Somany Ceramics plans expansion, brand building

Kolkata: Delhi-based Somany Ceramics is planning to invest Rs. 150 crore over the next 12 to 24 months for capacity expansion and brand building.

The BSE and NSE-listed company currently produces 41 million sq m of vitrified and ceramic tiles from three fully-owned facilities (two in Kadi in Gujarat and one in Kassar, Haryana) and six joint venture facilities at Morbi in Gujarat.

According to Abhishek Somany, Joint Managing-Director, Somany Ceramics, negotiations are on to acquire between 26 and 51 per cent stake in two more tile-makers in Gujarat.

Also on the cards are expansion of own facilities.

“We are looking to finalise two joint ventures soon. The capacity of our own facilities will also be expanded to shore up total production by 15 million sq m,” he told Business Line .

The company would invest around 2-3 per cent of its turnover towards brand-building.

JV Model

Elaborating his joint venture strategy, Abhishek said the current market conditions have thrown open opportunities to acquire shares in distressed assets and enter into joint ventures with the existing promoters. Stake pick-up would mostly be in companies having a net worth of Rs. 30-75 crore.

As part of its investment readiness, Somany offloaded 11.19 per cent stake to private equity firm Creador, at approximately Rs. 50 crore, in February this year.

This coupled with its debt-free status, offers Somany wide opportunities to fund the expansion plan.

The company reported a turnover of around Rs. 845 crore and a net profit of Rs. 17 crore for the first nine months of FY-14.

Tiles are marketed under the brand name Somany.

Its sub-brands are Vitro, Duragress, Durastone and VC Shieldfor vitrified, glazed, industrial tiles and its patented technology.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.