GONE are the days when ‘ceramics’ were synonymous with tiles used to decorate home floorings. The material is now used for many other purposes.

“It is now used in the production of items like roller pens to utensils and from bullet-proof jackets to missiles and shuttles,” says the chairman of Karam Ceramics Limited, Irshad Ali S Kassim.

Karam Ceramics — a listed company — holds Rs876 million in total assets. Incorporated on April 4, 1979, it is in the business of manufacturing and selling ceramic walls and floor tiles.

The company maintains a registered office in Karachi and its factory is located at Dah Halkani, Hub Dam Road, Manghopir Road, Karachi. The plant, close to the ‘troubled city,’ bears the full brunt of the law and order situation, and the frequent closure of local markets here is reflected in its depressed sales figures.

The installed capacity of the plant stands at 3.6 million square metres of tiles, which are sold through 200 outlets all over the country, from Karachi to Peshawar and Mirpur, Azad Kashmir.

Published figures show that the company has made a capital expenditure in the sum of Rs435 million in four years (2008-12). And it is, at the moment, in the throes of expansion that would lift its current capacity by 60 per cent.

“The building work has commenced on the 18 acres of land adjacent to the plant, and a Letter of Credit has been opened for the import of machinery from Italy and China. The expanded capacity is planned to go into operation by the end of this year,” the company’s chairman, Irshad Kassim, told Dawn last Thursday.

He said the advantage would be reflected on the balance sheet in savings in ‘depreciation charges’ for three years. And as production and sales rise, the cost of production would inevitably spread thin, translating into positive impact on the bottom line.

The company chief is upbeat about the growth of the ceramic tiles industry. He asserts that growth is led by the rural sector, where disposable income has multiplied manifold due to good harvests. Usage in this sector is expanding at a growth rate of 300 per cent per annum, and accounts for nearly 33 per cent of all industry sales.

Ceramic tiles are widely used not just for decorative purposes in rural Pakistan, but also in plastering walls and plug seepage and leakage. “In low-lying areas that are plagued by water logging and salinity, villagers cover both the inside and outside walls of their houses with tiles so as to fight off the decay,” says Kassim.

He expects that as the housing industry picks up pace, the sale of tiles would inevitably surge, both in rural and urban areas.

In the financial year ended June 30, 2013, Karam Ceramics earned an after-tax profit of Rs4.4 million, translating into earnings-per-share of Rs0.30. Its earnings were Rs5 million in 2011, but dropped to Rs0.6 million in 2012, before bouncing back in 2013.

Sales stood at Rs1.156 billion in 2013, slightly lower than the year ago sales of Rs1.187 billion. The directors attributed this to gas shortages/shutdowns and cut-throat competition in the marketplace.

The tile industry nurses grievances. Industry sources complain that the heavy influx of under-invoiced and smuggled tiles from Iran has jeopardised the local tile industry, which has collectively invested Rs50 billion and provides direct employment to over 10,000 people.

“Importers are paying combined taxes [duty, sales tax, income tax] at a minor rate of Rs10 per sq. metre, compared to Rs100 paid by local producers under the head of sales tax alone,” contends this producer of tiles.

He adds that imported, smuggled and under-invoiced tiles have captured 45 per cent of the market share, leaving local producers in an intense competition for the remaining 55 per cent of the market.

Karam Ceramics Limited has a paid-up capital of Rs145 million. The shareholders’ equity — at Rs271 million — produces the break-up value per share of Rs19. At the stock market, its share was trading last Thursday at Rs20.70. Its board of directors last paid a dividend of 10 per cent to shareholders.

As on September 30, 2013, promoters and directors held 10 million shares, equivalent to 70.5 per cent of the total equity. No institution was a shareholder in the company, and the balance of 0.3 million or 29.5 per cent of paid-up shares were in the hands of the general public.