Somany Ceramics to push up capacity through joint ventures

Bindu D Menon
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Abhishek Somany, Joint Managing Director, Somany Ceramics Ltd.
Abhishek Somany, Joint Managing Director, Somany Ceramics Ltd.

Tile major Somany Ceramics said it plans to invest Rs 200 crore to fund new acquisitions, expand its capacities and scale up its dealer network.

The company said it was focusing more on value-added products and was outsourcing plain vanilla products to smaller manufacturers with which it had forged joint ventures or contract manufacturing.

Abhishek Somany, Joint Managing Director, Somany Ceramics Ltd, said the strategy would help the company cater to all segments of the market, besides ensuring a consistent supply for tiles.

The company currently has capacity of 35 million sq m. “We want to take this to 41 million sq m. We are no longer putting fresh capacity but participating in equity with our partners through joint ventures. This helps us in being asset-light. We have three such joint ventures that are operational. We will be looking at three more by the end this fiscal,” he said.

The BSE- and NSE-listed company had reported a turnover of Rs 1,110 crore on March 31, 2013. “There is a general slowdown due to which sales have been slacking. There are also costs related to fuel and power but we still are targeting 20 per cent growth over last year,” Somany added.

The company plans to expand its product portfolio, by launching bigger sized tiles to cater to residential, hospital, hospitality and educational set-ups.

He said the domestic tile market was estimated at Rs 20,000 crore and was growing at 12-14 per cent.

“Our main growth driver would be enhanced sales of value-added products,” he said, adding that the company was scaling up the number of exclusive showrooms. “We will double the number of our showrooms to 140. The biggest drivers will be tier II towns,” he added. The firm also plans to increase its dealer strength from 1,700 to 2,000.

Somany Ceramics is also focusing on exports, which currently contribute about Rs 5-6 crore to its revenues. “We are looking to increase the revenue by adding new export destinations.”

He said the company had been facing competition from imported tiles from Thailand, Vietnam, China and Malaysia.

(This article was published on November 14, 2013)
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