Spartek Ceramic to expand operations: Expects to post turnover of Rs 140 cr

Hyderabad: Spartek Ceramics India, the Chennai-based manufacturers of ceramic tiles, granite and sanitaryware, has announced a major expansion to augment its wall tiles and floor tiles manufacturing capacity by three million square metres a year.

This follows the approval of its corporate debt restructuring package (CDR) from banks and financial institutions.

According to T. Krishnaprasad Tripuraneni, managing director, Spartek Ceramics, the company plans to invest Rs 100 crore which includes Rs 40 crore in foreign investments in various expansion projects across the country.

A new plant will be set up in the gas-rich Krishna-Godavari basin in Andhra Pradesh at an investment of around Rs 50 crore, while a joint venture in Gujarat is being planned for which the investments and capacities are under discussion, he said.

At present Spartek has a manufacturing capacity of six lakh square metres of tiles per year at its four plants in the country. Tripuraneni disclosed that the company was in advanced stages of discussion with potential partners for both plants which are expected to be simultaneously implemented in the next 12 to 15 months.

He added, "We are planning to infuse investments up to Rs 40 crore into the group to fund capital expenditure, working capital shortfall and substitution of high cost debt with low-interest loans. We have already tied up with an internationally reputed investor for raising Rs 16 crore and for the balance, discussions are in an advanced stage with a group of financial investors abroad."

The company's CDR programme involved prepayment in return for debt reduction and substitution of high-cost debt with lower interest loans. Following the package, the group debt has been reduced to Rs 65 crore from Rs 100 crore, while the average interest rate on loans has come down to around 10 per cent from nearly 17 per cent.

The last few years have been challenging for the company because of its acquisition of sick companies and the consequent burden on cash flows. Moreover the bureaucratic and legal procedures stretching over 12 years for the Board for Industrial and Financial Reconstruction approvals, four years for de-bonding the 100 per cent export oriented unit (EOU) division and mounting interest burdens had compounded the company''s problems.

The company seems to have put its problems behind it and now expects to post a turnover of Rs 140 crore next fiscal with a substantial increase in profits. "The consolidation programme is expected to be completed in 12 months" Mr Krishnaprasad said.