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15
Annual Report 2011-12
DESPITE HIGHER
INTEREST RATES.
DESPITE SCARCE
LIQUIDITY.
It’s an old story.
When the trade cycle slows, the first thing that dealers demand is
longer credit.
To continue to pay for the overheads and raw material, a number
of CFOs are compelled to borrow more - at higher rates.
Suddenly, all profitability ratios need to be recast. And logically
enough, the ‘fresh capex’ file is put into the ‘out’ tray.
Interestingly, at Kajaria, it was ‘business as usual’.
14 Kajaria Ceramics Limited
Capital investment
The result is that Kajaria enjoyed a
comfortable debt-equity ratio of 0.86
as on 31st March, 2012 and an interest
cover of 3.50 in 2011-12. We registered
a positive operating free cash flow of
• We shrunk working capital use (42 days of
turnover equivalent as in March 2011 to 27
days as in March 2012)
• We adopted a dual-approach with business
surpluses – we reduced total debt (from
`
2,797 million as on 31st March, 2011 to
`
2,417 million as on 31st March, 2012) and
increased our gross block (from
`
7,000 million
to
`
7,233 million over the same period)
Fund management
1,489.88
`
in 2011-12.
million
• We adopted the low-cost joint-venture route, by
minimising the gestation period for revenue
generation with a superior return on investment
• Soriso Ceramic, Gujarat was our first such
venture with a 2.30 MSM capacity; in 2011-12
we doubled its capacity at an outlay (significantly
lower than our initial investment) which will
strengthen business profitability and liquidity
going forward
• Jaxx Vitrified, Gujarat is our second venture on
the same principle where we invested
`
62.65
million for a 51% stake in this 3.10 MSM
vitrified tile facility, the unit commenced
operations in March, 2012
• Vennar Ceramics, Andhra Pradesh is our third
venture with a similar mindset where our 51%
stake will necessitate an investment of
`
136.50
million with access to 2.30 MSM of high-end
digitally printed ceramic tile capacity; the unit is
expected to commence operations in June, 2012