'Regency Ceramics is All Set for Strong Comeback'

With its incredible comeback to the market, Regency Ceramics, a publicly traded company on the BSE and NSE, is a true testament to tenacity and rebirth. Regency is poised to resume operations following a stoppage at its Yanam (Union Territory of Pondicherry) manufacturing facility. The Indian government's Ministry of Commerce named the 1983-founded business a STAR EXPORT HOUSE. 

With plans to hit a revenue target of 100 crore in FY 24, Regency hopes to take a sizable chunk of the expanding Indian ceramics market. Based on the Go-to-market analysis conducted with Crisil, the company's growth strategy places a strong emphasis on Tier 2 and Tier 3 cities in South and East India. 

It is important to note that a comeback into the entrepreneurial journey is always very challenging and one of the most courageous acts. Such courageous entrepreneur Mr. Satyendra Prasad Narala, Managing Director – Regency Ceramics, interacted exclusively with Dr Faiz Askari of SMEStreet.in. 

Here are the edited excerpts of the interview:

Faiz: Regency Ceramics is back in business after 11 years, what’s the company’s revival plan?

Satyendra Prasad Narala: Regency proposes to restart its production capabilities at its factory in Yanam in the first quarter of next year. Meanwhile, the company has entered into strategic contract manufacturing relationships with factories set up in the recent past in Morbi & Andhra Pradesh who look to tie up with a brand name player.  The company has already started distribution in Tamil Nadu, Andhra Pradesh, Telangana along with supplies to construction companies & builders in the projects segment.

Regency Ceramics enjoyed strong brand loyalty in the market, especially in markets of South & East India. Many of the dealers of Regency are still in the business and we will join hands in providing them a strong brand & quality product with state-of-the-art designs.

Regarding our strategic moves in the Indian Ceramic market, Regency Ceramics is proactively focusing on strengthening its foothold following the closure of our Yanam manufacturing unit in 2012 due to industrial riots in 2012. Presently, we've kickstarted production in Morbi, Gujarat, and are actively preparing to re-establish operations in Yanam, Pondicherry state. We've allocated INR 70 crore towards this revival, and our first tile consignment has already been delivered to Chennai, marking the beginning of this revival initiative.

Our primary focus lies in reinvigorating the Yanam plant, where an initial investment of INR 8-10 crores will be utilized to upgrade machinery and facilities. To achieve a robust manufacturing capacity of 25,000 sq m per day, we plan to introduce three production lines capable of 7,000 sqm each and a fourth line with a capacity of 4,000 sqm per day. Initially, production starts with one line at 7,000 sq m per day and is slated to scale up to four lines by March 2025. Our aspirations are aligned with reaching a revenue milestone of INR 100 crores by FY26. 

Faiz: From being a legacy brand to being a new entrant now, how does Regency plan to establish itself as a distinguished player?

Satyendra Prasad Narala: The brand’s key differentiating factor will be its design-led approach. With Spanish designer Maria Castillo on board, the brand has an increased focus on dynamic trends and emphasis on functionality and style. Regency was recognized as the STAR EXPORT HOUSE by the Ministry of Commerce, Govt. of India. We were a household name, renowned for our exceptional quality, intricate designs, and lasting durability - the Company's recall value has motivated it to relaunch in its key markets.

Faiz:  Please tell us about your entrepreneurial journey.

Satyendra Prasad Narala: I have been a serial entrepreneur before joining Regency Ceramics Being a graduate in computer sciences from College of Engineering, Guindy, Chennai, and Univ of S. Carolina, Columbia, USA, I co-founded two IT services companies and made a profitable exit after a few years. My other entrepreneurial projects were in the areas of GIS, deep sea fishing & food processing.

Faiz: What is the cumulative investment amount?

