Royal Ceramic PLC

Marketing Myopia in Royal Ceramic Lanka PLC
1. Introduction to Royal Ceramic Lanka PLC

Royal Ceramics Lanka PLC is a public Limited liability company quoted on the Colombo Stock
Exchange. The core business of the Royal Ceramic group is the manufacture and retail of
porcelain and ceramic tiles under the brand name Rocell. The company operates three fully
owned subsidiaries, Royal Porcelain (Private) limited, Rocell Bathware Limited and Ever Paint
and Chemical Industries (Private) Limited. The groups sanitaryware (bathware) products are
marketed under Rocell Bathware and represent the only range of such items manufactured in
Sri Lanka. Conversely, its paint and allied products are marketed under the brand name
ColorBrite.
In May 2013 Royal Ceramics Lanka acquired 80 % stake of the Lanka Ceramic group at a cost
of Rs. 3 billion. Through this acquisition, Royal Ceramic gained a controlling stake
in Lanka
Ceramic PLC and its subsidiaries, including Lanka Wall tiles, Lanka Tiles,
Horana Plantations,
Swisstek and Uni-Dil Packaging. And also, this acquisition resulted in Lanka Wall tiles and
Lanka Floor tiles coming under the Rocell umbrella, giving Royal Ceramics over 60% market
share in both the local wall and floor tile markets, and placing the brand in an undeniably
dominant position. At present Royal Ceramic group holds the leading position in the local
surface covering (tile and sanitaryware) industry.
2. General background of ceramic industry in Sri Lanka
Ceramic is a one of the most ancient scientific achievement of the man. Ancient man recognized
that clay could be made plastic with water and can be molded. Ceramic in Sri Lanka could be
traced around 500-250 B.C after introduction of Buddhism to the island. Oldest buildings
constructed by ancient people of the island were dagabas. Bricks & tiles burned red clay items,
crude ornamental ware had been produced during this period.
Under Act 19 of 1955 on the 1 st September 1955 Ceylon Ceramic Corporation was established.
The greatest development of the ceramic industry in Sri Lanka achieved during the period from
1970 to 1977. Commencement of mining of quartz and feldspar at Owala-Kikawala,

establishment of porcelain tableware factory with collaboration of Noritake at Matale, production
of mosaic tiles at the Piliyandala factory, establishment of 2 nd kaolin refinery Meetiyagoda,
establishment of a wall tile plant at Balangoda, establishment of ceramic research laboratory,
commencement of refractory factory were completed during this period. Lanka Porcelain Ltd.,
Lanka Wall tiles Ltd., Lanka Tiles Ltd., Lanka Refractory Ltd. and Dankotuwa Porcelain Ltd.
were established as subsidiaries of Ceylon Ceramic Corporation during 1980-1990. However
most of the factories have now become independent units and the Ceylon Ceramic Corporation
now manages only a few brick and tile factories. Royal Ceramics Lanka Ltd began operation as
a tile manufacturing company in 1990 and became a public coated company by 1994. In 2000
Vallibel Holdings bought a majority stake in the company and in 2002 Royal Ceramics embarked
on a major re-branding exercise, which resulted in the birth of the Rocell brand.
Sri Lankan ceramic products can be categorized into:
1. Tableware industry - (Almost export oriented(80-85%) and Noritake Porcelain Ltd,
Dankotuwa Porcelain PLC, Royal Fernwood Ltd are the major producers)
2. Floor Tile & Wall Tile industry - (Large quantity of production is sold at local market and
a small percentage is exported (10%). Royal Ceramic PLC, Lanka Floor Tile PLC and
Lanka Wall tile PLC cater to 60% of domestic market.
3. Sanitary ware Industry - (The only local manufacturer is Royal Ceramic PLC-Rocell
Bathware and its market share is around 50 %. Most sanitary ware is imported to Sri
Lanka from UK, USA, Italy, China and India). However, Royal ceramic sell 94 % of its
products in local market.
4. Ornamental ware industry - (Almost export oriented (90 %). Midaya Ceramic Ltd, Art
Decoration Ltd are the major producers.
3. General background and its impact to the Ceramic Industry

PESTLE analysis is used to analyze the impact of the external environment (macroenvironment factors) on a firm.
Political
At the end of the 25 years civil war, countrys national security and peace have been
established. Political stability is the key to create a favorable foreign investment climate
in a country. Average FDI inflows between 1978 and 2005 were $ 101.1 million and it
was $ 901.6 million between 2006 and 2013.

Sri Lanka ranked one of the best tourist destinations in the world by "The Lonely Planet",
the world's largest travel guide and the digital media publisher in year 2013 after the
political establishment of country.
Economic
The economy continued to expand robustly, creating opportunities for new business
activities throughout the country since year 2009. GDP growth rate, inflation, interest
rates, per capita income, FDI, earning from exports of the country is highly favorable for
better business environment for entrepreneurs . Sri Lanka rose to 89
th
position in global ranking, of 183 countries, partly by strengthening

investor protections and reducing taxes on business, according to an
IFC press release.

Sri Lanka's construction sector has witnessed a boom in recent years with mega
infrastructure projects such as Mattala Airport, Magampura Port, Colombo Port City,
Expressways and these projects creates demands and opportunities for local ceramic
industry (for sanitary ware and tiles).

Countrys tourist arrivals have remained stagnant for 3 decades at 400,000 -450,000
during 1982 to 2009 owing to the terrorist conflict. However, tourist arrivals to Sri Lanka
exceeded 1.5million in 2014 and moreover the governments next target is the optimistic
2.5 million tourist arrivals by 2018. It required construction of an additional 30,000
rooms for the tourism industry by 2018 to fill the gap in availability of hotel rooms.
There will be a good demand for high quality ceramic products such as tableware,
sanitary ware, wall tiles & floor tiles and ornamental ware when comes to constructions
and completion of these projects.

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What are the different categories of ceramic products in Sri Lanka?

How did the ceramic industry in Sri Lanka develop?

Marketing Myopia in Royal Ceramic Lanka PLC

1. Introduction to Royal Ceramic Lanka PLC

1970 to 1977. Commencement of mining of quartz and feldspar at Owala-Kikawala,

3. General background and its impact to the Ceramic Industry

was $ 901.6 million between 2006 and 2013.

position in global ranking, of 183 countries, partly by strengthening

IFC press release.

industry (for sanitary ware and tiles).

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