New Delhi: Lixil Corp., flagship of the Tokyo-based Lixil Group, on Wednesday said it acquired Hyderabad-based Sentini Sanitarywares Pvt Ltd as part of a plan to invest $65 million (about Rs414 crore) to produce ceramicware in India.
The company acquired Sentini Sanitarywares, a unit of the Rs1,300 crore Sentini Group, along with its recently-built sanitaryware plant in Andhra Pradesh, it said in a statement. The cost of the acquisition is pegged at Rs230-250 crore for an about 96% stake. The remaining amount will be invested in the 45-acre plant.
Lixil Group has businesses across 150 countries in housing and building materials and markets products and services under brands like Lixil, American Standard, Grohe, DXV, INAX and Permasteelisa.
Sentini is Lixil’s second acquisition in India. The Japanese firm had picked up a majority stake in Gurgaon-based curtain walling company Star AluBuild Pvt Ltd along with its factory in Maharashtra, in October 2013, for an undisclosed amount.
The factory in Andhra Pradesh will produce products for the Grohe and American Standard brands and cater to both the Indian market as well as the company’s global supply-chain network, Lixil said in the statement. The factory currently has a production capacity of one million units per year which can be scaled up to two million units. The facility will employ 400 people.
After the acquisition, Sentini Sanitarywares will be renamed Lixil India Sanitarywares Pvt. Ltd. Sentini Group chairman Seshagiri Rao Tipirneni will continue to be a shareholder and will act as an adviser to the board of directors of this entity, according to the Lixil statement.
“This investment demonstrates our strong commitment to the dynamic Indian market and its consumers, which is a strategic priority for Lixil for the future. The move also strengthens our overall ceramics production capacity, enabling exports to key markets such as the US," Lixil president and chief executive Kinya Seto said in the statement.
Lixil does not disclose sales numbers for the Indian market. Most of its sales in the country come through sales of products of its German subsidiary Grohe.
The size of India’s ceramic sanitaryware market was pegged at $1.9 billion in 2016, according to research firm Future Market Insights. The market is projected to grow at a compounded annual rate of 10.3% between 2016 and 2026.
Lixil, a relatively new entrant in the Indian sanitaryware market, has just about 2-3% volume share at present. “We see great growth potential in India and, with this investment, aim to capture 15-20% share and lead the local ceramics market in the next three years," said Lixil India country head Shubhajit Sen.