What is the usual lifecycle of a kitchen sinks in general?15 to 20 years?
Disclosure : Not invested
Ideally yes as per logical thought process. But with way people have disposable income I belive life cycle will eventually shrink and can be as low as 7-12 years.
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Carysil Limited: Ratings reaffirmed by ICRA; rated amount enhanced.
Key highlights from the latest credit rating report by ICRA.
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Carysil was incorporated in 1987 and is the leading manufacturer of granite-based kitchen sinks in India, also known as ‘Composite Quartz Sink’. Its promoters have over three decades of experience in the kitchen sink industry (both granite and steel sinks). The promoters’ long experience in the industry, apart from their established relationships with suppliers and customers, is expected to support the business profile.
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It also trades in kitchen appliances and has plans to start in manufacturing/assembling of the same in the near term. Product/segmental diversification is expected to result in operational synergies to support Carysil’s future revenue growth.
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Carysil derives major part of its revenue from export sales, with the same contributing around 80% to the total revenue in FY2022 (at the standalone level). The company has an overall presence in 50 countries with the US being the company’s biggest market, which contributes around 35% to total exports, followed by Europe (20%) and UK (10%).
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The company is exposed to the demand pressure in key export markets, as reflected by a decline in exports by ~21% in Q2FY2023 on a YoY basis at the consolidated level.
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The inventory levels also remained high as of September 2022 and are expected to reach the normal level by Q4FY2023.
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Carysil faces major competition in the European market where at present, the players are facing issues related to high energy costs, hence, Carysil is expected to benefit in near term in respect to manufacturing costs as its operations are based out of India.
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The ratings are constrained by the near-term demand pressure in the key export markets, coupled with stiff competition from other established players, though it is favourably placed in terms of cost efficiency as the manufacturing operations are based in India.
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Its operations are working capital-intensive due to the high inventory holding period and the relatively longer collection cycle.
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Its profitability is vulnerable to raw material prices and adverse forex movements, although the risk is partially mitigated by the natural hedge in terms of imports.
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The company has undertaken capex of around Rs. 73 crore in FY2022 and has planned capex of around Rs. 20 crore in FY2023 to increase the manufacturing capacity of sinks. The company has already deferred its capex related to expansion of the sink capacity by 2 lakh units to FY2023 due to weakening export demand.
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the utilisation of the working capital limit stood high at around 87% during the 12-month period from November 2021 to October 2022.
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The company has enhanced the capacity to 8,40,000 units in FY2022 from 5,00,000 units and further to 10,00,000 units in H1FY2023. However, it has postponed the expansion to FY2024 for the additional 200,000 capacity of quartz sinks.
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The company is going ahead with expansion in kitchen appliances, where the domestic market remains relatively under penetrated. This expansion will take place in two phases i.e., 100,000 units in Q1FY2024 (primarily fast-moving models of chimney/hoods) and the **balance 100,000 units (**additional model of chimney/hood and other appliances) in Q3FY2024. The fund requirement will only be in the range of Rs.5-10 crore which will be funded through internal accruals only.
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The company primarily uses natural quartz and resins in its manufacturing process, which does not pollute the air and water. However, the major environmental impact of granite sink manufacturing is caused by carbon dioxide emissions. The company complies with the Gujarat Pollution Control norms and it has not received any show cause/legal notices from it. The company has also started using natural gas, PNG that has less carbon dioxide emissions. Also, it has installed solar panels at the factory for shifting to environment friendly fuels.
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They face near term headwinds in export but it also help them to set up capacity to fulfill demand in medium to long term. Headwinds also help us how company speak and execute plans.
disc. Tracking from few months.
