Cera: Can it beat Jaquar?

Cera Sanitaryware formerly known as Madhusudan Oils and Fats is a company operating in the sanitaryware, faucet and tiles industry. Cera also deals in wellness products like bathtubs, mirrors, steam cubicles, shower partitions, shower panels and kitchen products.

Company incorporated in the year July 17, 1998 in Gujarat. Mr. Vikram Somany is the Chairman of the company.

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A. Brief History of Cera


Cera originally incorporated as Madhusudan Ceramics, a unit of Madhusudan Industries Limited with presence in oil and ceramics segments.


Demerger of Madhusudan Industries and Ceramics division & thus transfered to newly formed Cera Sanitaryware Limited.


The company signed the MoU to commence the sanitaryware manufacturing unit in Kadi in North Gujarat using natural gas. Moreover, Cera increased production capacity from 1.3 million pieces to 2 million pieces.

Also, Cera allotted 1,50,000 warrants & further 1,10,000 warrants to promoters during the year.


Cera ventured into faucet ware by opening plant at Kadi, Mehsana, Gujarat. The plant had initial capacity of 2,500 pieces per day scalable upto 10,000 pieces per day.


Cera expanded Sanitaryware plant capacity from 2 pieces p.a. million to 2.7 million pieces p.a. Also, during the year, the company forayed into vitrified and floor tiles segment.


The company expanded faucet manufacturing production capacity to 7,200 pieces per day.

Cera Sanitaryware issued 3,51,000 equity shares on preferential basis at price of INR 2,011.50 including premium of INR 2,006.50 per share.

Moreover, Company entered into agreement with Italy based ECE Banyo which owned luxury brand ISVEA exclusively for sales, distribution & marketing of ISVEA brand in India for 5 years.


Cera acquired 51% stake in joint venture ‘Anjani Tiles’ in Andhra Pradesh for manufacturing vitrified tiles. Anjani Tiles started production from April 1, 2016.

Also,Cera entered into a joint venture Packart Packaging LLP for manufacturing of corrugated boxes.


In addition, Cera launched a new sanitaryware brand ‘JEET’ for the affordable segment.


Cera launched a premium sub-brand ‘Senator’ in the market. The company also commissioned Zamac plant for manufacturing of Zamac handles.

In addition, the company incorporated Race Polymers Arts as a subsidiary with 51% share for manufacturing of polymer products like seat covers, cisterns, fittings & other related products made of polypropylene with INR 5.61 crore investment.


Cera started a new JV with Milo Tiles LLP in Morbi, Gujarat with 26% stake for 8.06 crore. JV will produce high end Glazed Vitrified Floor Tiles of 7,000 sq. mtr. per day. During FY19, company entered into 3 new product line shower partitions, water heaters & modular kitchens.

B. Shareholding Pattern

shareholding pattern of cera sanitaryware
major public shareholders in cera sanitaryware
major promoter shareholders in cera sanitaryware

C. Executive Management of Cera

(i) Mr. Vikram Somany- CMD (Age: 71 years):

Mr.Vikram is also founder of the company. His education includes B.Sc. and he is also Fellow of the Chartered Management Institute (UK). Mr. Vikram Somany’s only son Mr. Vidush Somany died in 2012. His remuneration for FY18 is INR 5.83 crore & in FY19 is INR 5.7 crore.

(ii) Mrs. Deepshikha Khaitan – Vice Chairperson (Age 45 years):

She is the daughter of Vikram Somany. From April 1, 2020 onwards she will be the joint managing director of the company. She is married to Mr. Abhishek Khaitan, MD of Radico Khaitan. Her educational qualification is B.Sc. Hons. (Economics) and LLB. She is associated with Cera for more than 7 years. Currently she is receiving sitting fee & commission of INR 4 lakhs.

(iii) Mr. Atul Sanghvi – CEO & Executive Director:

Mr. Atul is associated with the company for more than 20 years. He holds Master of Business Administration in Marketing. His remuneration for FY18 is INR 2.31 crore & for FY19 is INR 2.52 crore.

(iv) Mr. Ayush Bagla – Executive Director:

Mr. Ayush holds B.A (Business) from Franklin & Marshall College, USA. His role in the company is to manage Investor Relations & Strategic Planning initiatives.

D. Products of Cera

research report of cera sanitaryware with details of products classification

E. Brands of Cera

Company has mainly four brands – ISVEA, Senator, Jeet and Cera.

