Previously I have written on CERA here & here

Let’s try and summarize key messages from 2015 annual report

The headlines

  1. Sales up by 23%
  2. Net profits up by 30%
  3. 3,51,000 equity shares issued on preferential basis
  4. Company also entered into competitive tiles market with exclusive tie up with manufacturers of tiles
  5. Company has set up Wind Turbines of 11.825 MW and 1.00 MW Solar Plant which will generate about 90 % of the requirements and it will offset against monthly consumption of energy bill

Management focus

The growth of your Company, much above the market growth, is largely on account of its continued efforts in leveraging the high brand value and product optimization besides deeper penetration in tier 2 markets. These efforts are further fortified by strong and structured marketing efforts, good product quality and after-sales service, and backed by a very loyal distribution network across India.


Increasing distribution strength – This is helps company to push new products (like tiles) through existing channels

Improving Product quality – Especially as many products sold are not made in house


Your Company’s two-pronged aggressive marketing push of mass media advertising over television and print and partnering with industry organisations like CREDAI (Confederation of Real Estate Developers Associations of India), IIA (Indian Institute of Architects), IIID (Institute of Indian Interior Designers) and IPA (Indian Plumbing Association) has helped increase the value and equity of brand CERA

Ad spent increased in proportion to sales


Penetration through

CERA Studio – In big cities

CERA Style Galleries – Tier 1 and 2 towns

CERA Style centre – Rural upcoming centres


After-sales service through CERA care

Business units update

Sanitaryware Unit

Company has expanded its annual production capacity to 3 million pieces for meeting the increased demand of its products. Further, by adding balancing equipment, the company aims to achieve production of 3.2 million pieces per annum

Faucetsware Unit

The new ranges and designs of Faucets have been well accepted by the market. The company attained its full capacity in the year. Owing to this success, the company has further expanded its capacity to 2.34 million pieces per annum

Bathware Unit

No sales break / capacity information in Annual report

Tiles Unit

Entered tiles market production outsourced

I would have been delighted to get some numbers on how each unit is performing

Promoters have been buying – Albeit in small quantity


The company is in Expansion mode

(See the increase in Gross block)


However it is partially funded through borrowings as both long and short term borrowings have increased, though debt equity ratio is still healthy but this is definitely a watch item for me

Equity was not diluted by preferential shares were issued


Company working capital requirements increased by about 60% largely due to increase in Trade receivables and short term loan and advances – Not a problem now but should be monitored closely

(Below figures in INR crores if not %)


I would suggest to draw up cash conversion cycle – for last three years it was improving, a reversal is not a healthy sign but could be because company is trying to push new product lines (Faucet and Tiles) thereby allowing lenient terms

Cash from operations were impacted as wellCERA-8

Good sign was increase in deposit from dealers


Overall company is expansion mode by entering in relatively low margin business, I will keep a eye on working capital situation