Somany picks up stake in VTPL for Rs 5.5 cr

As part of its plans for capacity addition in tile manufacturing, Somany Ceramics Limited (SCL) has acquired 26 per cent equity stake in M/s Vintage Tiles Private Limited (VTPL) for Rs 5.5 crore. Under a memorandum of understanding (MoU) entered by SCL and VTPL, the former will sell vitrified tiles manufactured by the latter.

"We have invested around Rs 5.5 crore for picking up 26 per cent equity stake in VTPL. We might extend the stake to 50 per cent in near future," said GG Trivedi, chief executive officer, SCL. The Morbi-based VTPL will utilise funds raised by selling its stake to SCL, apart from adding another Rs 15-17 crore to set a new polished vitrified tiles at Morbi.

To be set up at a daily capacity of 7,500 sq mtrs, the plant will be commissioned by end of November 2011, Trivedi stated, adding that the strategic stake shall allow the company to market/sell the entire quantity of the polished vitrified tiles to be manufactured by VTPL.

Apart from investing in a new plant in Morbi through the acquisition of equity stake, Somany Ceramics is also planning expansion at its Haryana and Kadi plants.

“Within a year, the capacity at Morbi will be around 14,000 sq mt per day. We had also expanded our Haryana plant and will be adding capacity at Kadi plant as well. All of these efforts is towards increasing our market share and meeting growing demand at the retail level,” said Trivedi.

Currently, of the overall Rs 15000 crore tile and sanitaryware market, SCL holds an eight per cent share. However, by the end of financial year 2011-12, the company is looking at a Rs 1000 crore turnover. Meanwhile, the company is also ramping up its distribution channel by opening up exclusive stores across the country.

“Currently we have around 1,150 direct dealers and another 5,000 sub-dealers to which we will be adding more. We are also opening up exclusive stores in several parts of the country. Through such efforts, by the end of financial year 2011-12, we are looking at a turnover of about Rs 1,000 crore," said Trivedi.