Indian stone in the U.S.: A decade of change

August 4, 2004
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In 1993, the stone industry in the U.S. found itself in a time of transition. The large-scale architectural projects that were predominant during the 1980s had all but dried up, and stone suppliers were looking for new avenues for selling. At the same time, stone-producing companies in India were being equipped with state-of-the-art machinery from Italy, and they were geared for exporting their unique stones around the world. Ultimately, the American market became a major target for Indian stone exporters. U.S.-based companies first took in granite tile, followed by slate tiles and then slabs and cut-to-size work. Today, India is the leading exporter of slate to the U.S., and it is the third largest exporter of granite to the U.S., behind only Italy and Brazil.

Although growth was gradual during the 1980s, Indian stone became more and more prevalent in the U.S. marketplace over time, and it began being specified for both residential and commercial applications later in that decade. One of the first major suppliers of Indian stone in the U.S. was MS International, now based in Orange, CA, which supplied Premium Plus granite for the Vietnam Memorial in Washington, DC, during the early 1980s. But this high-profile project did not necessarily open the door for Indian granite as a building stone at the time, according to Manu Shah of MS International. “Black granite was popular in monuments, but it wasn't until the late 1980s that black slabs and tiles became popular in the construction industry,” he said. “Until then, no one wanted black in their home. People were treating black as the color of death.”

Black granite from India eventually became more and more popular in the U.S., particularly a material called Black Galaxy, which was accented by flecks of gold. In fact, the very name “Black Galaxy” was trademarked in the U.S., although there were other Indian black granites on the market as well.

In subsequent years, colored granites such as Ruby Red came into vogue, and Indian slate also grew in popularity -- mostly in a tile format. These developments were bolstered by capital investments by stone producers within India, particularly during the early part of the last decade. “There was new capital in India. By 1990, there were lots of companies -- as many as 300 -- who began moving into stone production,” explained Manu Shah, who added that these investments provided a jolt to the Indian stone industry. “Most were financed by banks, but the banking industry in India is not as efficient as that in the U.S. Companies were seeing interest rates in the high to mid-teens.”

Government incentives encouraged Indian companies to export their stone production, Manu Shah said, as “export oriented units” (also known as EOUs) were not required to pay income tax on revenue from exports -- provided they kept the money in the company.

All of these developments resulted in tremendous growth for Indian stone exports to the U.S. over the past decade. Overall exports of Indian stone to the U.S. grew from $21.1 million in 1993 to $138.8 million a year ago. More specifically, granite imports increased from $17.6 million to $97.2 million; slate imports increased from $2.3 million to $31.2 million; and marble imports increased from $1.2 million to $10.4 million.

But despite the major increases, the stone industry within India -- as well as Indian stone distribution in the U.S. -- has been somewhat variable. Ironically, the major importer/distributors of Indian stone from a decade ago no longer specialize in stone from India. In fact, most now rely on stone from elsewhere in the world -- particularly Brazil -- for much of their sales. Last year, exports of Brazilian granite to the U.S. totaled $127.70 million, placing it as the second largest supplier of granite to the U.S. -- one spot ahead of India.

“We are very active in Brazil, and that trend will remain,” said Rajendra Kankariya of Lotus Natural Stone in Englewood, NJ, which was established in 1991 as an importer/distributor of Indian stone. “There are approximately three times as many colors of Brazilian granite than can be found in India. Production capacities in Brazil are also higher than those in India.” Overall, Kankariya said that the quality levels reached by top Indian companies and top Brazilian companies are comparable.

Indian stone distribution

During the early part of the 1990s, Indian stone importers in the U.S. were selling material to a broad range of suppliers. Ravi Johar of Southland Stone in North Hollywood, CA, recalls working with several major tile distributors during that time, including companies such as Dal-Tile and Del Piso. “Dal-Tile wasn't doing any stone, and within six month they were buying $250,000 to $300,000 [of Indian stone] a month from us,” Johar said.

Uday and Mahesh Patel, owners of Instile Stone Corp. in Rahway, NJ, also cited a high volume of Indian stone sales in the early to mid-1990s. The company had worked with Grapco Granites of Calcutta, India, since the 1980s, and began operating under the Instile name in 1994. “The early days were good,” Mahesh Patel said. “Inventory was strong, and we had a 1,000-square-foot showroom in Carteret, NJ. We saw $6 million in annual turnover with five workers.” Instile's success in the Northeast prompted the owners to expand in other markets, and they opened facilities in Atlanta, GA, Charlotte, NC, and Anaheim, CA, all in partnership with other individuals. (The company has since consolidated its operations to New Jersey and New York.)

