBITDA Margin at 8%). Net Profit for the FY2022 stood at Rs.91.8 crore (PAT Margin 5.9%). The Company’s export for FY22 was at Rs. 204.9 crore.
Over a period of time, the company has gradually shifted from B2B to B2C business model, focusing on Asset light and Capital light model for expansion. Today, retail sales contribute over 40 per cent of company’s total sales which was around 20 per cent few years back. The improvement in retail sales has resulted in creating a strong brand value for the company, reduced dependency on low margin project business and improvement in margins.
Please tell us the share of quartz stone and marble segment in the top line?
Asian Granito is one of the leading players in the composite marbles and quartz segment nationally. Quartz is a premium product and 80-90 per cent production is exported to USA, Europe, Australia and other developed markets. Quartz and Composite marbles segment reported turnover of Rs. 279.7 crore for FY22, growth of 64 per cent YOY as compared to sales of Rs. 169.9 crore in FY21. The Company expects quartz and composite marble segment to grow to Rs. 400 crores in next 2-3 years.
Rapid Fire Round
What is your goal, both on the entrepreneurial as well as at personal level?
We have a vision to achieve Rs. 6,000 crore in topline in the medium to long term.
What drives you and what is your philosophy of life?
I believe in power of positive thinking and lives by the motto that “every challenge is an opportunity”. Think big, follow your dream and strive for excellence in whatever your do.
Please share the most memorable / Eureka moment for you.
The most memorable moment in my life was the day when we launched first lot of tiles from tiles facility.
Whom do you consider as your inspiration/Idol?
Mr Ratan Tata is one such entrepreneur that inspires me the most. We have a vision to take Asian Granito India Ltd. to the heights at which Mr Tata has taken the Tata Group.
What is your message to young entrepreneurs?
If you’ve got an idea, start today. There’s no better time than now to get going. Success comes down to hard work plus passion, over time. If you work really, really hard over a long period of time, it will pay off. The biggest risk is not taking any risk. In a world that changing really quickly, the only strategy that is guaranteed to fail is not taking risks. Every startup should address a real and demonstrated need in the world. If you build a solution to a problem lots of people have, it’s so easy to sell your product to the world.
How you make a balance between your various passions?
For every businessman, striking a good balance between personal and professional life is very important. Anything done for self is nature, whereas anything done for others is culture. By engaging myself towards little contribution for the society, I feel immense satisfaction and calmness which in return gives me strength and positivity in my professional life too. With a culture of giving back to the society, Asian Granito undertakes many initiatives in the larger interest of the community especially in the area of education, save girl child, healthcare, rural development, women empowerment and environment.
Which of your personality traits, you feel, has not been widely known?
A good entrepreneur is one who constantly challenges himself for better and has the courage to convert adversity in an opportunity. Uncertainty and change are the only constants in any business and one has to strive for excellence through continuous improvements, innovations and embrace change for a better tomorrow.