Spartek to invest Rs 100 cr

Spartek Building Products Ltd (SBPL), earlier known as Spartek Ceramics India Limited, is planning to set up manufacturing facilities for  wall, floor and vitrified tiles at two locations in Tamil Nadu and Andhra Pradesh. The two facilities would be set up with an initial investment of around Rs 100 crore.

Krishna Prasad Tripuraneni, chairman, SBPL, said that the erstwhile company (SCIL) was doing well till seven years ago, but went into debt after acquiring two sick units for around Rs 70 crore.

In the last 18 months, the company had undergone a restructuring programme as part of which the promoters have infused around Rs 90 crore into the company. The amount was mainly used to repay the debts, and the company was debt-free now, according to Tripuraneni.

The company was renamed Spartek Building Products Ltd (SBPL) “so that we can go beyond tiles and ceramics,” Tripuraneni said.

The company launched products in premium vitrified tiles with 16 designs sourced from its partner at Morbi in Gujarat, as well as high-end imported floor and wall tiles, premium sanitaryware and bath solutions and home spas, according to Varun Tripuraneni, manager (business development).

The company, which so far had been working solely on a contract manufacturing model, has now decided to set up its own facilities, while continuing with contract manufacturing, according to Tripuraneni.

The proposed plants will have a combined capacity of 7.2 million sqm in Phase 1 and would involve an investment of around Rs 100 crore. Production is expected to commence during the first quarter of 2011-12, he added. In Phase II the company would invest another Rs 35-40 crore, after 15-18 months from Phase 1.

“All the investment will be funded through debt and equity in the ratio of 70:30,” said Tripuraneni. He ruled out any possibility of raising money from private equity.

He added that the proposed manufacturing facilities would be set up jointly with local entrepreneurs who are capable of investing Rs 5-15 crore equity on their own or with associates.

The partners are expected to manage bank loans, government approvals, assist in implementation of the project, manage business operations, etc. Spartek group will set up turnkey plant and will provide technical support at the time of implementation, production, product design and development.

All production would be branded under Spartek or Italian Consortium, the company's technical partner, and sold through 400-strong Spartek dealer network.

The company has set a target of around Rs 300 crore over the next three years, from the current around Rs 50 crore.

Tripuraneni said the overall Indian ceramics market size would be around Rs 4,500 crore, of which wall tile market comes to around Rs 1,575 crore and floor and vitrified tile market to Rs 2,925 crore.

The south accounts for 30 per cent of the total Indian market, but only four units producing five per cent of country's total production currently operate in the region.