Regency Ceramics has entered into a manufacturing arrangement involving, among other things, the leasing of facilities from Segno Ceramics in Bapatla, Andhra Pradesh, according to a filing with the Bombay Stock Exchange (BSE).

Under the arrangement, Regency Ceramics will make monthly lease payments and has a period of two years to decide whether to acquire Segno Ceramics.

Satyendra Prasad Narala, the Managing Director of Regency Ceramics, indicated that Segno Ceramics had been taken over by new promoters through the National Company Law Tribunal (NCLT) over a year ago. Unfortunately, the facility had to cease production. Narala viewed this situation as an opportunity to expand their portfolio and noted that the arrangement was structured to ensure minimal impact on cash flows.

Narala also mentioned that Regency Ceramics operates as a zero-debt company and that any further expansion of Segno Ceramics would be financed through a combination of debt, promoter funding, and internal accruals.

The Segno plant, which spans 50 acre, has an annual production capacity of 3.6 million square metres. The facility will allow the production of products such as glazed vitrified tiles and polished vitrified tiles.

The company announced that it would assume full control of the manufacturing plant starting August 22, 2024. Narala stated that the company aims to achieve a revenue target of Rs 1 billion from the Segno plant in the coming calendar year.

Regency Ceramics has been inactive for the past decade. Narala revealed that about 8-10 months ago, the company began refurbishing its plant in Yanam, Pondicherry, with manufacturing expected to commence in 3-4 months and reach a capacity of 2.1 million square meters. The company plans to eventually increase the Yanam plant?s capacity to 8.2 million square metres. Currently, it is serving its customers through manufacturers in Morbi.