  • ISVEA is luxury Italian brand.
  • ISVEA brand products are totally made in Italy and products price range is INR 40000 to INR 3 lakhs per piece.
  • Senator is a premium brand of the company.
  • Senator products price range from INR 17000-40000 per piece.
  • Jeet brand is neither advertised nor displayed at showrooms because it is exclusively for the Government tenders.
  • Cera is the mass brand as the mass market is 90-95% of the total market.
  • Cera brand includes products whose price is between INR 800-17,000 per piece.

F. Revenue from Operations

research report of cera sanitaryware with revenue classification in detail

Revenue on the basis of Sales Channel

Cera supplies products directly to the builders as well as through dealers to the retail customers. Cera’s institutional clients include Sobha, Shapoorji Pallonji, Tata Housing, DLF, Lodha, Godrej Properties, Taj Hotels, Marriott, Meriden, L&T construction, Penta homes, Oberoi Hotels, NBCC, Airport Authority of India, RBI, SBI & LIC.

research report of cera sanitaryware with revenue classification as per the sales mix

Geographical Mix of Revenue

Exports contribution is very little to overall revenue of the company i.e around 1%. Though, Cera’s presence is pan India. But, Kerala alone contributes 15% to the revenue of the company. Company’s major sales come from south and the region is also the buyer of high margin products.

geographical mix of revenue of cera sanitaryware

(G) Manufacturing Facility

Cera’s manufacturing plant is located at Kadi, Gujarat. In fact, this plant is the largest sanitaryware plant at a single location in India.

The company outsources 30- 40% (low-price SKUs) of sanitaryware products whereas higher-valued products are manufactured in-house.

(H) Production Capacity

ProductsProduction Capacity of Cera
Sanitaryware10,000 pieces per day
Faucets7,000 pieces per day
  • Cera outsources 50% of Faucets products & sanitaryware, of which bulk are lower price-point SKUs. Thus, technologically sensitive high value products are manufactured in house.
  • The tiles business operates through an asset-light joint venture model. Overall, Joint Ventures produce 28% GVT, 13% soluble salt & the rest 59% include double charge, wall tiles, paving tiles.
  • Capital employed in tiles is INR 37 crore in total. This includes INR 29 crore for Andhra Pradesh JV and INR 8 crore for Gujarat JV. These two JV supply 35% of the company’s tiles requirement and rest is met from vendors which directly supply to the consumer to save logistics cost.

(I) Cost Structure

In Sanitaryware, raw material cost is 17% of the total cost of production. Raw material cost in case of faucetware is 54% of the total cost of production. Labour cost is 15%, logistics and freight cost is about 7% and gas cost is 2% for sanitaryware and faucetware combined.

research report of cera sanitaryware with details of cost structure in detail

(J) Research & Development Expenditure

R&D expenditure classification of cera sanitaryware

(K) Group Structure

group companies of cera sanitaryware for detail research report

(L) Market Share of Cera Sanitaryware

Cera commands market share of 21-22% in organized Sanitaryware industry in total values around INR 3,600 crore which is 70-80% organized.

Secondly, faucetware industry is INR 7500-8000 crore, which is 60% organized, Cera’s market share is 6-7%. 

Lastly, in tiles industry which is of INR 28,000 crore, the company’s share is small as the revenue from tiles is INR 325 crore.

(M) Major other Industry Players

  • Other key players in sanitaryware segment include Parryware & HSIL (Hindware).
  • In faucet segment, key player is Jaquar which has around 60% market share of the organized market.
  • In tiles segment, the major players include Kajaria ceramics, Somany Ceramics, Asian Granito, Nitco & Orient Bell.
  • All above given players are listed players except Parryware & Jaquar.

