City-based bathroom solutions provider, Cera Sanitaryware, has opened the doors for heavy fund inflows into the company from FIIs and private equity funds.

Swachch Bharat effect

The company has lined up plans to expand the output of bathroom products, including sanitary ware, faucet ware and tiles.

“After the launch of Swachch Bharat mission by the Central government, the demand for sanitary ware has increased exponentially. We are meeting the demand by outsourcing, as we are running at 100 per cent capacity utilisation,” Bharat Modi, Strategic Advisor to Cera told BusinessLine . Amid high demand, Cera has to outsource about 20 per cent of its capacity.

“Considering the potential in the Indian market and the company also exploring new markets in West Bengal and Odisha, we felt the need to keep our capacities ready to meet the future demand,” said Modi. Currently, Cera Sanitaryware has capacity of 27 lakh units a year, which it plans to increase to 30 lakh units by the end of FY2015 and 33 lakh by the second quarter of fiscal 2015-16. Also, its faucet ware capacity is planned to be increased from the current 2,500 units a day to between 7,000-8000 units a day.

Fund-raising plans

On Thursday, in a filing with the BSE, Cera announced an increase in the holding limit for FIIs to 36 per cent from the present 24 per cent, which will allow more foreign fund inflows. At the board meeting held on Thursday, the company decided to allot 3.51 lakh equity shares of face value of ₹5 each of the company to India 2020 Fund II at a price of ₹2,011.50 a share on preferential basis, which aggregates to around ₹70 crore.

The company would require funds in the range of about ₹100 crore for expansion. “Whatever balance is required after the preferential allotment, will be met through internal accruals,” said Modi. Notably, the company has witnessed increased foreign investors interest as the FII holding in the company has successively increased to 16.45 per cent in December 2014 from 13.16 per cent as on December 2013.

On Thursday, Cera Sanitaryware shares ended at ₹2,094.2, down 1.5 per cent, on the BSE.

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