Overview
Before I begin my overview of the Company's performance, I would
like to offer a context.
Over the past two decades, there has been a marked shift in how people
aspire to live - seeking not just functionality but a better quality of life. Nowhere is
this shift more evident than in the evolution of the bathing area. Today's bathrooms
reflect a heightened sense of style, space and sophistication. In fact, the transformation
witnessed in bathrooms - across India and globally - has arguably outpaced the changes
seen in other residential, office, or institutional spaces.
A couple of decades ago, bathrooms were typically considered a low
priority, marked by minimal investment and the use of basic materials. This perception has
undergone a significant change. Bathrooms are now seen as an integral dimension of a
residential identity, influencing how people shape impressions. They have evolved into
design-forward, opinion-enhancing zones that reflect personal taste and aspirations.
Inflection point
At CERA, we have been fortunate to witness—and capitalize
on—this transformation. Our sustained outperformance is rooted in two pivotal trends.
First, we benefitted from the shift of a large segment of India's population from
shared and informal bath areas to personalized, formal bathrooms. Second, we aligned
ourselves with the aspirations of a new India that is increasingly upgrading its bathing
spaces to meet emerging global standards. This dual positioning—bridging mass
relevance with class appeal—has helped us grow significantly. From revenues of Rs. 41
crore in FY01-02, we expanded to Rs. 243 crore in FY10-11, Rs. 1,202 crore in FY20-21, and
reached Rs. 1,915 crore in FY24-25.
We believe these twin trends will remain relevant for the foreseeable
future. India will continue to witness a broad transformation, with one of the
world's largest population clusters gradually moving from a legacy bathrooms mindset
to adopting modern, well-designed bathing areas. Simultaneously, a growing segment of the
affluent population will transition from modern to ultra- modern bathrooms. As a focused
brand, our intent is to remain relevant to both these customer segments— though the
weightage of our capital investments, operational bandwidth, and promotional efforts may
vary in line with evolving demand patterns.
Optimism
What gives us the confidence to look ahead with optimism?
I would like to answer this through multiple lenses. India has long
faced significant challenges in sanitation and hygiene, with deep implications for public
health. Open defecation remains a major issue, with estimates ranging from 300 million to
522 million people lacking access to proper sanitation facilities. India accounts for the
highest number of individuals practicing open defecation. Of the one billion people
worldwide without access to adequate sanitation, 82% live in just ten
countries—including India. This statistic highlights the pressing need for continued
and comprehensive improvements in sanitation infrastructure. (Source: pib. gov.in, Health
Issues India)
India's sanitaryware and bathware sector reached an inflection point
with the introduction of the Goods & Services Tax (GST). The GST regime created cost
advantages for organized manufacturers while increasing the compliance burden on
unorganized players. This accelerated the formalization of the sector, enabling companies
like CERA to expand their market share and build long-term structural advantages. It
marked the beginning of a new phase of scale and competitiveness for the organized
segment.
The Union Budget FY25-26
Our optimism is supported by recent policy developments. Under the
Union Budget, Rs. 5,000 crore was allocated to the Swachh Bharat Abhiyan to enhance urban
sanitation, infrastructure, and public health. Additionally, a Rs. 1 lakh crore Urban
Challenge Fund was introduced to transform Indian cities into future- ready growth hubs
through focused redevelopment and improved water and sanitation facilities. The Rs. 15,000
crore Special Window for Affordable and Mid-Income Housing (SWAMIH) Fund 2 aims to
complete 100,000 housing units, building on the momentum created by SWAMIH Fund 1, which
delivered 50,000 homes and is set to deliver another 40,000 in 2025. (Source: ASDReports,
Economic Times, Reuters, IBEF, Financial Express)
Sustainable growth
At CERA, we believe that the tailwinds within this sector should
translate into sustainable growth for a long-term, committed player. We have acquired land
to commission fresh sanitaryware manufacturing capacity. We enhanced our faucetware
manufacturing capabilities in September 2023. At the same time, in line with our strategy
to provide a complete bathroom solution, we will continue to outsource bathroom tiles
rather than venture into their production.
This approach positions us attractively to achieve high double-digit
revenue growth year-on-year. We expect to outpace the industry growth by 5-6%.
We believe that this business approach will enable us to create
enduring value for all our stakeholders.
| Vikram Somany |
| Chairman and Managing Director |