(N) Cera Recent Concall Highlights

  • Company launched 50 new SKUs in Q3 FY20.
  • No price hike taken in October due to soft raw material prices in Sanitaryware and faucetware. Brass prices (used in faucetware) declined considerably which is 40-45% of cost.
  • 3-5% price hike in sanitaryware will kick in from coming 1st April. Faucetware price hike will depend on brass prices.
  • In sanitaryware and faucetware revenue, 35% sale is of entry level, 15% is mid level & premium is 50%.
  • In Q3, FY20 tiles sales breakup is GVT (28%) and soluble salt (13%) and rest which includes double charge, wall tiles, paving tiles etc. (59%).
  • City wise sale breakup:
Particulars 9M,FY20 Q3, FY20
Tier 1 (Cities with population above 25 lakhs) 31% 30%
Tier 2 (Cities with population between 10-25 lakhs) 12.6% 11.8%
Tier 3 (Cities with population less than 10 lakhs) 55% 56.5%
  • As company 50% revenue comes from premium products so there is overlap between tier 3 towns sales and premium products.
  • Retail & Institutional sales are 72:28 in Q3FY20 as compared to 75:25 in Q3FY19.
  • Faucet and Sanitaryware margins are higher than the overall margin of company. Tiles margins are lower so pulling down the overall margins.
  • Company will not expand tiles capacity and continue to source from 2 JV and vendors. There is significant overcapacity situation in India.
  • The company does not export to China. Similarly, there is no dependency on China on input side. Thus, no Coronavirus impact highlighted by the management.
  • Cera’s own production capacity utilization is 81% for sanitaryware & 69% for faucetware.

Industry overview

  • Sanitaryware industry grew at 7-8% till FY19 and this year there will be no growth. In future, the growth will come back to 7-8%. Faucetware will grow by 6-7% and company expects to capture 12-15% incremental market share.
  • Products produced by regional players like Simpolo, Commander and Plumber are Me-too products. They copy the products of big companies like Cera & produce them on outsource basis or local level basis. But they do not have the technology in terms of natural gas, 1200 degree firing or glazing. Thus, quality speaks by look and feel of the products.

Capex Detail

Capex done in nine months is INR 31.8 crore. Money is spent on sanitaryware automation (INR 6.2 crore), faucetware automation (INR 3.4 crore), customer touch points INR (4.3 crore), completion of staff colony at Kadi factory (INR 11.1 crore) and logistics, IT and infra upgrade (INR 6.7 Crore).

(O) Key Risks/Concerns

(i) Unorganized Sector:

As most of the market is unorganized, it poses a threat to the company. Other players can easily copy the design of the company & sell in market.

(ii) Competition:

Sanitaryware, faucetware & tiles industries are highly competitive. Players are entering into other fields, like sanitary players in tiles and tiles player in sanitaryware. So that leads to intense competition in the industry. Jaquar is aggressively spending on marketing and coming in sanitaryware business also.

(P) Industry Attributes

  • Sanitaryware industry values around INR 3600 crore which is 70-80% organized.
  • Faucetware industry market size is INR 7500-8000 crore which is 60% organized.
  • Indian tiles industry is INR 28,000 crore and there is overcapacity situation in India.
  • Tiles are also exported to China & other countries.

(Q) Key Raw Materials

  • Raw materials used by the company are sand, sandstone, clays, chemicals, brass and natural gas.
  • Natural gas is sourced from GAIL and Sabarmati Gas.
  • Brass is a key component for the manufacturing of faucetware.

(R) Distribution Network

  1. Company has 10 display centers under the name Cera Style Studio (CSS) located at Ahmedabad, Bangalore, Chennai, Mumbai, Kolkata, Morbi, Thiruvananthapuram, Chandigarh, Hyderabad and Cochin.
  2. Lately, Cera opened CSS at Morbi because lots of dealers from the country come here to purchase tiles.
  3. Company has 139 Cera Style Gallery (CSG) across the country and these are owned by dealers.
  4. Company also has around 2,700 Cera Style Centre (CSC) operational and these are owned by retailers. Retailers do not need to pay for products which are displayed in these centres. Company has planned to add over 600 CSCs in the next 2 financial years.
  5. Moreover, Company has 3,461 dealers and retailers are 11,306 at the end of December 2019. Dealers’ number increased by 19% as from March 2019. Retailers’ numbers are same as on March 2019 because company does not have any information for how many retailers are related with newly added dealers

(S) Future Plans

Cera’s Management believes that the company will see revival in sales with the economy coming out of slowdown. Company will have incremental 10-15% market share in faucetware business.

For FY20, company has capex plan of INR 56 crore. Out of this, INR 20 crore is for sanitaryware automation, INR 9 crore is for faucetware automation, INR 6 crore for customer touch points, INR 17 crore for the completion of the staff colony at Kadi plant & INR 4 crore for logistics & IT. Company is incurring capex of around INR 55-70 crore for the last 4-5 years.

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References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry’s Publications. 

Disclaimer: The report only represents personal opinions and views of the author. No part of the report should be considered as recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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Investment Services, Equities, Mutual Funds, Insurance Official Website : www.pawealth.in

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