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New Delhi, June 16 Somany Ceramics will look to add 25 per cent capacity to its existing 11 plants in north, south and west India, with its Rs 675-crore capex plans – across brownfield and greenfield projects – materialising by FY24.
In the last phase of expansion at Rs 175 crore, the big slab plant at Morbi in Gujarat will be commissioned in Q3 of this fiscal.
Net capacity addition so far has been around 11 million square meters across ongoing projects that have seen an investment of around Rs 500 crore.
According to Abhishek Somany, Managing Director & CEO, Somany Ceramics Ltd, the company is targeting a turnover of Rs 5,000 crore in FY28.
In FY23, it reported a standalone turnover of Rs 2,470 crore, while net profit was around Rs 90 crore.
“The benefits of capacity addition and investment will be fully effective FY25 onwards,” he told businessline.
Margins to come-back
For the current fiscal, Somany Ceramic’s volume growth guidance is in the “mid teens” - largely driven by volume growth and “very little by value growth”, while EBITDA (earnings before interest, tax, depreciation and amortisation) margins should improve.
“EBITDA margins are coming back somewhat, with gas prices moderating,” Somany said.
“We are looking at an EBITDA margin, what we achieved in Q4FY23, and maybe add a little more to it. There still seems to be a little bit of volatility in input costs, gas and so on. But we’re fairly confident that if this sticks, then EBITDA could be a little more than 10 per cent this fiscal. And could inch up to 12-13 per cent levels in the next two years or so,” he added.
Gas costs, which account for 30 per cent of the input cost for making a tile, currently stands at Rs 47 per standard cubic metre; down from Rs 60-odd per standard cubic metre in FY23.
Somany explained that with gas prices coming down, “there will be price corrections” and companies will also need to reduce prices.
“We should be able to retain some of the price reductions. So everything won’t get passed on,” he said.
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