The product lines for Indian stone grew along with the volume. In addition to tiles, suppliers began stocking slabs in the U.S. Kankariya said that Lotus diversified into slab distribution in 1995 after several years operating solely as a tile supplier. Today, he reports that slabs comprise 90% of the company's business.

A different approach was taken by Stone-Tec in Garland, TX, another firm that specialized in Indian stone during the 1980s and 1990s. To distinguish itself from other stone suppliers, Stone-Tec always covered all aspects of the trade, including importing, distribution, fabrication and installation. “From the very beginning, I wanted a turnkey operation,” explained Rupy Shah of Stone-Tec. “When I came to Dallas, there were companies where you could buy stone, but someone else had to fabricate it, and someone else also had to install it. And if you ended up with second quality stone, the buck was always being passed. So I decided that if I was going to do something, I wanted to have complete control over the product.”

Changes in the trade

Although Indian stone exports to the U.S. grew over the past decade, buying habits also dramatically changed the face of the industry. Companies that previously had been purchasing Indian stone from U.S.-based importers began buying direct from India, and the advent of the Internet hastened this trend. “We were educating Dal-Tile on a day-to-day basis, and we helped them set up their own stone program, but within 18 months, they created their own buyer for stone,” said Johar. “With that volume, they were able to begin importing directly by 1996. Companies were able to buy containers on their own, and everyone became an importer, so there was no real role for someone to import and distribute. Anybody who did $3 to $4 million of business became an importer. Better communication and Information Technology have stream-lined this. This changed the nature of the business. We used to ship truckloads out every week -- to Denver, Utah, Oregon. Then this stopped. At the time, 40 to 50% of our business was shipping. Now, 30 to 35% is projects and 65% of business is from local buyers and contractors around the immediate Los Angeles area.”

Mahesh Patel also said that the distribution structure for Indian stone has changed dramatically. “There are a lot more players today, and the competition is intense,” he said. “Unfortunately, people are mixing quality to keep the price down. Also, people are buying off the Internet. There are auctions for second-quality material. Even fabricators and tile stores are buying direct. We don't see a future for mid-range distributors. You are either seeing very small owner/operators or larger companies that make money on sheer turnover. They can buy cheaper and create turnover faster. No one specializes anymore.”

Because of these changes, virtually all of the Indian stone specialists from a decade ago no longer fulfill that role. A prime example of this is MS International. Even though the company's roots are in the Indian stone industry, Manu Shah is quick to point out that it is inaccurate to refer to MS International as an “Indian stone supplier.” In fact, he reports that only 45% of MS International's sales are comprised of Indian stone. The remainder of sales are stones from Brazil, Turkey, China, Mexico, Spain and Italy, among other countries. And as the company diversified, it also grew tremendously, increasing sales by a factor of 10 over the past decade. Today, MS International is one of the largest stone distributors in the U.S., with 550,000 square feet of space at its headquarters in Orange, CA, and other facilities in Chicago, Atlanta, New Jersey and Dallas. Currently, the company has 20 million square feet of material in stock at the five warehouses, and two more facilities will be established later this year.

According to Manu Shah, changes in stone distribution will continue. “Sales of stone -- and even porcelain tile with a stone look -- are growing, and this comes at the cost of the carpet industry,” he said. “In Arizona, for example, 80% of new homes have no carpet. They have rugs, but no carpet.” As a result of this trend, he said that individual orders for small quantities of stone will become more prevalent and will comprise a higher percentage of overall stone sales in the U.S. These types of sales, he said, will be handled by “Big Box” retailers such as Lowes and Home Depot, as well as other flooring retailers who formerly specialized in carpeting.

Architectural/design products

While increased volume and product diversification have proved successful for MS International, other major players are combating increased competition by entrenching themselves in the field of architectural work and design products.

For well over a decade, Southland Stone has been working on large-scale commercial and residential projects. “We have worked in the U.S. and in other parts of the world,” said Johar. “We have been involved in projects in Japan, China, Taiwan, Thailand, Poland, Turkey, Holland and Canada.”

According to Johar, the company's work in the architectural field can be attributed to his solid relationships with members of individual firms. Some of Southland Stone's longest associations have been with prominent Los Angeles area firms such as the Jerde Partnership and Gensler, and the company has also maintained “very personal relationships” with other architects throughout the country.

