CERA SANITARYWARE LIMITED
ANNUAL REPORT 2011-2012
The Directors have pleasure in submitting the Annual Report together with
the Statement of Accounts of your Company for the year ended 31st March,
The summary of your Company`s financial performance is given below:
(Rs. in lacs)
Year ended Year ended
March 31, 2012 March 31, 2011
Profit before Depreciation and Taxes &
Exceptional item 5620.60 4805.18
Deducting there from Depreciation of 770.52 653.03
Profit before Tax 4850.08 4152.15
Deducting there from taxes of:
- Current Tax 1670.00 1432.03
- Deferred Tax (23.57) 66.04
Profit after Tax 3203.65 2654.08
Add: Balance brought forward
from previous year 1100.00 900.00
Amount available for Appropriations 4303.65 3554.08
The proposed appropriations are:
1. Proposed Dividend 379.64 316.37
2. Tax on Proposed Dividend 61.59 51.32
3. General Reserve 2462.42 2086.39
4. Balance carried forward 1400.00 1100.00
Total 4303.65 3554.08
Your Company has continued to grow substantially due to brand building and
The well-entrenched distribution network of your Company is getting a boost
by opening of CERA Bath Galleries in different towns.
Your Company is expanding its production capacity, to meet the increasing
demand. The production capacity will go up to 2.7 million pieces per annum
from 2.0 million pieces on completion of expansion program, which is under
Your Company`s Faucetware plant has already gone on -stream in September
2010. After successful production of half-turn series and quarter-turn
series, the plant is now producing high end single lever series. Automatic
CNC machines and automatic polishing machine were installed, which
facilitates the plant to produce more premium ranges.
Your Company continues to import and market, under the brand name CERA,
wellness range, consisting of products like shower cubicles, shower panels,
steam cubicles in addition to high end sanitaryware.
Your Company has also added other products like kitchen sinks, mirrors and
sensor products to its range under Bathware.
The non-conventional wind power generation remained at 52,55,614 KWH
against 43,81,473 KWH in the previous year. The installed capacity of wind
power unit of the company is 4.975 M.W.
Corporate Governance and Management discussion and Analysis:
Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges,
Report on Corporate Governance along with the Auditors` statement on its
compliance and Management discussion and Analysis have been included in
this Annual Report as a separate section.
Directors` Responsibility Statement:
In compliance of Section 217 (2AA) of the Companies Act, 1956, the
Directors of your Company confirm:-
* That in the preparation of annual accounts, the applicable accounting
standards have been followed and there are no material departures;
* That such accounting policies have been selected and applied consistently
and made judgments and estimates that are reasonable and prudent so as to
give a true and fair view of the state of affairs of the Company as at
March 31, 2012 and of the Profit of the Company for the year ended on that
* That proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
* That the annual accounts have been prepared on a going concern basis.
Your Directors recommend a dividend of Rs. 3.00 per share (60%) (Previous
year Rs. 2.50 per share (50%)) on 1,26,54,874 equity shares of Rs. 5/- each
fully paid for the year ended 31.03.2012, to be paid subject to approval by
the members at the ensuing Annual General Meeting.
Energy Conservation, Technology Absorption, R & D Cell and Foreign Exchange
Earnings & Outgo:
The details required under the Companies (Disclosure of particulars in the
Report of Board of Directors) Rules, 1988 are annexed to this report.
The Company has contributed Rs. 64.92 Crores to the exchequer by way of
excise duty, customs duty, income tax, VAT, sales tax, and other fiscal
Fixed deposits from the Public outstanding as on 31.03.2012 was Rs. 3.52
lacs. There were 06 Fixed Deposit holders with Rs. 2.74 Lacs of
unclaimed/unrenewed deposits as on 31.03.2012. The Company, on the basis of
the working results during the year under review can accept deposits from
the Public as well as from the shareholders to the extent of Rs. 4871.33
During the year under review, the Company repaid loans of Rs. 692.00 Lacs
to Financial Institutions and Banks.
