Genuine Hand Made Clay Tile Factory For Sale

Business description

Overberg Clay & Tile Cc

Executive Summary

Activity
As main activity Overberg Tile & Clay CC produces, lays, seals and treats hand made clay tiles for discerning niche markets such as restaurants, wine cellars, guesthouses as well as upmarket residences. These types of clients are not primarily price sensitive, but very demanding as it comes to quality, professionalism and customer care. Customer satisfaction and mouth to mouth recommendation are the keys to new sales leads and repetitive sales. Overberg Tile & Clay operates from Swellendam, Overberg District, Western Cape Province.

By-products are sieved clays for clay pot making, sold to clay wholesalers, as well as higher added value products in the form of Italian style pots.

As only manufacturer of genuine hand made clay tiles in South Africa, Overberg Tile & Clay has no direct competitors. Its name is established and well known and recognised by architects active in the targeted niche markets. Indirect competition comes from suppliers of pressed clay tiles or other floor types that however are less preferred in the target market.

Products And Services

When laid and treated properly hand made clay tiles are virtually ever lasting and maintenance free. They can be used indoors and outdoors, are resistant to heavy pedestrian traffic and do not absorb water. Hand made tiles cannot be compared with industrial or ceramic tiles, each hand made tile having its own shape, shine and warmth. The tiles can also be combined with hard wood planks to obtain exclusive designs.

About 60% of the production is laid by tilers employed by Overberg Tile & Clay. They have been trained not to spoil the tiles with cement before sealing. Tilers and builders unfamiliar with hand made clay tiles might experience problems to do the job properly and damage the reputation of the product. Only selected qualified subcontractors are used to seal and treat the tiles.

Management

The company is managed actually by its full owner, who registered the company in 1993. He now plans to retire and is looking for a successor to buy the business and to continue its successful operation. The transfer of technical know how is easy to organise as the processes are quite understandable. All the personnel are also fully trained for their jobs. The challenge lies in the communication with the discerning customers and obviously also with the personnel of the company. From the lather most of them work for the company since its start-up. The new manager must also be prepared to travel intensively to market the products, to follow up the building sites and to liaise with the customers before, during and after a job. Furthermore sufficient organisation talent is required to have the 18 employed people doing the right thing at the right time in the right way. Punctuality and promptness are brands of Overberg Tile & Clay.

Sensitive Parameters

Demand. The demand for hand made clay tiles is determined by the size of the building and renovation target markets. The geographical extend is limited by the transportation costs of materials and personnel. It has however not been uncommon to do jobs up to Johannesburg whereby the tilers have been flown in. The production is adjusted to the sales forecast and can be nearly doubled when necessary. The bottle neck in production capacity is situated at the kilns. They are fired 4 to 7 days a week to adjust the production to the demand.

Salaries. As can be expected from a business producing hand made products, the salaries are the most important cost. The salary cost averages around R50.000 per month. All workers are however paid by the quantities they produce or lay. Inefficient workers would penalise themselves. Generally sub-contractors are called for the transportation, the sealing and the treatment of the tiles. Generally they also get paid directly by the final customer so that their added value does not appear in the books of the company.

Electrical power. The 2 kills are fired with electrical power and the energy cost has dramatically increased in the last years. The cost increase has been reflected in the sales prices. Today the average monthly cost hovers around R30.000. The reduction in power consumption imposed by Eskom further limits and reduces the number of possible firing cycles, making the hand made clay tile scarcer and harder to get.

Transportation costs and accommodation. A further R15000 is spent monthly on the transportation to the building sites and the local accommodation of the tilers. It also includes the transportation cost of the raw clay.
Marketing and follow up costs. The intensive travel and communication activity of the manager/owner gives rise to an average monthly diesel cost of R4000 and R2000 telephone. It does not include the depreciation cost and maintenance of his bakkie.
The other costs are less critical or significant. The total annual expenses and depreciations hover around R1.5 million.

Recession

Overberg Tile & Clay has suffered its share in the recession. The economical uncertainty caused tiling projects to be delayed or halted, causing a loss of income of R250.000 in the last 12 months. Workers have been temporarily laid off to avoid the inventories to explode and marketing efforts have been increased to sell the inventories and to generate cash. The savings in energy consumption were largely compensated by the increase of the energy cost. The building and renovating activity picking up again, all workers are at their post again.

Processes
• Clay is received from local brick fields and excavation sites. Swellendam stands on good quality clay.
• The clay is hammer milled and sieved. About 1/3rd goes through the sieve and will be sold to clay wholesalers for pot making. A part of these fines is also used to make Italian style pots.
• The coarser clay is mixed with water and a little of Bentonite in one of the pug mills.
• The pugged clay is hammered down in a mould with a rubber hammer, the excess is scraped of. The wet tile is placed on a slat covered with a sheet of newspaper to allow the tile to shrink without cracking.
• The tiles are allowed to dry during 10 to 14 days and then placed in a hot air drying chamber.
• The tiles are packed at 45m² in the moving hood kiln and the temperature is raised gradually during 24 hours up to 1150°C. About 130 kWh of energy is consumed to do so. The cooling also takes 24 hours. Two kilns being available a firing cycle can be started every day.
• The fired tiles are then unloaded and sorted according “Rustic” or “Reject” grades. About 15% do break during the firing cycle.
• The tiles are then stored in the warehouse waiting for dispatching. An inventory of average value of R350.000 at cost price is carried to accommodate planned and unplanned orders.
• Generally the transport to the building site is carried out by a subcontractor.
• The 3 qualified tilers employed and trained by Overberg Tile & Clay, travel to the building site and do stay over until the job is done. Each of them is helped by an unqualified worker. Altogether they can lay about 200m² per week. They handle about 60% of the production.
• Sealing and treatment of the tiles is carried out by approved subcontractors.
• Quality control and customer care are performed by the manager. Problems or complaints are very exceptional and solved immediately without any discussion.

Price

Overberg Tile & Clay is offered for sale for its effective actual value, estimated actually to R1.4 million plus stock. The final sales price will result from a due diligence to be carried out by the potential purchaser.

Contact

For more information please contact Carlo JLM Schots, management consultant based in Swellendam.

Property information

Real Estate:

Lease

Location:

Industrial area Swellendam

Premises details:

Rented premises @ R6000/month

Other information

Competition / Market:

No direct competition. Overberg Tile is the only genuine clay manufacturer in South Africa

Support & training:

Full transfer of know how foreseen

Reasons for selling:

Planned retirement of the owner / manager

Trading hours:

24/7

Furniture / Fixtures value:

R865,000 (included in the asking price)

Inventory / Stock value:

R350,000

Website:

www.overbergtile.co.za/

Related documents:

• 
• Presentation

• 
• Statements 2009

• 
• Statements 2008

Video:

Log in or sign up as a buyer to view this video.