But while the supply of architectural projects has been satisfying for Johar, he stressed that the nature of this work can be unpredictable. “You can wait two to five years before actually supplying the stone, so you have to maintain other business interests to sustain yourself,” he said.

Johar also pointed out that stone “brokers” are another challenge in supplying stone for architectural work, and that general contractors are often acting as their own stone suppliers, which can lead to problems. “There seem to be more people who are in the industry with little or no knowledge in stone,” he said. “Several large companies have disbanded their architectural departments.”

In Texas and throughout the Southwest, Stone-Tec has been supplying Indian stone for architectural projects for many years, and it has expanded its product selection to meet the changing needs of the architectural community. “We are involved with many other materials [besides Indian stone],” explained Rupy Shah of Stone-Tec. “We are supplying Rocamat French limestone for projects and for wholesale. French limestone is now 20% of our business, and Indian stone is 35 to 40%. We are also supplying a good bit of Jerusalem Stone as well as material from Italy.”

Expanding their import range allowed Stone-Tec to offer more options to the commercial market. “Sometimes [architects and designers] don't want Indian stones, so we would have to get involved with other importers, and quality was a problem,” Rupy Shah said, adding that by importing the stone themselves, they could control the quality.

On the East Coast, Instile started a fabrication shop in 2002, supplying seven to 10 kitchens per week, and also fabricating stone for light commercial work. It also supplies stone for larger commercial projects such as hotels and multi-unit condominiums. Projects have been completed across the Eastern seaboard, from Florida to Maine and Vermont. Some examples of recent projects completed by Instile are the Hilton Garden Inn and Marriott Courtyard.

And to differentiate itself from its competitors, much of Instile's inventory from India is not traditional tiles and slabs, but “designer” options that utilize unique patterns and materials. Included are exotic Indian materials such as Lady Dream and Golden Sunset as well as the “Instile Metallics” line of mosaics. These cementitious “hardback” mosaics combine Indian stone with metal pieces, and they are fabricated in India. Mosaic pieces and tiles are also offered with an abrasive/chemical finish, providing yet another design option.

With the shift in product lines, Instile has become more localized in its sales and marketing. To support sales of its architectural and designer products, Instile operates a retail location in Manhattan.

Lotus has also developed more specialized product lines for architecture and design. It recently developed the Lotus Natural Stone Series for contemporary projects, and it is offering a line of landscape products.

Quality issues

With increased volume and sources for Indian stone, quality control has been cited as a major concern by veteran suppliers in the U.S. To ensure quality, major importers are employing quality control teams within India to make sure that the material being shipped to the U.S. meets the high standards of the American market.

“Our business is still based on the model of quality first,” said Rajendra Kankariya of Lotus Exim. “There are many factories in India, but all do not focus on quality.” Lotus has prepared its own inspection team, which is still in place today. All stone goes through a rigid quality control program and has to receive a stamp of approval before it leaves India.

Veteran suppliers of Indian stone have found that customers are still willing to pay for quality assurance. “I find that people who come to me do so because they want quality,” said Rupy Shah of Stone-Tec. “The quality of Indian stone is there, and stones from India are very hard for commercial projects. You have to be careful where you are buying it from, though. The quality can be like day and night. I am very fortunate, and Gem and Imperial have backed me up all the way as suppliers. No matter what happens, I will not accept something that is not up to quality, but they've never even tried to send something that was second quality.”

Ravi Johar of Southland Stone agreed that there are customers who are willing to pay for quality. “We never sell on the basis of price,” he said. “We are surrounded by other suppliers, and are not interested in competing with them on the basis of price. By the time [buyers] get to us, they know the difference. We fight for quality and reliability and give people what they are looking for. We go out of the way to make customers happy. This is where we excel.”

Editor's Note:

Stone World would like to thank MS International, Lotus Exim, Southland Stone, Instile Stone Corp. and Stone-Tec Inc. for their assistance in preparing this article. In-depth features on all of these firms can be found later in this issue.

Sidebar: Indian stone exports to the U.S.

2003
Granite $97.2 million 262,090 tons
Marble $10.4 million 23,958 tons
Slate $31.2 million
TOTAL $138.8 million

1993
Granite $17.6 million 56,278 tons
Marble $1.2 million 1,284 tons
Slate $2.3 million
TOTAL $21.1 million

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