Information as per sub-section (2A) of Section 217 of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975 forming
part of the Directors` Report for the year ended 31st March, 2012 is
Employees Stock Option Scheme:
Pursuant to the authority of the members granted at the Extra - Ordinary
General Meeting of your Company held on 6th January, 2007, the company has
framed the Employees Stock Option scheme 2007 (ESOS - 2007).
No eligible employee exercised options during the year. 32 options were
lapsed due to non-exercise by employees. The exercise period of all options
have expired on 09.07.2011 and no granted options are outstanding after
that date under Employees Stock Option Scheme 2007 (ESOS 2007).
Dr. K.N. Maiti and Shri Sajan Kumar Pasari are due to retire at the end of
ensuing Annual General Meeting and being eligible offered themselves for
Brief resumes of Dr. K.N. Maiti and Shri Sajan Kumar Pasari, Directors as
required under clause 49 of the Listing Agreement executed with the Stock
Exchanges are provided in the notice convening the Annual General Meeting
of the Company.
M/s H.V. Vasa & Co., Statutory Auditors of the company retire at the end of
forthcoming Annual General Meeting and being eligible, offer themselves for
re-appointment. The Board recommends their re-appointment at the ensuing
Annual General Meeting.
The Company has adequately insured all its properties including Plant and
Machinery, Buildings and Stocks.
The Company`s relations with its employees remained cordial throughout the
year. The directors wish to place on record their deep appreciation for the
services rendered by workers, staff members and executives of the Company.
The Company has taken adequate steps for the health and safety of its
employees, as required under the Gujarat Factories Rules, 1963.
Your Directors thank the Financial Institutions and Bankers for extending
timely assistance in meeting the financial requirements of the Company.
They would also like to place on record their gratitude for the co-
operation and assistance given by State Bank of India, ICICI Bank Ltd, Yes
Bank Ltd and various departments of both State and Central Governments.
For and on behalf of the Board of Directors,
Place: Ahmedabad. Vikram Somany
Date : 11th July 2012 Chairman and Managing Director
Annexure to the Directors` Report:
Disclosure of particulars with respect to Conservation of Energy,
Technology Absorption, Foreign Exchange Earnings and Outgo as required
under the Companies (Disclosure of particulars in the Report of Board of
Directors) Rules, 1988 and forming part of the Report of the Board of
Directors for the year ended 31st March, 2012.
A. Energy Conservation
Form - A: Not Applicable
B. Technology Absorption
Research and Development (R & D)
1. Specific areas in which R & D is carried out:
The Company`s Research & Development Unit is recognized by the Department
of Scientific and Industrial Research (DSIR), Government of India, since
1989. It has been relentlessly working for improvement in quality of
products, cost reduction through waste minimization and pollution abatement
to keep the company ahead in market competition.
Some innovative R&D activities carried out and commenced commercial
production during the year under report are:
* Development of an opaque glaze with extra-ordinary whiteness has been
completed for better aesthetic appeal look and then introduced in
commercial production. The glaze has been named as Snow White. Cera
Sanitaryware products covered with snow-white glaze has been voted as the
product of the year in Sanitaryware Category for the successive second year
in a row.
* Several dark coloured glazes have been developed utilizing stains from
indigenous source through import substitution and also commenced commercial
* Development of a new body in which recycling of fired waste (pitcher) in
the composition is increased. Thus the said development has helped in
reducing solid waste as well as reduce the consumption of raw materials
thereby natural resources are also conserved.
2. Benefit derived as a result:
With the introduction of new sources and import substitution of raw
materials, colours etc., the cost of production has reduced significantly.
3. Future plan of action:
* To minimize imports through utilization of raw materials and other inputs
from indigenous sources for better inventory management and cost reduction.
* To develop various glazes matching to the international standards of
* To develop crack resistant body and matching glazes with a view to mature
the products at a lower maturing temperature for energy conservation.
4. Expenditure on R & D:
a) Capital : Rs. 3.34 Lacs
b) Recurring : Rs. 65.68 Lacs
c) Total : Rs. 69.02 Lacs
d) Total R & D Expenditure as a
percentage of total turnover : 0.22%
Adaptation & Innovation : Nil
C. Foreign Exchange earnings and outgo:
The Company has continued to maintain focus and avail of export
opportunities based on economic considerations. During the year the Company
has exports (FOB value) worth Rs. 392.43 Lacs.
