Advertisment

HSIL expects to grow faster than the industry

The parent company of Hindware with ad spend of 6-7% of its revenue sees greater productivity coming out of marketing as the decade nears its end

author-image
BestMediaInfo Bureau
New Update
HSIL expects to grow faster than the industry

After being in a phase of sliding growth for almost a year, the sanitaryware market is now showing an upswing, with the market leader HSIL expecting the industry to grow anywhere between 10-12 per cent in coming months.

publive-image
Manish Bhatia

“Structural reforms have happened in the economy and things will only improve from here. It is still early days after GST and things are stabilising now. The GDP is expected to be a percentage or two better than what it has been in the last two months. So, if say the GDP grows by a percentage point then the industry grows by 2 per cent. The growth will typically be 1.5 times the GDP growth,” said Manish Bhatia, President, Building Products Division, Hindustan Sanitaryware & Industries Limited (HSIL), the parent company of Hindware.

The entire real estate industry, which was already witnessing a slow demand, took a beating as the government rolled out demonetization, RERA and GST in a quick span. The moves led to a slowdown in large scale construction projects across the country.

But with government's Infrastructure push, bank's recapitalization and easing of lending rates, the real estate industry is now hoping for a revival.

The company is also expecting to grow at the same rate as the industry. Further boost to its sales is likely to come from the consumer business category such as kitchen appliances, water heaters, air coolers, water purifiers and air purifiers. In the current year, it expects to get Rs 240 crore from this category.

Splitting the industry growth into retail and projects (real estate), Bhatia agreed that the real estate business in the country has been stunted due to various reasons like credit supply, implementation of RERA and availability of raw materials and that it is a cause for concern for HSIL.

“Across India, real estate has seen a slow-down and that area is a cause for concern. But our retail business is going very well and it is growing in double digits. Among our competitors we are the most retail index company. More than 80 per cent of my business is retail,” said Bhatia.

The fact that the industry is 65 per cent retail and 35 per cent projects has meant that HSIL has the edge. HSIL also intends to grow faster than the industry and gain market share by increasing their consumer preference.

“Our objective is very simple. For every consumer who wants to make a bathroom in India we want to be the preferred choice. Instead, of going after a percentage growth we would rather look at each brand and see how can we increase our consumer preference. We are looking at a consumer preference jump of about 5-7 percentage over the next couple of years which should reflect in our market share growth automatically,” said Bhatia.

Currently, HSIL holds a market share of about 30 per cent in the ceramics category which is a Rs 3,500 crore strong market. In the showering category which is Rs 6,000 crore strong, HSILis all set to become the second biggest player with a market share of 8-10 per cent by the end of this year.

“If you combine both the ceramics and the showering category about 65 per cent of it is organised and 35 per cent unorganised. When you combine both the categories we are the second biggest player in the industry,” said Bhatia.

HSIL posted a total income of Rs 2,237.64 crore in the year ended March 31, 2017. Last year the company had posted revenues of Rs 2,143.20 crore for the same period. Building products is about 50 per cent of the overall business that HSIL does and there are four brands under the building products umbrella.

Speaking about the contribution of the brands to the overall revenue of the building products business, Bhatia said, “Hindware, being the lead brand, accounts for about 55-60 per cent of the business, 25 per cent comes from the Italian collection and then the other brands including Alchymi make the balance.”

Much of HSIL’s marketing is celebrity centric, Jacqueline Fernandez for Queo, Shah Rukh Khan for Hindware and Manish Malhotra for Alchymi. While, Bhatia mentioned that their annual marketing spend is up to 6-7 per cent of their revenue, he also stressed on the fact that a higher marketing budget wasn’t the point but reaching the right TG was.

“The trick today is not a higher marketing budget but rather it is about having targeted spend on targeted consumers. The multitude of media and tools available today can result in very effective utilisation of your marketing budget. I see greater productivity coming out of marketing as we near the end of the decade,” said Bhatia.

According to Bhatia, the biggest challenge that this category poses, as far as marketing is concerned, is the fact that it is governed by planned purchase and not impulse purchase.

“If you are not looking to renovate your bathroom in the next six to nine months, you maybe oblivious to the category. The cycle of renovation is somewhere between 7-10 years. So, finding the right consumer when they are in that renovation zone is probably the biggest challenge for marketers in the category today,” said Bhatia.

Info@BestMediaInfo.com

Hindware HSIL
Advertisment