V-Guard to exit from the non-core B2B segment

Looking for acquisition in existing, adjacent businesses

Kochi-based consumer electrical and electronics manufacturer V-Guard is planning to exit from the business-to-business (B2B) segment to focus on its core module- the business-to-consumer (B2C) segment, while targeting around 15 per cent growth every year in the next few years.

As part of an ongoing strategy, the company recently exited from the industrial UPS business. Currently, it is also into the business of making industrial cables- an area from which the company will be making an exit within one or two quarters, said Mithun K Chittilapilly, managing director of V-Guard Industries Ltd. The volume of this segment, accounting for around 2 perc ent of V-Guard's total business, is very small.

"These are very small businesses and they were not making money and had long working capital requirements. That is not our core competency," he said. The company has LT Cables business, which it offers to construction and power sectors, apart from other industry focused products.

"Despite this, we are targeting a 15 per cent growth every year in the next few years," he said. The company intends to grow its revenues at a compounded annual growth rate (CAGR) of 15 per cent over the next few years, which means the company is targeting to touch the Rs 3,000 crore-mark in terms of revenues within next three years.

"Within our existing product categories, we address a market size of Rs 75,000 crore; even as we are an organised branded player, we account for a market share of not more than 2 to 3 per cent. Our brand is considerably larger than what our market share indicates and we believe that the time has come for this gap to be decisively plugged," he said in the company annual report for the year 2016-17.

The company is active in the large category segment that includes wires, stabilisers, pumps and motors, water heating systems, inverter and battery systems and electric fans. The estimated value of each business stands at around Rs 200 crore. It is launching a gas cook-top in Kerala during Onam, which is in the beginning of September, this year. It would also be looking forward to expanding its product offerings in the kitchen appliances and switch gear segment.

V-Guard is also considering acquisition prospects. In March this year, it had received an in-principal approval from its board to acquire a majority stake in Guts Electromech- a Hyderabad-based switch gear and power transformer maker with a revenue of around Rs 40 crore.

"We have close to Rs 150 crore on our book and we have almost no debt as of now. We are flexible in terms of size, it is difficult to put any number. We are generating Rs 30-40 crore of cash in every quarter," said Chitilapilly, when asked about the investments it would make in acquisitions in the near future.

The company recently set up a manufacturing facility in Sikkim.

During 2016-17, V-Guard posted a turnover of Rs 2,150.62 crore, as against Rs 1,862.28 crore in the previous financial year.