Crisil feels that players with a low cost position, geographically diversified manufacturing locations and depreciated plants would be better positioned to withstand the impact of current over-capacity in the industry. The capital structure of a company would also determine its pricing flexibility in the current scenario. In addition, the marketing focus of the players is expected to shift away from the institutional project segment in favour of the retailsegment.

"Given the high capital intensity of the ceramic tiles industry, the debt usage levels of many players in the industry are considerably high on account of largely debt funded expansion projects over the last 2-3 years, " Crisil has said in its outlook report. In view of the pressures on profitability and cash flows, the financial ratios including interest coverage and debt service coverage ratio are likely to be impacted adversely for the major ceramic tiles manufacturers.