NEW DELHI: Makers of bathroom fittings are having a tough time recovering their dues from builders on time because of a prolonged slowdown in the real estate sector.
While this issue persists across India, the situation in the Delhi-NCR market is particularly acute.
“We are suffering, not in terms of orders, but in billing orders,” said Pau Abello Pellicer, managing director, Roca Bathroom Products, the company which operated the Parryware brand.
Pellicer said that his company has received hundreds of crores in orders from builders but since there is a slowdown in the real estate market and construction of many projects has stalled, many of those orders have only been partially executed.
Another major player Cera Sanitaryware also complains of similar issues with builders.
“Liquidity is a big issue for real estate players, especially in north India, these days. We are being very careful with payments from them,” said Atul Sanghvi, executive director, Cera.
For Hindware, project sales comprise just 20% of the total sales, with sales through its retail distributor network grabbing the larger chunk of 80%.
Sandeep Sikka, chief financial officer, Hindustan Sanitaryware & Industries Limited (HSIL), the company which runs the Hindware brand, said, “Markets like Noida and even Gurgaon are witnessing these kind of issues lately.”
And understandably so.
The first half of 2016 witnessed the lowest number of new residential launches in the last three years across the top eight cities, to 107,120 units, a 54% drop from 232,490 units launched in the first half of 2013, according to property consultancy Knight Frank India.
National Capital Region has witnessed the sharpest drop in new launches, at 41% from a year ago period, followed by Chennai and Pune, at 36% and 32%, respectively.
“All these big and medium real estate players have hundreds of crores in the pocket but when the delivery date for our fittings arrives and we have a purchase order, they don’t honour the deal for reasons like site not ready, permits, etc, and thus there is a huge delay in billing and deliveries,” claims Pellicer of Roca Bathrooms.
Over-dependency on builder contracts, going overboard on commitments and underutilisation of retail network are the major reasons for such problems, according to Sandeep Shukla, head of marketing communications, Jaguar Group.
Jaguar has a 60:40 sales ratio between retail network and projects. “This has held us in a relatively comfortable position. However, we are overly judicious in working with fly-by-night players and are not running after projects blindly,” he said.
Around 65-70% of the sales of the company comes from crome or metal bathroom fittings, and around 20-25% from ceramic sanitaryware products.
India sanitaryware market is growing with the CAGR of 12% to 15% from last four years, a report by Research and Markets named India Sanitaryware Market Outlook 2021. However, the market is estimated to grow with the CAGR of 20.87% over the period of six years due to increasing disposable income, rapid urbanization and changing end user preferences.
Credits ET Realty