Visions in Porcelain

ALTHOUGH IT'S THE MOST IGNORED PLACE IN A HOUSE, it’s also where the best ideas originate. It’s where Archimedes had his eureka moment centuries ago. For contemporary American singer and actress Alicia Keys, it is a study. “If I want to be alone, some place I can write, I can read, I can pray, I can cry, I can do whatever I want—I go to the bathroom,” she once said. Others improve their general awareness by sitting there and reading something like the popular Uncle John’s Bathroom Readers series.

That a bathroom can be the most inspiring corner of the house as well as a style statement is something the Rs 1,000 crore HSIL (formerly Hindustan Sanitaryware and Industries) realised early on. Its popular brand, Hindware, has managed to retain the top spot in India, despite large global brands such as Kohler and Roca entering the market. HSIL has stayed ahead by evolving its designs and focussing on specially created products, smart branding, and a slew of launches.

Its efforts have paid off. HSIL’s revenues from the building products division (mainly sanitaryware) has more than doubled to Rs 502 crore in fiscal 2011 from Rs 247 crore in fiscal 2007. The company has maintained the momentum, with the division growing by 35% during the year ending March 2011 and 30% year-on-year during the April-June 2011 quarter. HSIL’s stock has jumped by 60% in the last six months, compared to a mere 5% growth in the Sensex during the period. This makes HSIL one of the top performers among smaller stocks.

Sandeep Somany, joint managing director of HSIL, attributes much of the company’s success to the new generation’s desire to be fashionable. “Sanitaryware has evolved from being a utilitarian product to a lifestyle item. It’s no longer uncommon to spend a few lakhs doing up a bathroom,” he says. Aesthetics is now the biggest draw. His insight: a purchase is fashion-led rather than function-led.

It wasn’t always like this. Till around 2004, the company (set up in 1960) made basic—and boring—bathroom fittings. But by the early 2000s, Indians wanted more: aspirations were soaring and there was a growing market for the foreign goods flooding India. Somany sensed that with Indians “desiring the best”, the bathroom could no longer be just another corner in a middle-class household. He decided to turn his products from ceramic to works of art. With global brands coming in, he knew if he didn’t, someone else would.

To turn bathrooms into art is not easy. It takes the dexterity of a sculptor and the technical finesse of an engineer to come up with a water closet that can take pride of place. So while designers and clay modellers work on the look and feel, hydraulic engineers ensure the most efficient utilisation of water in a commode. A decade ago, a typical western style commode consumed 9 litres of water per flush; now there are models that use just 1.5 litres.

Today, HSIL’s creative team, which includes foreigners, draws on the talent of people from diverse backgrounds—graduates of the National Institute of Design (NID), Ahmedabad, and Chennai’s School of Fine Arts, art diploma holders, graphic designers, ceramic engineers, and hydraulic engineers. Some have learnt the skills on the go.

Hindware designer Prachi Garg, one of the many NID graduates, sits at the top of the design hierarchy. Their responsibility is to come up with cutting edge ideas and concepts. Designers and modellers such as Sanjeev Kumar use software to convert sketches into workable 3D designs including a closet’s hidden water channels, in many ways the soul of a commode. These are the ones who ensure that a press of the flush generates maximum power using minimum water and without any mess.

Once the 3D model passes the theoretical tests, it is passed on to clay modeller Pradeep Karmakar, an industry veteran with nearly 25 years of experience, and his apprentice S. Gopinath, a graduate of School of Fine Arts, Chennai. Karmakar and his team take these 3D designs and bring them to life. A few pilot batches are made and tested. If the product works, the design is sent to the die-making department to be produced on a commercial scale.

As HSIL’s ambitions have grown, so has its creative team. Five years ago, it employed five designers, now a 35-member team works at its two factories in Bahadurgarh, Haryana, and Hyderabad, and at the corporate office in Gurgaon. This focus on design has paid off. With Indian customers becoming more choosy, designs fade in a matter of weeks. Last year, the company launched 95 new products or their variants. In all, Hindware has around 3,000 different products in its portfolio. However, there are only some 300 available for sale at any given point. “At the beginning of every month we receive a production plan from our sales and marketing team,” says R.B. Kabra, president, building products division, HSIL. Supply is based on the sales and marketing team's estimate of demand.

Competition has not been idle. HSIL has to contend with aggressive marketing from Chennai-based Parryware (now owned by Roca) and Ahmedabad-based Cera Sanitaryware. “Roca is the current global leader with around 30 million pieces manufactured in dozens of factories spread across Europe, South America, and Asia,” says Somany.

But HSIL scores when it comes to brand strategy. It is the only company in the industry with multiple brands to target various sub-segments of the market. “The Indian market is diverse and fragmented. So we have products that cost as low as Rs 250 to our latest water saving closets that cost Rs 18,000 a piece,” says V. Krishnamurthy, senior general manager, marketing, HSIL. The strategy has helped the company to maximise its market share without sacrificing brand equity.

The company has also scaled up operations. “In our industry, for a unit to be viable, it must manufacture at least a million pieces a year. We now have two such units, an advantage nobody else enjoys,” says Somany. By 2013, the company’s manufacturing capacity is likely to grow to 5 million units spread across two locations, making it one of the top manufacturers in the Asia Pacific region by volume. HSIL has also acquired Benelave, one of Britain’s top selling bathroom fitting brands, and markets Keramag, a high-end German brand.

To close the loop in marketing and distribution, HSIL has ventured into retailing with its chain of Evok stores, owned and operated by a wholly owned subsidiary. Besides selling Hindware’s traditional products, Evok offers an entire portfolio of home interiors, including furniture and furnishings. Beginning with two flagship stores in 2008, the company now has a dozen outlets in key cities and plans to increase this to 50 over the next five years.

However, sanitaryware is still a small industry in India. According to Somany, the total size of the market is around Rs 2,000 crore. This is less than 2% of India’s consumer durable goods market. According to the Central Statistical Organisation, Indians spent around Rs 1.39 lakh crore in buying consumer durables in 2009-10.

There are three reasons for the small size of the sanitaryware market—low per capita income, shortage of housing, and lack of water supply and sewerage infrastructure. “Connectivity to underground sewer lines is a pre-requisite for a household to invest in a modern bathroom. Only 40% of homes in India are connected,” says Somany. As more infrastructure is created, the industry will grow, he adds.

This makes India a clean slate for manufacturers of modern and premium bath and toilet products, and HSIL has just scratched the surface.