Once the stronghold of screen printing, the ceramic tiles factories in Morbi, Gujarat, have embraced the digital technology in a big way. How this came about and what happened next? Asha Sampath, founder and head of growth and brand strategy practice at BrandHorizon tells Noel D'Cunha Once Morbi, the municipality of Morbi district in Gujarat, was a princely state ruled by the Jadeja clan of Rajputs. Located on the river Machhu, around 60 km from Rajkot, today, Morbi is a hotspot of ceramic activities, producing around 70% of the country’s gross ceramic production and 5% of the world’s needs. There are around 600 ceramic manufacturing units with production worth Rs 4,000 crore per annum. The main products are ceramic tiles, vitrified tiles, floor tiles, glazed wall tiles, lustre wall tiles, sanitary wares, porcelain tiles, spartek tiles, glaze tile, roofing tiles and mosaic tiles. Morbi’s ceramic factories belong to small and medium scale units which together comprise the largest ceramic production in India. In this sense, in Morbi, ceramic production is a communal activity, which involves family members, relatives, friends and neighbours, with everyone chipping in.
A typical ceramic unit in Morbi is funded 50% by the owner, with funding support from friends and relatives. The rest 50% is raised through formal external funding. Of the 50% finances raised by the owner, around 30-35% will be his own and the rest 15-20% will come from relatives. While the relatives offer floating support, they usually commit with the venture for two to three years." Asha Sampath, BrandHorizon
And the business model? Sampath says it’s very difficult to explain the business model of a ceramic unit in Morbi. To begin with, unlike a typical business venture, a typical ceramic unit in Morbi is not driven by a formal project report with a projected payback logically worked out. “There is rather a cluster culture, and often, a good element of emotion drives the business decisions. These emotional drivers can be a combination of multiple factors,” Sampath adds. To be fair, a good percentage of the units in Morbi are owned by the Patel community, and therefore it is “a formidable community cluster”. Going digital For a long time, screen printing was the name of the game at the ceramic units in Morbi. In the recent years, however, most of the units have shifted to digital printing. Is it because of the extreme competition among ceramic manufacturers that if one invests in a certain technology all the other follow? Sampath believes rather than competition, the digital revolution started as a result of the positive and aggressive spirit of the Morbi players to keep pace with the trend. “Thereafter, the potential it offered to meet international standards and to scale up exports took the revolutionary trend forward. Today, according to unofficial sources, there are 400-odd digital printing units in Morbi,” she says. However, there are still some reactive and lustre effects that the digital technology has failed to replace, even though it is not a significant market segment in the overall context. Research is also on for digital inks compatible to soluble salts technology. And what about screen printing which the digital technology ousted? Has it become extinct? “Screen printing is still being used for double charge and soluble salts technology based vitrified tiles,” says Sampath. Also, there are several floor tile units yet to convert to digital technology while most of the wall tile units already have. Has it affected local employment? On the contrary, says Sampath. The shift to digital has generated more employment. With the digital technology, quality has improved. So has productivity. “Not only has export market gone up but the local production has also scaled up, thereby increasing employment opportunities. In fact, today, after the advent of digital technology in Morbi, China has been completely wiped out of several export markets,” states Sampath. Has it affected local employment? On the contrary, says Sampath. The shift to digital has generated more employment. With the digital technology, quality has improved. So has productivity. “Not only has export market gone up but the local production has also scaled up, thereby increasing employment opportunities. In fact, today, after the advent of digital technology in Morbi, China has been completely wiped out of several export markets,” states Sampath. "Today, there is a good spread of digital print machine manufacturers having a balanced market share. There is a good competition, both internally and internationally, for digital inks, as many players have established presence. In terms of technology, it is already moving from four-colour to six-colour printing. However, there are areas of improvement, such as advanced colour management with special effects, extended applications, and so on." Asha Sampath, BrandHorizon There are inherent advantages of screen printing and digital technologies. When one talks of these technologies in the ceramic industry, how do they compare in terms of pricing of the final products, return on investment and cost of operations? Sampath says as of now, the advantages of digital printing have clearly overtaken screen printing. “While significant advantages from differential pricing may be restricted to export market, the increased productivity, low inventory holding costs and the flexibility to customise that digital printing offers, have clearly demonstrated a convincing payback. High level of product differentiation is possible through digital technology and it assures justified returns,” she adds. Sampath says there are about 600 units, of which all wall tile units have already implemented digital technology. In the case of floor and vitrified tiles, it is under process. Nearly 400 units have already been installed or are in the process of being installed . India is the third largest ceramic manufacturer after China and Brazil. Have these countries also seen the digital revolution? Sampath says, aye. She says 70% of the production in Brazil is on inkjet printing. “Probably, in Brazil, the transformation has been more evolutionary than revolutionary, considering that the market there is not as fragmented as it is in India,” she adds. In China, on the other hand, like India, the transformation has been more rapid. In 2013, China already had 1,600 units of digital printing facilities, while the estimated demand for printer for ceramics was around 3,000 units. Brand Morbi Despite this technology revolution, and despite it being the third largest ceramic manufacturer in the world, it seems not many tile brands have emerged from Morbi. As a result, it has failed to boost the quality of print or the print business. It has largely remained in the realm of being just a necessity without any value addition, with just one print company with a brand new four-colour press. Sampath begs to differ. She clarifies that Morbi is not the third largest ceramic manufacture, but India as a country is. There are at least six to seven national players who make up for 30-35% of national production. Sampath says there are several extremely successful units in Morbi today, although they may not be reaching out to the national market by their own brand names. “Some of them have established brand presence beyond Morbi, while several others have established competitive edge not just in terms of cost efficiency but also in terms of technological advancement and customisation,” she argues. In fact, Sampath says, Morbi tile producers were one of the first to embrace digital technology ahead of the other players in the national sector. “Today, there are at least 400 players who have shifted from screen printing to digital, and now are moving to six-colour press options for their second lines of facility. However, the competitive edge of several of these successful players are actually being effectively utilised by the national sector either as JV partners or outsourcing partners,” she adds. To sum up, there are several high potential brands in Morbi but branding has not assumed greater significance as yet in relation to the national brands. So, the question is not the lack of brand value but the lack of brand communication and awareness. What is the next big thing for the ceramic players of Morbi? “The next big thing is to find a way to integrate digital technology with the entire production line,” says Sampath. In case of tile technology, large format tiles could take a while to reach Morbi, as it needs big investment in machinery. "Morbi tile producers were one of the first to embrace digital technology ahead of the other players in the national sector." Asha Sampath, BrandHorizon DISCLAIMER : Views expressed above are the author's own.