Bengaluru: Bathroom fixtures market leaders Hindustan Sanitaryware and Industries Ltd (HSIL Ltd) and Jaquar and Co. Pvt. Ltd expect to benefit from the recovery in the real estate market and the government’s focus on affordable housing. Both firms expect their value or economically-priced brands to grow at a faster clip than those in higher price segments.
HSIL expects the basic portfolio under its flagship Hindware brand and economy brand H Vitreous it launched about a year ago to gain. H Vitreous in particular is expected to double revenue growth in 2017-18 and 2018-19 from the previous years. The brand was launched about 17 months ago and earned Rs40 crore in revenue in 2016-17.
Jaquar expects a similar curve for its Essco value brand, which earned Rs260 crore in revenue in 2017-18. It is expected to grow 38.46% to Rs360 crore in 2018-19 and hit Rs800 crore by 2022.
HSIL is the No.1 in terms of market share in the bathroom and sanitaryware market, while Jaquar ranks fourth, according to data from Euromonitor International.
“We are fairly placed as a country because growth is not stopping anywhere—in luxury, premium or value. But the real success story will come from affordable housing, from people who want to get two-bedroom and small-budget houses, there we definitely see Essco clicking," said Sandeep Shukla, Jaquar’s marketing head.
For HSIL, 70% of its revenue comes from non-premium brands, with a majority contributed by its Hindware family. The Hindware family includes products that are a notch above entry-level in terms of pricing and stretches into the premium segment with its Hindware Italian collection.
Within the affordable housing space, there are two types of building activity taking place, said Manish Bhatia, president of the building products division at HSIL.
“Some builders choose very basic fixtures and cut down on space and frills but won’t compromise on quality, and that’s where Hindware comes in. But entry-level building firms want just branded products and that’s the space H Vitreous operates in," Bhatia said. Fixtures for an entire bathroom—a very basic wash basin, tap and a working closet etc.,—can be done using the H Vitreous brand for just Rs3,500, he added.
When it comes to Jaquar, its eponymous premium label accounts for 65% of the firm’s total bath fittings sales while its luxury brand Artize makes up around 15%. Jaquar’s value brand Essco rakes in the rest.
The government launched its “Housing For All by 2022" programme in 2015, with the Pradhan Mantri Awas Yojana as the anchor.
Several developers have been venturing into the affordable housing space due to the potential sales these projects may generate and to tap into recent government incentives.
This month, Ashok Piramal Group firm Peninsula Land Ltd, known for its luxury residential projects in Mumbai, ventured into affordable housing with a project in suburban Pune.
Also last month, Bengaluru-based Brigade Enterprises Ltd said it has earmarked around Rs3,000 crore for building affordable houses.
Others ranging from National Capital Region-based developer ATS Group to Mumbai-based Group Satellite have also entered the space this year.
“With the number of housing projects and the number of loans being taken for affordable housing, and the government’s push, I think the (growth) numbers targeted by the bathroom fixture companies are quite achievable," said Harminder Sahni, founder and managing director of retail consultancy Wazir Advisors.
But that’s not to say that the premium and luxury markets are not growing because those are doing well in value terms, Sahni added.
Indeed, Jaquar expects revenue from its luxury label Artize to grow 44% to Rs180 crore in 2018-19 on an annual basis.
HSIL’s imported luxury brand Queo earned Rs55 crore in 2016-17. The company’s bathroom fixtures under that brand start at around Rs1 lakh and can go up to Rs10 lakh.
Last year, HSIL also felt there was a market to be tapped just below the luxury segment and, thus, it launched a super-premium label called Alchymi in collaboration with designer Manish Malhotra. Bathroom fittings under Alchymi start at around Rs75,000 and can go up to Rs3.5 lakh.