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| Geography | Category | Market Size | Growth | Carysil Market share | Nature | Competition |
|---|---|---|---|---|---|---|
| Global | Sinks | 28K Cr | 4-5% | |||
| India | Sinks | 3-4K Cr | 15-20% | <1% | ||
| Global | Quartz Sinks (Schock Tech) | 2-2.5K Cr | 5-6% | 14-15% | Consolidated* | Blanco, Franke, Acrysil, and Schock |
| India | Quartz/Premium Sinks | 500-1000 Cr | 20%+ | Carysil is only player with Schock tech but lot of unorganized players do make quartz sinks | Grohe, Hindware and many more | |
| Global | Stainless steel Sinks | 20-25K Cr | 3-4% | |||
| India | Stainless steel Sinks | 3-4K Cr | 15%+ | <1% | Fragmented | Grohe, Hindware and many more |
| India | Chimney | 1700 Cr | 15% | New entrant | Highly Fragmented | Hindware, Sunflame appliances, Flipkart, PKL Limited (Brand Clix), Green Line Appliances, Kaff Appliances, Wonderchef, Tuareg Marketing Private Limited, Stove Kraft Limited etc. as its Customers |
| India | Cooktops | 8K Cr | 6-7% | |||
| India | Wine Chillers | |||||
| India | Dish Washer | 500 Cr | 10% | |||
| India | Built in ovens | 2K-3K Cr | ||||
| India | Microwave ovens | |||||
| India | Coffee Makers | |||||
| India | Bath Fittings | 15-20K Cr | 9-10% | New entrant | Highly Fragmented | Cera, Jaquar, Hindware, Kohler, Pipe companies etc etc |
| UK | Solid Surfaces | 400-500 Cr | 30-35% |
My assessment of market opportunity for Carysil. Some numbers are approximations and may not be 100% accurate. I might update if I find new information.
To me, it looks like Carysil has to now pivot to Indian market for good growth for long term in kitchen and bath categories. But Indian market is price conscious and quite small for premium products that Carysil is targeting (for ex. they sell coffee maker for 1.5L INR).
Disc: Invested with small position to track the company as execution record is there but keeping risk of big fish in small pond in mind.
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In My View you shall mention only those competitors who make luxury of product.
Acrysil 's approach is to always tap the High end customers which may not be true about other brands though they might be having some products to compete in the segment but not all.
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Thank you very much for this. Really helpful. Could you explain your view on Carysil’s business ex-sinks?
Visited the Carysil store in Mumbai. Products are premium product be it Quartz sink or stainless steel sinks. Range for both sinks starts from 8-10k and goes upto 30-40k for quartz.
Their Hobbs and microvave and oven were also on display. Again premium range only no competition with retail segment
My understanding - Export will remain a good market considering premium range and quality products. Domestic market will take time to develop as income level goes people may shift to premium range for kitchen ware.
Well placed to capture luxury segment in kitchen appliance and sinks .
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you mentioned about exports will remain good because of premium and quality products.Do you have any personal experience in using the products? If so would love to hear about that…When i search the online reviews, i see a lot of user complains on the reviews( amazon etc). So a bit confused on the products…
I am using a Carysil quartz double bowl sink with drain and found no issues. Its almost an year now. I went for this as I was having the shares.
I took it from a dealer, buying was hassle free and delivered on time. Though don’t pitch for it. i think brand awareness is still an issue in India. Hope this helps
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No experience of use. Might not even want to use it as its more for aesthetic appeal . How many of us will actually happen to use a sink. Unlike a Tap / shower / appliance.
Sink as a product I don’t think can have much of complaints as use is simple right . You wash plates in it and some minor scratch i do expect if it’s used daily.
It’s a simple product without much complexity on how it works.
With regards to appliance quality is something which needs to be checked as people prefer brands / quality assurance while buying .
I did my home but never thought about changing to expensive sinks.
In concall also Mr Chirag said for builder lobby they are developing a product which fits budget( pocket). Same would be case for Indian market if they were to scale and wants to capture mass market
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Carysil Q3 concall -
High channel inventory during past months reducing, reaching optimum levels
Demand from US,UK improving. Europe - not so much due inflation
Started supplying to reputed builders locally
Acquired 60000 sq mtr land near own factory for expansion
Steel sinks capacity enhanced - almost doubled. To go live by Mar 23
Exporting PVD sinks to UK,France,Germany. Seeing strong demand. They have excellent aesthetic value
Faucets assembly line to go commercial by Q1 FY 24
Started ordering machines to make built in appliances - basically hobs and chimneys
Margins here likely to be similar to consolidated business
Launched green sinks ( made from waste materials ). Receiving good customer feedback
Q4 outlook looks good
Q3 EBITDA margins at 18 pc. Margins to improve as volumes pick up going fwd, which is very likely
Carysil Surface business doing better than initial expectations
Very bullish on Kitchen hoods and hobs category. Hiring entire new teams including IITians
Robust demand seen in Q4 in domestic mkt. Company building separate B2B team to tap builders and architects
Very hopeful of increased orders from Ikea and other global giants as the manufacturing costs in Europe soar. Ikea team visited, went away with positive feedback
Domestic mkt sales expected to grow at 30 pc + CAGR for next 3-4 yrs
Aim to hit 1000 cr revenues in FY 24 - this to me sounded like a bit too much!!! But, if achieved, can propel the stock to a different trajectory.
