Outsourcing has been a long-running issue with Asian ceramics manufacturers, but developments in Sri Lanka, where one of the industry’s key Groups has revealed it has extended its production to India and China, perhaps reveal a changing dynamic within the continent itself.
Royal Ceramics group, the dominant domestic tile and sanitaryware manufacturer, has expanded its contract manufacturing operations and imports from India through a subsidiary to exploit lower costs there.
Competition from cheap imports intensified last year, Royal Ceramics chairman Dhammika Perera told shareholders in the company’s annual report. But he said escalating trade tensions between the US and China will provide opportunities for Sri Lankan manufacturers.
“We are gearing ourselves to become positioned as a viable alternative manufacturing destination.”
The Royal Ceramics group invested four billion rupees in expanding production last year, mostly in tiles.
“A large portion of this investment was in Lanka Tiles which now has a state-of-the-art plant with the capability to manufacture the larger sizes required in line with global design trends,” Perera said.
The group’s tiles manufacturing capacity increased to 41,000 square metres a day from 35,000 square metres a day, Royal Ceramics Managing Director Aravinda Perera said.
“Lanka Tiles also expanded the number of contract manufacture operations locations in India from eight to thirteen factories during the year to compete effectively with the imported tiles on price while widening our portfolio,” he said.
Lanka Tiles had ventured into India a few years ago with a partnership deal with Ambani Vitrified (Pvt) Ltd. to make digital glazed vitrified tiles at its plant in Morbi, Gujarat, ceramic cluster.
It is not just tiles either. Lanka Ceramic – which is part of the group, has said it has revived its sanitaryware business with production outsourced to China.
“The company went back to its roots and revived the pioneering business arm of sanitaryware,” Managing Director Mahendra Jayasekera said.
“Further, in order to provide superior quality products into the local market, the company has outsourced production to China to provide deluxe brand sanitaryware,” he told shareholders in the company’s just-released annual report.
Jayasekera said Lanka Ceramic experienced a downturn during all four quarters of 2018/19 due to work disruptions and restructuring and also delays in getting mining licences.
The slowdown in the construction sector also had weakened demand for ceramic products like tiles which had a ripple effect on demand for raw materials like clay. These are certainly interesting developments, and one wonders how many others may soon mirror this approach…
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