Regency Ceramics has announced a pivotal step in its growth strategy by entering into a leasing agreement with Segno Ceramics. The arrangement, officially recorded in a BSE filing, involves leasing Segno’s manufacturing plant located in Bapatla, Andhra Pradesh.
This agreement not only provides Regency Ceramics with access to a high-capacity production facility but also positions it for significant expansion in the ceramics industry. Under the terms of the lease, Regency Ceramics will pay monthly rentals for the Segno Ceramics facility and has been granted a two-year window to decide on the potential acquisition of the plant. The facility, which has been dormant since its takeover by new promoters through the National Company Law Tribunal (NCLT) process, offers a substantial production capacity of 3.6 million square meters annually. This plant will enhance Regency’s manufacturing capabilities for products such as glazed and polished vitrified tiles.
The Managing Director of Regency Ceramics, emphasised that the lease arrangement was strategically designed to minimise cash flow impact while leveraging the opportunity for growth. Regency, currently a zero-debt company, plans to fund the expansion through a blend of debt, promoter funding, and internal resources. The company aims to achieve a revenue target of Rs 100 crore from the Segno plant within the next calendar year. In addition to the Segno plant, Regency Ceramics is refurbishing its own plant in Yanam, Pondicherry. Expected to resume production in the next 3-4 months, this facility will initially reach a capacity of 2.1 million square meters, with long-term plans to expand to 8.2 million square meters. Currently, Regency services its customer base through manufacturers in Morbi.
The leasing of the Segno Ceramics facility marks a significant milestone for Regency Ceramics, aligning with its strategic goals of expanding production capabilities and market reach. This move not only bolsters Regency’s manufacturing capacity but also sets a solid foundation for future growth. As Regency transitions to utilise both the Segno and Yanam plants, it is well-positioned to enhance its competitive edge in the ceramics industry and achieve substantial revenue growth.
