cera sanitaryware ltd Management discussions

As Last fiscal year 2021-22 was a year of recovery in post Covid scenario. Your Company quickly adapted to the new market practice, understood customer expectation and delivered customized market specific solutions which helped in creating positive sentiments and as a result your company delivered double digit growth.

1. Right product mix:

Your Company was quick in conceiving, developing, manufacturing and rolling out Covid-appropriate products in the shortest time, like: a) Sensor faucets b) Anti-bacterial seat covers c) Rimless WCs d) Sensor urinals

2. Use of high tech in manufacturing:

Your Company has been in the forefront of co-creating indigenous technology for production, like 3D printing, robotic glazing, etc.

Your Company also implemented high pressure casting, for high end wall hung WCs, which could produce thirty pieces from one mould in a day, as compared to one piece by one worker in a day from conventional casting systems.

In Faucetware too, induction of high tech machines has helped increase production.

3. Constant brand promotion:

Your Company continued its brand promotion using television as well as digital platforms. Digital platforms were used to narrow-cast its ads to relevant target audience, thereby reducing the media wastage.

Making the product and brand visible through retail outlets has always been your Companys motto. Your Company does periodic audit of its retail outlets to ensure that the branding and product display are intact.

4. After-Sales Service:

Your Companys CERA Care team of technicians, with a 24-hour toll free call centre, and timely on-site service from the technicians to individual customers, has been one of its key strengths in generating customer loyalty and helping it garner word of mouth publicity.

Even during lockdown, CERA Care team members continued to connect to the needy customers and provide online solutions.

5. Company Display Centres:

For providing touch and feel experience to customers, the Company - managed large format CERA Style Studios in select cities, while dealers own and operate CERA Style Galleries and CERA Tile Galleries. In case of retailers owned customer touch points, CERA Style Centres and CERA Tile Centres provide customers not only an insight of your Companys products, but also a delightful shopping experience.

The CERA Style Studios operated as digital display centres with guided tour of the products for customers who did not want to visit the showrooms.

6. Manpower Training:

Your Company constantly imparts training to not only its own sales and service teams, but also to its dealers and sub-dealers salesmen. During the lockdown period and also in subsequent period, the training was conducted digitally.

7. Industry Structure and Developments:

Your Company is present in all segments—from affordable to luxury.

8. Opportunities and Threats:

After the lockdown was lifted, there was surge in demand. There would be an increase in demand for housing, giving the boost to the demand of your Companys products.

9. Outlook:

Your Company has been a preferred partner of CREDAI (Confederation of Real Estate Developers Associations of India), the apex body of developers, for the last seven years. Your Company also works closely with influencers and their associations like IIA (Indian Institute of Architects), IIID (Institute of Indian Interior Designers) & IPA (Indian Plumbing Association).

10. Risks and Concerns:

Any drastic change in Government policy may affect your Company.

11. Internal Control Systems and their adequacy:

The Company has an adequate system of internal financial controls with reference to the financial statements and also relating to the purchase of stores, raw materials, plant & machineries, equipment and various components and for the sale of goods commensurate with the size of the Company and the nature of business.

The system of internal control of the Company is adequate keeping in mind the size and complexity of your Companys business. Systems are regularly reviewed to ensure effectiveness. The internal auditors monitor and evaluate the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies. Based on the report on the internal audit function, necessary corrective actions in the respective areas are taken and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the audit committee of the board.

12. Key Financial Ratios: (in times / %)

S.N. Ratio 2021-22 2020-21
1. Inventory Turnover 6.30 6.42
2. Interest Coverage Ratio (Refer Note No. I) 46.56 32.46
3. Debtors Turnover (Refer Note No. II) 9.14 6.61
4. Current Ratio 3.02 2.60
5. Debt Equity Ratio 0.42 0.47
6. Operating Profit Margin % (Refer Note No. I) 14.82% 11.53%
7. Net Profit Margin % 10.36% 8.43%
8. Return on Net Worth % (Refer Note No. I) 14.85% 11.59%

Note :

I. There has been increase in current periods profit after taxes by 47% (YOY) due to favourable market conditions which were adversely affected in FY 2020-21 due to COVID19 and owing to the disruption at the manufacturing facility for about two and half months.

II. Effective credit control steps including timely recoveries were taken during the current period resulting into reduction in Trade Receivables.

13. Financial performance with respect to operational performance is discussed in the main part of the Report.

14. Material Developments in Human Resources, Industrial Relations, Environment, Health & Safety

Faced with the shortage of quality manpower, the thrust of your Company has been on talent improvement through training programmes.

Your Company continues to invest in training and development of its employees and has been organizing various training programmes from time to time. CERAs manpower strength as on March 31, 2022 stands at 2402.

The Company is ISO9001, 14001 and BS 18001 certified. Your Company is also a member of Indian Green Building Council (IGBC), promoted by Confederation of Indian Industry (CII).

Ahmedabad Vikram Somany
10th May, 2022 Chairman and Managing Director
(DIN : 00048827)