Overall - very bullish commentary.
Disc: invested, biased.
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Do they even have the capacity to do 1000Cr sales?
1000Cr sales in FY24 means an approximate growth of 65%, over FY23.
For the last 10 years, the max YoY growth they ever had was 56%, which was due to a good amount of capex coming onstream, and post covid pent-up demand.
This statement could be to ease the exit of an existing large investor, and in my opinion the management should strictly refrain from making such random comments.
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I think with their current capacity, they can do about 900 cr ( including overseas subsidiaries ). Maybe they can outsource a little to achieve that 1000 cr tgt.
But the tgt looks like a tall order. Definitely.
I did some search on linkedin and found that the team has hired a B2B lead in Nov… person has good experience in the space…
I’m unable to spot any IITians though…
could some one please help me find the STL topline in 3rd quarter? From the results it looked like, domestic did bad, exports did bad as well, may be STL kind of bridged the gap to 3rd qrtr22?
In there recent Q3 Conference call , Chirag mentioned that In domestic mkt they cant hope to grow ONLY through sinks as when their dealer network is spreading , the people want more than a sink when they come to the store , hence the additional adjunctions like kitchen Appliances / Bath products etc & Hope to get into Builder segment for growth ,so now the problem is Bldg product segment by nature is a low -margin segment and i am not sure if they will be able to maintain their current margins if this segment grows, at a consolidated levels. This is the precise reason by CERA Sanitary ware didnt go big in the Bldg segment due to dilution of margins in this segment ! So jury is still out on this one.
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Till we get incremental sales at decent Return on invested capital it should be fine. Builder segment would be a good way to also create brand awareness .
Chirag had done a comparision to Toto in concall. Toto has premium product basket and to portray their products in likes of Toto brand awareness and positioning is important which they are doing.
I think it’s investor community who thinks more about maintaining margins.
I remember some one saying 22% of nothing v/s 16% of 100. What would you choose.
So if company can grow their sales with new segment by getting decent margins overall PAT will grow . Margins matter but without scale they make no sense.
If I were to choose low scale high margin v/s high scale and little low margins . Second one would give me more bottom-line growth and visibility .
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https://www.linkedin.com/in/garima-taneja/ - here is the profile of the B2B lead…
In the year 2019, I took over a 13-year legacy brand called INSIDE HOMES. A brand synonymous with Modular Kitchens, Wardrobes, Bathroom Vanities, and other Cabinets for Indian Homes.
As a Business Head, transformed the brand’s identity and history of excellence of “Changing Houses to Homes”, whilst guiding the company into a new phase of growth that enabled it to successfully address the ongoing changes and challenges.
I am passionate about home interiors and believe an aesthetically designed house brings positive vibes.
I bring my 10+ years of experience in understanding home and kitchen interiors, leading Corporate Communications, Marketing, Brand Building working with Global Companies in India, Dubai & Singapore towards the development and business transformation of CARYSIL LTD. and STERNHAGEN.
CARYSIL being one of the world leaders in producing sinks, Carysil’s global experience, and expertise have naturally led it to diversify into other kitchen products which is a perfect fit for my skill set. A global company that exports to over 58 countries as well as is a pioneer in innovation and design.
Sternhagen Germany will allow me to further explore the global markets and market products based on design sensibilities and cutting edge technology.
With my capability of acting as a liaison with Architects, Interior Designers, Vendors; a customer-centric approach and the capacity to deliver the best in class quality, I am excited to embark on this journey of growing the brand and reaching new heights.
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