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RAK Ceramics will invest Rs 500 crore to set up its second tile manufacturing factory at Himmatnagar, Gujarat.
Mr Bupendra Vyas, President, RAK Ceramics India, said land acquisition, facilitated by the Gujarat Government, would be completed in a couple of months and the factory would begin operations in June 2012. Initial production would be in the range of 10,000 sq. metre a day which would be scaled up to 30,000 sq. m in three to six months and to 70,000 sq. m thereafter. The factory would be spread across 53 acres.
Asked about funding, he said it would come from its UAE-based parent company and from internal accruals.
RAK has a 30,000-sq.m a day production facility at Samalkot, Andhra Pradesh. Mr Vyas said there was little scope to expand as gas promised initially was yet to come, making production marginally expensive. The higher production cost was to some extent made up by opting for a product mix predominantly focussed on the premium range. RAK has also introduced glazed vitrified tiles in its portfolio which comes in the range of over Rs 600 a sq.m.
Transportation was also an issue there as RAK wants 1,500 trucks a month for shipping its production and what was available at times were about 800.
The Gujarat factory would cater to the Northern markets, as transportation from the South was expensive. About 50 per cent of the production from the Andhra Pradesh factory served the southern States, while the western regions account for 30 per cent and east about 12 per cent.
For the year 2009-10, turnover was Rs 500 crore (72 lakh sq. m) and for the last fiscal the company hopes to close upwards of Rs 600 crore (close to 80 lakh sq. m).
Dealer outlets
RAK, which has over 700 dealers, intends to set up 50 shop-in-shop outlets at a cost of Rs 2 lakh each on 50 select dealer points this fiscal. Under the shop-in-shop programme, the company will take up a portion of the dealer outlet of about 400 sq. ft and display its entire product range, including its high-end Klude bathroom range between Rs 3,000 and Rs 2 lakh.
RAK is also gearing up to hit the capital market to raise about Rs 250 crore. The issue is expected to come in the second-half of the current fiscal.
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