Lloyd to boost consumer durables portfolio with entry into refrigerators

Havells, which owns the Lloyd brand, expects its non-AC business to contribute 50-60% of its consumer durables business

After expanding its product portfolio to cover washing machines and television sets beyond its flagship air-conditioners, Lloyd, the consumer durable brand owned by Havells India, will be entering the country's Rs 15,000-crore refrigerator market in the next 1-1.5 years. 

While the necessary research and product development for refrigerators is underway, Havells expects its non-AC portfolio to grow to contribute around 50-60 per cent of the turnover from the Lloyd business. 

“ACs are the strongest revenue contributors in our portfolio, but we expect the non-AC business to pick up as well. As a result, even as revenue will continue to increase, the contribution of non-AC business will go up. It will take another 1-1.5 years for us to launch refrigerators,” Anil Rai Gupta, chairman and managing director at Havells India said.

AC sales currently account for 70 per cent of the total business Llyod generates for Havells India, and commands three per cent of the total white goods market in the country, pegged at around Rs 60,000 crore.

Under this initiative, the company is focussing on doubling its outlet count from the current 7,000-8,000 in the next 3-5 years and will be focussing on opening more Lloyd exclusive stores, primarily in the upcountry locations.

Currently it has around 80 such outlets which operate on a franchisee model and the company targets to open 30-40 such outlets every year.

The company expects to close the current fiscal year with a topline of around Rs 10,000 crore. The Lloyd brand is expected to contribute 20 per cent to the company’s consolidated revenue with the electrical business contributing 80 per cent of the projected turnover.

“We have been seeing a 20 per cent growth in the Lloyd business and expect to maintain a 15-20 per cent growth from this segment in the coming few years,” Gupta said.

Although back in February 2017, Havells India acquired the consumer durables business of Lloyd Electric at an enterprise value of Rs 1,600 crore, it didn’t purchase the manufacturing plants leaving Havells dependent on third-party manufacturing of the white goods.

However, it is now investing Rs 1,000 crore at the group level to achieve higher economy of scale for the electrical business of which around Rs 450 crore will be invested in an AC manufacturing plant.

“In the first phase around Rs 350 crore is being invested in our greenfield AC manufacturing plant in Ghilot in Rajasthan which has a capacity to produce 0.6 million ACs annually. In the next phase, another Rs 100 crore will be invested to scale up the installed capacity to 1 million pieces every year,” Gupta said.

However, Havells will not be coming up with manufacturing plants or lines for the non-AC business till sales volume goes up for these categories.