BSE listed-Cera looking at JVs to help growth

The company expects to improve a couple of basis points, said the company

BSE listed Sanitaryware firm Cera is in talks with firms to have two join ventures, to manufacture santiaryware products and tiles, which would help the company to improve the margins, said a senior official from the company.

The company, which currently relies completely on outsourcing for manufacturing tiles, has said that it is looking at joint venture with tiles manufacturers to set up manufacturing facility Gujarat, Rajasthan or in Andhra Pradesh.

Cera also said it is open for another JV to manufacture sanitaryware. The company claims it got about 23 per cent market share in the Rs 3,500 crore sanitaryware market in India.

The new facility would come up either in Andhra Pradesh, where it would help the company to serve the South Indian market, or in Gujarat, a State where its existing facility is situated. At present, it has a capacity of 3 million pieces of sanitary wares in the existing facility in Kadi in North Gujarat.

"We are expecting both the discussions to be in a concluding stage by end of this quarter and one of the either JVs to take

place soon after that," said Atul Sanghvi, executive director, Cera. While the company expects both the facilities together would cost around Rs 50-100 crore, the investment from the company depends upon the equity holding it would have in the JV and what would be the actual cost of these projects.

"At present our Ebitda (Earnings Before Interest, Taxes, Depreciation and Amortization) is currently at 15.1 per cent and with the joint ventures, it would go up by a couple of basis points," said Sanghvi. The companmy has recently entered into the Rs 22,000 crore tiles market in India and currently has a negligible market share in the segment, he said.

The company today launched its nineth Cera Style Studio showroom in Chennai, offering the entire range of sanitaryware, faucets, tiles, wellness and kitchen sinks. It is expected to launch the next showroom in Thiruvananthapuram, Kerala. It also has around 92 Cera Style Gallary, set up by its franchisees, which is expected to go up to 100 in a couple of months.

The company, which posted a revenue of Rs 850 crore last fiscal year, has a manufacturing plant for faucets with a capacity of 7,200 pieces per day, with the low pressure die casting machines, automatic chrome plating unit and an array of CNC and automatic polishing machines.