Slowdown in real estate hits profitability of Kajaria Ceramics

Kajaria Ceramics, the largest manufacturer of ceramic and vitrified tiles in India, reported on Monday a 5 per cent decline in profitability during the third quarter of current fiscal at Rs 61.54 crore due to sustained weakness in real estate sector and continued slowdown in the overall economy.

The company had reported a consolidated profit of Rs 64.8 crore in Q3 FY19.

Revenue growth in Q3 FY20 fell by 2 per cent to Rs 741.3 crore from Rs 758.56 crore in Q3 FY19 despite sales growing by 1 per cent to Rs 20.44 crore from Rs 20.34 crore in the same period.

In terms of quantity, Kajaria recorded a 7 per cent rise in production to 17.37 million square metres in Q3 FY20 from 16.31 million square metres in the corresponding period of the previous fiscal year.

The board of director has withdrawn expansion plan of manufacturing capacity of polished vitrified tiles at the existing facility at Malutana in Rajasthan.

The demand environment for tiles in Q3FY20 continued to be sluggish led by sustained weakness in the real estate sector and continued slowdown in the overall economy, the company said in a statement.

With the liquidity concern prevailing in the market, the festive demand uptick was missing, impacting the sales volume.

"In these tough times, our major endeavour is to focus on further strengthening our brand equity through sustained branding measures and maintain our balance sheet strength with working capital discipline being a major focus area," it said.

"We expect improvement in volume off-take in next fiscal due to various positive measures taken by the government to boost demand with a special focus on incomplete housing projects by infusion of Rs 25,000 crore, improving liquidity by reforms in the banking sector and tightening of GST compliances."

Kajaria is the ninth largest manufacturer of ceramic and vitrified tiles in the world. It has an annual capacity of 73 million square metres distributed across eight plants -- one at Sikandrabad in Uttar Pradesh, one each at Gailpur and Malootana in Rajasthan, three at Morbi in Gujarat besides one each at Vijaywada and SriKalahasti in Andhra Pradesh.

.