reduce tile baking cycle, optimising
the gas requirement per SQM of tile
manufactured. We are installing waste
heat recovery systems in our various
units, which should be operational
in 2013-14. We are also exploring
alternative ways to optimise fuel cost.
Regulation:
The introduction of GST
promises to converge diverse taxation
rates and anomalies into a single-rate
and standard taxation platform. We
expect that this will reduce the product
cost payable by the end-user, widening
the market for tiles in India. Since
GST unifies the states into a single
landmass, inter-state movement will
be seamless, reducing the logistics
cost for tile manufacturers. Kajaria,
enjoying a pan-India manufacturing
and distribution presence, stands to
gain significantly.
Growth engines
Kajaria’s profitable growth will be
driven by a prudent volume-value
play that will strengthen business
profitability.
Volume-led growth:
In 2013-14, the
additional volume will come from the
following:
Full year operations of Vennar
(operated for nine months in 2012-13)
Full year operations of Cosa
(operated for five months in 2012-13)
Capacity utilisation of Soriso to
improve by about 25-30% over
2012-13
Our subsidiary Jaxx Vitrified acquired
another plant with a 2.60 MSM capacity
of polished vitrified tile in April 2013.
Value-driven growth:
Our continuous
endeavour to graduate up the
value pyramid will help us enhance
profitability. In 2013-14, we expect
the following measures to sustain our
operating margins:
Sale of double-charged polished
vitrified tiles (high-value product) from
Cosa Ceramics
Substitute imports with in-house
manufactured products
Replacement of 3.00 MSM soluble
salt polished vitrified capacity with
glazed vitrified tile capacity at our
Sikandrabad unit, a margin-accretive
initiative
Increase the proportion of digitally
printed tiles by investing in additional
digital printing machines
Message for shareholders
At Kajaria, we are not as much focused
on topline growth as we are about
profitable growth. As this continues
to transpire, we are optimistic that
this will extend into a stronger market
capitalisation and superior value in the
hands of all those who own shares in
our company.
Warm regards,
The management team
This reality has translated into growing returns:
ROE increased from 5.62% in 2008-09 to
32.51% in 2012-13 and ROCE strengthened
from 13.08% to 28.89% during the same
period, ensuring shareholder faith in our
capability to deliver superior value.
Mr. Rishi Kajaria
Joint Managing Director
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