Total foreign exchange used : Rs. 4746.03 Lacs
Total foreign exchange earned : Rs. 392.43 Lacs
Annexure to the Directors` Report:
Management Discussion and Analysis
Your Company`s healthy growth record continues year after year only and the
growth got bettered in this fiscal.
The uninterrupted growth of your Company, despite the clouds of housing
construction slow down, is due to the marketing efforts and product
quality. On the marketing front, your Company inducted Miss Dia Mirza, a
well-known celebrity from the film fraternity, as CERA`s brand ambassador.
The new television commercials, print advertisements featuring Miss Dia
Mirza in various media were released during the year.
Your Company also strengthened its CERA Care division with induction of
technicians for taking care of its after-sales services in all key cities
of the country.
Another milestone in improving the retail experience of customers is
inauguration of CERA Style Studio in Mumbai in the prime western suburb
Veera Desai Road in Andheri (West).
a) Industry Structure and Developments:
Your Company`s brand CERA, with its impeccable legacy of over three
decades, continue to grow, much above the industry rate, despite the
competition from peer brands-both domestic and international. Your
Company`s well-entrenched and loyal distribution network, nation-wide teams
for quick response in sales and service, immaculate product quality, and
continuous advertising and promotion of the brand through television,
print, OOH and POP have helped place CERA in an enviable platform in the
minds of the customers.
Your Company`s brand extension to other related categories like showers,
faucets, PVC cisterns, seat covers, etc. has also helped in accelerating
the growth. Such brand extensions will continue in the coming years as
well, which will help CERA establish eventually as a total home solutions
brand and place the brand ahead of its peers.
The industry structure remains unchanged with domestic and International
brands vying for space in the Indian market and for getting larger shares.
b) Opportunities and Threats:
Though there was no significant drop in housing construction rate in the
fiscal under review, the fears of Euro-zone cloud looming over India too is
not ruled out. However, your Company is unperturbed by such prediction
because of its well-established mid-segment positioning in the market. The
demand in mid-segment housing is likely to be least affected by any
impending slow-down and hence your Company is confident of maintaining the
Your Company`s brand CERA has strong equity, loyal and dedicated network.
The width of distribution network is also being increased continuously for
across India to reach out to tier two towns, where there is huge potential.
In addition to this, your Company has been continuously present in
television and print media and today, CERA has near top-of-mind recall
amongst architects, interior designers and builders.
Your Company is also been fortifying its rapport with housing developers
and influencers like architects, interior designers and plumbing
consultants. This is being done through personal contacts by your Company`s
sales team as well as through sponsorship of get-togethers by the
organizations of these personnel like CREDAI, IIA, IIID, IPA, etc.
Your Company`s growth continues to be much above the industry growth, year
after year, which is testimony to its product quality and marketing
The successful display centre concept of your Company, introduced through
CERA Style Studios is now extended to more cities. One such CERA Style
Studio was opened in Andheri West in Mumbai. Soon, another CERA Style
Studio in Gurgaon will be opened.
The CERA Style Galleries opened in several cities in collaboration with
CERA dealers have been a success, with many more dealers coming forward for
opening such Galleries. Already 36 CERA Style Galleries are functional all
over the country.
Together, the CERA Style Studios and CERA Style Galleries have been of
great impact in improving the retail experience for prospective customers
and institutional buyers of CERA.
d) Risks and Concerns:
Any drastic change in the Government Policy may affect the sanitaryware and
(e) Internal Control Systems and their adequacy:
The Company has an adequate system of internal control relating to the
purchase of stores, raw materials, plant & machineries, equipments 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 Company`s business. Systems are regularly
reviewed to ensure effectiveness.
(f) Financial performance with respect to operational performance is
discussed in the main part of the Report.
(g) Material Developments in Human Resources/Industrial Relations:
Faced with the shortage of quality manpower, the thrust of your Company has
been on talent improvement through training programs.
Your Company continues to invest in training and development of its
employees and has been organizing various training programs from time to
CERA`s manpower strength as on March 31, 2012, stands at 1895.