Havells’ joint managing director, Anil Gupta, who played a pivotal role in turning around its biggest foreign acquisition, Sylvania, has now set his eyes on the Africa and China markets. In an interview with Mansi Taneja, he talks about the road ahead for the company, mainly an electrical and power distribution equipment maker. Edited excerpts:
Havells went for the big-ticket acquisition of SLI Sylvania in 2007, but the unit soon went into losses, after the recession. There were apprehensions that you were stretching your pockets too far. When will the unit report its first profit?
This will be the first year, i.e the end of fiscal 2011-12, that Sylvania will make profits. It is a big turnaround story. Internally, we knew it was the right move, but there were some concerns outside. At the end of FY 12, the PAT (profit after tax) was Rs 70 crore. Our focus will be on expanding margins and improving efficiencies, so it will contribute more to profits. We have already introduced Sylvania products, mainly architectural lighting, in the Indian market. It is a very niche segment. We have also set up a factory for Sylvania lighting fixtures in India, which will start production now. This will cater to Sylvania globally and the India market as well. After localisation, Sylvania products will definitely have a much faster access.
How big is the market abroad for Havells in revenue terms? What is the update on your factory in China? Will you be looking at more production units?
We will have revenue of Rs 6,700 crore overall, of which Rs 4,000 crore is from the Indian market and the rest from Europe and Latin America. We are setting up a plant in China for high-intensity lamps, to cater to global markets such as Latin America, Europe and India. It will start production in July this year. We have opened sales offices in China, so we wanted to have a local production centre.We have enough capacity for the next two-three years, so no plans of setting up any new plants.
Do you plan to enter new geographies? Are there any acquisitions in the pipeline to increase your reach or product portfolio?
We will not be going for another big-bang acquisition, as it is not required. Sylvania has given us a 100-year-old brand in in our segment and an international base in about 50 countries. So, acquisitions will be smaller in nature. It may be done to increase the reach and expand product portfolio. We have started in a small way in the Africa and China markets, in lighting and switch gear segments. We have opened offices in Kenya, Nigeria and South Africa. Currently, the Africa market is around Rs 80 crore and we are expecting Rs 200 crore in the coming years. Similarly, China will be ¤100 million in the next four-five years. Africa and China are potential markets for acquisitions. These are the geographies for the future and we are exploring acquisitions there.
You have recently forayed into home appliances. What is the strategy behind it? How much have you invested and what growth numbers are you looking at?
In the last five years, we have spent about Rs 1,000 crore as capex. We have been growing consistently at 20-30 per cent except in 2009. We have built an infrastructure, but there will be continuous upgradation. Any new product addition comes from the fact that we have a strong brand and distribution channel, which we can use in the home appliance segment. That market is around Rs 5,000 crore. We are expecting to clock Rs 500 crore revenue from this segment in the next three-four years. Overall, we are looking at domestic growth of 15-20 per cent and five to 10 per cent in the segment abroad. We will have the entire range in home appliances, but are not looking at entering the white goods segment currently. Indian consumers are expanding towards premium quality products. In the past few years, we have also spent about Rs 500 crore in brand building and advertisements.
