Watertec (India) Pvt. Limited, the Coimbatore-based bath fittings and accessories major touched a turnover close to Rs. 200 crore in FY 2015-16. Recently, the company diversified into the CPVC / UPVC Pipes & Fitting space to leverage its vast dealer network and expertise in the polymer based bath fittings segment. Here, we uncover the journey of this unsung hidden gem, which is now gearing up to touch Rs. 500 crore in revenues in the next five years. Read on, to find out more.
As we began our research to uncover India’s best mid-market companies, one of the first things we did was to identify cities where entrepreneurship has flourished for years, if not decades. Quickly into our pursuit, we realized that Coimbatore was home to several hidden gems. The city even has many nicknames – Manchester of the South, Textile City of India and the Pump City. It is home to some of South India’s biggest family businesses – ones that have been around for generations.
The mandate our team was given for the ‘hidden gems’ section was to identify companies with a turnover of more than Rs. 100 crore., healthy credit ratings, sound financials and a trusted source to vouch for the quality of its products or services. During our search, we stumbled upon Watertec (India) Pvt. Limited, a company that is a three-way joint venture among Coimbatore-based UMS Group that is part of the GD Naidu group, Watertec Malaysia and Sri Lanka-based South Asian Investments. The company was close to hitting a turnover of Rs. 200 crore in FY 2016, it was debt free, and, most importantly, it had carved a niche for itself as the market leader in the polymer based bathroom fittings and accessories segment.
For our inaugural edition of Hidden Gems, we travelled to Coimbatore to meet with N.G. Anand, Executive Director and a Member on the Board of Watertec (India) Pvt. Limited.
Going back in time
Watertec (India) started its operations in 1997 by spotting a gap in the market for plastic bath fittings and accessories. In its first year of operations, the company touched revenues of Rs. 1 crore, scaling up slowly but steadily to Rs. 7 crore in 2006. At that time, N.G. Anand, a senior level professional at Pidilite Industries, Mumbai came on board as COO to spearhead the operations and put the company on a rapid growth path. He was then promoted as Executive Director and elevated to the Board in 2011. Anand says, “One of the key reasons why we were able to reach almost Rs. 200 crore in revenues, is that the operating management had a free hand. The promoters would receive an MIS report from us every month, take part in the annual budgeting exercise, but after that it was left to us to execute the plans.”
“I believe over 90 percent of the market is taken by the metal players. But, in the remaining 10 percent, we’re the market leaders.”
Leading a niche
Anand believes that Watertec’s USP lies in two areas; One, quality of its bath fittings and accessories, thanks to the usage of high-quality polymers and patented technology from Watertec / Malaysia and two, its 4000-strong dealer network that ensures availability of products to its end users all over the country.
Overall, the bath fittings sector is dominated by metal-based players like Jaguar, Grohe, Parryware Kohler etc. Anand says, “I believe over 90 percent of the market is taken by the metal players. But, in the remaining 10 percent, we’re the market leaders.” Watertec is probably the only branded, organized player in the plastics segment, which caters to public places, budget residential / commercial segment and government schools, hospitals and the like.
Critical success factors
When we quizzed Anand on some of his top priorities today, he says, the biggest focus is to remain the market leader and penetrate the markets further. Anand believes, over time, there will be several other organized players who’ll enter the polymer based bath fitting sector. He’s specifically referring to the entry of large piping players like Ashirvad and Supreme into the bath fittings segment. “Over the last few years, we were the only organized players in this segment. That is going to change and we’ve to be prepared,” explains Anand. At the core of his strategy to tackle competition is to enhance his focus on marketing, dealer network enhancement and market penetration. This is on the bath fittings side.
As part of its related diversification strategy, the company is extremely focused on scaling up the CPVC and UPVC business which was started almost three years ago. “We’re putting a lot of focus on several new products; We’re gearing up to grow the SWR pipes business and overtime, you’ll see us get into fire-resistant pipes, underground drainage pipes, column pipes etc.” says Anand. For the Pipes segment, Watertec has setup a state of the art production facility spread over 6.5 acres at Vagarayampalayam, 30 km away from Coimbatore for injection molding and extrusion operations.
Anand says that the next year is focused on increasing penetration in the bath fittings segment and consolidation and scaling up of the pipes & fittings division. From a profitability perspective, while Anand does not divulge exact numbers, he says EBITDA is very “healthy” and expects to grow with a profitability mindset. Overall, in the next five years, the company aspires to hit the Rs. 500 crore revenue mark and capture high market share in both its business divisions.