Expect 20% revenue growth in FY17: Cera Sanitaryware

Cera Sanitaryware has been outsourcing its tiles from abroad. But it has started a new subsidiary recently — Anjali Tiles — which is going to produce tiles, said Vikram Somany, Chairman and Managing Director, Cera Sanitaryware. Anjani will contribute around Rs 100 crore in revenues in FY17, Somany told CNBC-TV18. He expects the revenues to grow 20 percent owing to the new tiles business, a decrease in raw material and gas prices. Below is the verbatim transcript of Vikram Somany’s interview with CNBC-TV18's Mangalam Maloo and Reema Tendulkar.Mangalam: The sharp increase that we have seen in the margins for the company, could you tell us whether they are sustainable or are you going to pass on the benefits of lower gas prices ahead?A: No, we are not going to reduce our prices. Benefits are sustainable because the prices are low. Raw material cost has come down, transportation cost has come down. In fact we are planning to increase our efficiency and try to increase our margins in the coming year.Reema: It is a 12 percent topline growth. Can you break that up in terms of volumes as well as pricing?A: Volumes we can\\'t say because there are a number of pieces but we can say sanitary ware constitutes around 62 percent of which 21 percent tiles, 14 percent on wellness and mirrors around three percent.Mangalam: Could you also tell us what the outlook for FY17 is right now considering we have been speaking to a lot of other companies and they are seeing some green shoots of demand. So, what kind of revenue growth can we expect in FY17?A: We have started out new subsidiary company, Anjani Tiles in Nellore. So, that will contribute around Rs 100 crore to our revenue growth this year. So, we are expecting because of that and our normal growth around 20 percent growth. So, we are expecting a turnover of around Rs 1,100 crore in the current year.Reema: But Rs 1,100 crore includes Rs 100 crore on an inorganic basis. Organically it will be about Rs 1,000 crore and if I compare to with Rs 933 crore that you have done this year it is only a growth of about seven percent. So, a chunk of the growth seems to be coming on account of the expansion that you spoke about. Why the decline on the organic revenues?A: One of the reason is I have given a very conservative estimate and one of the reason is that we were outsourcing some tiles from Morbi and other places. Now we are supplying our own tiles. So, it will be partly offset by that and apart from that I have given a little conservative thing. Our target is more.Reema: So, what is it? What would your internal target be, realistically if you could guide us for your revenue growth?A: We are thinking of - like this year our turnover was Rs 933 crore. So, internal thinking is that we should show 20 percent growth including our subsidiary Anjani Tiles.Mangalam: Could you also tell us how your margins are likely to be in the next year, how much better can they get from here considering you do have a few more triggers coming as well. First up, lower gas prices, secondly the anti-dumping duty that was imposed on 30th of this month itself. So, will you get the benefits and how much could they be?A: Firstly the margins of our tiles, previously we used to purchase from Morbi. Now we will be making our own tiles, so, that will improve and general market is expected to improve from October, November. So, we expect our earnings before interest, taxes, depreciation and amortisation (EBITDA) margins to be better by at least one percent.