Satyendra Prasad Narala: With a cumulative investment of approximately Rs. 70 crores in production facilities, Regency Ceramics is strategically positioned for taking advantage of market expansion which is slated to grow with a CAGR of 5 – 7%. The company's comprehensive approach includes forging contract manufacturing agreements with cutting-edge production facilities. Regency is on track to initiate the first of its four manufacturing lines by the close of 2023 and gradually increase to four lines by March 2025. The inaugural line is projected to yield 7,000 sq meters per day, with plans for further expansion to achieve a robust daily production capacity of 25,000 sq m. 

Faiz: What kind of products will Regency manufacture? What are the key markets?

Satyendra Prasad Narala: The ‘Renaissance range of Regency’ will have a wide range, in all sizes and varieties – glazed vitrified tiles, full body vitrified tiles, polished vitrified tiles, double charged tiles, wall tiles, exterior tiles, steps, and risers. We are also equipped to manufacture technically advanced tiles with anti bacterial properties and cool roof tiles - designed to reflect more sunlight than a conventional roof, absorbing less solar energy. Once all four lines will be in production, each line will produce different tiles – like GVT, Wall Tiles and exterior tiles. With an aim for a pan-India presence, Regency has a three-pronged approach for its distribution strategy across southern and eastern India. 

Faiz: What is the size and strength of your dealer network currently?

Satyendra Prasad Narala: The Company has established a wide network of dealers to cover various regions. It proposes enduring relationships with key influencers like architects and interior designers. Over 50 dealers are appointed in Tamil Nadu, Andhra Pradesh, and Telangana.

Faiz: What’s the timeline to start the Yanam production facility? 

Satyendra Prasad Narala: Regency is gearing up to initiate trials in first quarter of 2024, marking a significant step towards operational readiness. After successful trials, the first phase of production is scheduled to commence. In the subsequent phase, we plan to augment production capacity by adding two lines, each capable of producing 7,000 sqm per day. As we progress, we aim to further increase production capacity and revive the economy of Yanam as well as generate employment in the region. 

Faiz: In terms of employment, how many people will you be employing?

Satyendra Prasad Narala: We are committed to fostering economic development in the Yanam region by providing meaningful employment opportunities. Regency is set to create approximately 600 to 800 direct jobs after full expansion, with individuals actively engaged in the production processes. Furthermore, the impact on the local economy extends to indirect employment, expected to generate an additional 400 to 500 jobs. Regency is excited about the positive impact the expansion will have on the community and looks forward to welcoming new team members into the Regency Ceramics family.

Faiz: Regarding the raw material sourcing, what are your plans?

Satyendra Prasad Narala: Regency Ceramics is strategically located near ball-clay and feldspar from nearby areas, with additional mineral resources available in Andhra Pradesh & Orissa. We will also have cost advantage in terms of logistics for South India markets. 

Faiz: Key entrepreneurial learnings from the Yanam incident?

Satyendra Prasad Narala: The Yanam incident taught us two important lessons. First, we're moving to a contract model to avoid conflicts over wages and production. Second, we've realized the need for better information to prevent problems. Despite challenges, the local community supports reopening the plant, showing they value Regency in their lives. These lessons emphasize the importance of good management, staying informed, and building strong ties with the community in the business journey.

Faiz: What market opportunities do you have in the Indian ceramics market? Any trends you can reflect on?

Satyendra Prasad Narala:In the Indian ceramics market, Regency Ceramics sees significant market opportunities driven by the strong brand, valuable assets, and the overall growth of the market. The industry is projected to have a Compound Annual Growth Rate (CAGR) of 6 to 7% in the next five years, followed by another 4 to 6%. With a substantial market size of 808 million square meters currently, the potential for expansion is tremendous. We are well-positioned to capitalize on this growth, leveraging Regency's reputation and assets to seize the incredible opportunities presented by the expanding market.

Some recent trends we have observed are – preference of customers for products of quality and design, make informed decisions, sustainable production practices (especially from builders & interior designers), back to nature products and walking the talk. Regency embodies these values and hopes that its long-term vision will be appreciated by discerning & aspirational customers.