|City-based tile and sanitaryware maker, CERA Sanitaryware Ltd has entered into a joint-venture agreement with an Andhra Pradesh-based Anjani Tiles Ltd to set up a ceramic vitrified tiles facility in Nellore, Andhra Pradesh. |
CERA will hold 51 per cent stake in the project that is estimated to cost around Rs. 68 crore. The plant will have an initial capacity of 10,000 square meters per day of tile manufacturing with further possibility for expansion.
The JV partners would fund the project with a mix of equity of around Rs. 36 crore and balance in debt to the tune of Rs. 32 crore. The plant will be commissioned by March 2016.
"South is a major market for us. And with new capital of Andhra Pradesh, Amaravathi being announced we see greater scope with increased construction activity there. Also, Andhra Pradesh has announced subsidies to encourage businesses to grow," said Vikram Somani, chairman, CERA Sanitaryware Ltd.
"Of the total production at new facility, about 50 per cent will be consumed in Andhra Pradesh, driven by boost from new city Amaravathi," said Somani adding that he will also explore a possibility to set up another manufacturing facility in Rajasthan to cater to the North Indian market.
"There is a location near Vijaynagar in Rajasthan. We have applied for land and based on the success of this new JV, we will plan the Rajasthan plant," he added.
Till recently, CERA outsourced its tiles manufacturing, which has 12 per cent share in the total revenues of the company.
"Amaravathi will be a big boost for the demand. Also, The plant is close to Ennore and Krishnapatnam ports, hence exports too would be conducive in future," said K V V Raju, chairman of Anjani Tiles Ltd.
Tile industry in India is estimated at Rs. 22,000 crore, of which 55 per cent sales come from South India. Even as Cera has expressed its seriousness about the tiles business, out of its turnover of Rs. 822 crore for the year 2014-15, about 60 per cent came from sanitaryware, 16 per cent from faucetware and 12 per cent from tiles and rest from lifestyle products.
On Friday, the company posted 13 per cent rise in sales at Rs. 225 crore for the second quarter ended September 2015, and a 14 per cent increase in net-profit at Rs. 18 crore as against Rs. 16 crore in the same period last year.