Annual Report Summary - Cera Sanitaryware
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Business Overview:
Cera Sanitaryware is one of the leading, longstanding players in the tiles, bathroom and allied appliances market in India. They are involved in the production of sanitaryware units, Faucet ware units, Bathware units and premium bathroom suites. Their core business also includes the production and sales of tiles in India.
The Company has been a preferred partner of CREDAI (Confederation of Real Estate Developers Associations of India), the apex body of developers, for the last seven years. It also works very closely with associations like IIA (Indian Institute of Architects), IIID (Indian Institute of Interior Designs) and IPA (Indian Plumbing Association).
The company has two subsidiary LLPs namely Packet Packaging LLP and Race Polymer Arts LLP in which it has a controlling stake of 51%. The company sold its stake in Anjani Tiles pursuant to the share repurchase agreement it entered into with the entity. The consequential impairment loss of Rs.573.80 Lakhs was recognised in the profit and loss statements.
In FY 22-23, the turnover of the company increased by 24.68% while its EBITDA rose by 32.19%. This resulted in an increase of over 40% at PAT. The major reason for the dramatic increase in revenue has been an increase in the volume of outputs and aggregate demand for the products in the market.
Cera also places a huge emphasis on its advertisements and media presence. It follows a high-impact media strategy to increase brand reach and customer exposure. It has started venturing into southern regional local channels this year, starting with Kannada, thereby effectively trying to increase product awareness in new market regions. The company also spends a lot on its brand ambassadors – Kiara Advani and Vijay Devarkonda and social media handles.
The various business units of Cera are as follows:
Sanitaryware unit
Faucet ware unit
Bathware unit
Premium Bathroom Suites – Senator, Lustre
Packaging unit
Polymer Unit
Green Energy Unit
The company also focused on improving its retail presence across the country to strengthen its D2C structure of distribution and promotions. The company has opened over 400+ stores in the last year, crossing the mile mark of 1000+ stores in the country. The 24-hour after-sales service channels have also helped gain customer attention as this is not a common service in the hardware or tiles business in the country.
Industry Analysis
With rapid urbanization and changing trends, customers are increasingly becoming hygiene conscious in India. Additionally, there is a growing demand for functional and feature-rich bathrooms. The rise of interior designs, ease of cleaning, durability and sanity are the main factors that cause the tailwinds in this industry.
According to the recently published report, “India Sanitaryware and Bathroom fittings market outlook: 2027-28”, the CAGR of the industry is expected to grow at a pace of 9.78% in the country. One important characteristic is the huge amount of unorganized players involved and the ultimate competition in the market space. Over 46 million units of sanitary ware were sold in the base year 2021-22 and are expected to cross 80 million Units by 2030.
The governmental push for building toilets and improving sanitation across the country is also an excellent indicator of the growing demand and potential for the players involved in this industry.
The major competitors in this industry include Hindustan Sanitaryware, Roca Bathroom Products, Cera Sanitaryware, Jaquar, Kohler India, Somany Sanitaryware etc.
Cera has identified its core business units as follows:
Sanitaryware – Tailwinds: Urbanization, Rise in disposable income, Health consciousness, Awareness.
Faucet Ware – Tailwinds: Urbanization, Customer trends, Increase in upper-middle-class families, Innovation
Tiles – Tailwinds: Infrastructure demands, Increasing housing requirements, Urbanization and Rise in disposable Income.
Subsidiaries
During the financial year 2018-19, the Company acquired share capital worth Rs 806 Lakhs in M/s Milo Tile LLP (“Milo”) which was a vendor of tiles for the company. During the financial year 2022-23, Milo has been unable to maintain product quality parameters which has forced the Company to discontinue procuring tiles from Milo and raise claims based on inferior quality products supplied by Milo. The company faced an impairment loss of Rs. 500 Lakhs which was disclosed under “Exceptional items” in the financial statements.
M/s Anjani Tiles ceased to be a subsidiary pursuant to the share repurchase agreement executed in March 2022-23.
Business Segments and Performance:
The business operations of Cera Sanitaryware can be explained through their defined business units as follows:
Sanitaryware unit:
Increased production based on market response and increased demand led to an increase in revenue.
The major activities that the company undertook include waste elimination, KAIZEN, dedicated projects on cost saving and sustainability, has improved the utilization of deployed resources.
The Company is committed to developing new and innovative product designs including one-piece EWC, high-end and rimless Wall Hung EWC, Lustre series products etc, through its dedicated product NPD team.
Faucet ware unit:
The increased sales and production helped the company to reach an optimum level of achievements in the year.
The company is continuing to focus on its debottlenecking projects, SOP compliances and automation of the processes.
The company’s projection in the faucet business is very strong and expected to contribute significantly to the revenue.
It has launched over 330 new products this year.
The company focuses on bringing innovation and environmental consciousness together by developing and selling Water saving faucets.
Bathware unit:
The company has launched plenty of new products like smart electronic toilets, Tankless Wall Hung closets and one pc EWCs with Vibe sense touchless flushing technology and modern design tabletop basins along with wall-hung closets for retail spaces.
Senator by Cera:
Senator was re-introduced with the latest collection of premium bathroom suites, bringing together sophisticated designs and quality sanitaryware products to create truly artistic spaces
Lustre by Cera:
A range of colour faucets, sanitaryware, showers and bath accessories are designed to splash character and charisma into the modern Indian bathroom space.
Packaging unit:
CERA holds a 51% stake in a Joint Venture unit i.e. Packcart Packaging LLP for the manufacture of corrugated boxes which has now achieved full utilisation of production. The products are now available on a just-in-time basis, built to the exact specifications for the Company.
Polymer unit:
The Joint venture for the Polymer Products unit i.e. Race Polymer Arts LLP for manufacturing seat covers and cisterns has reached optimum capacity of its production during the year. Cera holds a 51% Stake. The quality products are available and capacity utilization has increased gradually during the year.
Green Energy unit:
The company has also made significant advances towards using solar and wind energies in the year.
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