The Hindu Business Line : Cera may outsource tiles production to China

Cera Sanitaryware Ltd (CSL), the country’s third largest sanitaryware company in the organised sector with 20 per cent market share, may outsource production of tiles and some other products to China, even as the profit-making company completes its first phase of expansion plans next month. It plans to undertake another in 2008-09 in view of increased demand due to indigenous realty boom and exports.

The company’s ongoing talks with its Chinese counterparts for outsourcing were put on hold recently, for the time being, due to the rupee appreciation. The company had even booked 100 containers to kick start the process. “We are still considering it and would take a decision at the earliest,” Mr S.C. Kothari, CEO and whole-time Director, told Business Line here.

Besides tiles, the proposed items for outsourcing included CP fittings and shower panels. The company with a 20-product basket is also talking to its counterparts in Spain and Italy for similar outsourcing of vitrified tiles. However, Cera would continue to manufacture vitreous China sanitaryware.

The company also aims to enter the kitchenware product range shortly with the aim of increasing its turnover of Rs 106 crore in 2006-07. CSL had also signed up a memorandum of understanding with an Australian Group, a global exporter with a presence in the US, enabling the latter to outsource its majority of requirement close to one million pieces to CSL, Mr Kothari said.

Soon, Cera will also launch premium vitrified floor tiles in the Indian market where the organised sector is worth about Rs 1,000 crore. The company is aiming to emerge as total bathroom solutions provider.

Capacity expansion

In view of this CSL, founded in 1980, is bracing up for a further expansion to have its overall capacity increased to over 2.7 million pieces per annum with an investment of Rs 63 crore. This is proposed to be financed with a mix of debt (15 per cent), internal accruals (18 per cent) and equity (30 per cent).

Its export to the US alone is expected to grow from two per cent to 10 per cent in the next three years and the company is likely to consider setting up a new manufacturing unit, besides the existing one at Kadi, Mehsana district, in Gujarat.

Bath studios

Along with its tie-ups and expansion plans, CSL, the largest and the only listed company in pure sanitaryware space, had recently launched its ‘Bath Studios’ in seven cities across India to showcase the company’s full-range of products.

Apart from the organised and unorganised categories in India, sanitaryware has seen emergence of a third category that of imported sanitaryware when Cera entered into strategic partnership with Pozzi-Ginori, Italy, to market products under the latter’s original brand name.

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