"hpl is increasingly finding relevance in the industry as newer technologiescontinue to disrupt. through smart technology-led products we are making a positive andmeaningful difference to the lives of consumers and the society at large. our focus willbe on making sustained investments in research and development to strengthen our portfolioand in advertising and promotion to improve our brand perception."
The market context for electrical industry in India is getting exciting. While thecompetitive scenario continues to prevail mega opportunities are coming underwayespecially in smart and solar product segments which are likely to provide a huge fillip.It is projected that between 2019 and 2023 the shipments of smart home devices globallywill grow at a compounded 16.9%. Even in India the Government is coming out withinitiatives like replacing all household and business meters with smart ones to the tuneof 300 million and focussing on providing reliable power to all citizens. Complementingthe initiatives is the ambitious smart cities projects and the mission to instal 100 GWsolar power by 2022. All these are very big opportunities. In fact the smart meteringopportunity is such big that even if a part of it actually materialises the whole meteringmarket could grow exponentially. Obviously these industry developments are very relevantto us and excite us.
Solid position in a competitive market
We continue to maintain leadership position in the metering and switchgear segmentsalong with establishing strong base in the lighting segment. This helped us deliver strongperformance in FY 2018-19 with an 11.8% growth in revenues to Rs. 1158.5 crore. We sawholistic performances across the key focus businesses of metering switchgear andlighting the revenues of which grew 16% 17% and 15% respectively.
Revenues from wires and cables business however declined. This was partly because ofthe higher base effect as FY 2017-18 revenues were high due to receipt of specialtycable orders. And partly due to our strategic call of taking a steady approach in thesegment as margins here are typically low. This was necessary to channelise our effortsand resources to margin accretive portfolio and improve product mix. Evidently ouroperating margins improved 92 basis points to 11.5% despite price pressures due toincrease in polycarbonate prices. We are further working on centralising purchases tofurther bring down costs.
We are particularly satisfied with the performance of the metering business and excitedof its prospects. Despite a strong execution in the segment we still have a healthyorderbook pipeline of Rs. 554.6 crores (net of GST) which includes orders for meters withsmart communication technologies and with RF and IRDA communication. This reinforces ourpositioning as a technologically advanced meter supplier.
Making HPL aspirational and consumer-oriented brand
Consumer business is an important pillar for future growth. We have in the last fewyears focused on enhancing B2C revenues by increasing thrust on brand building activity.Our advertising and promotional expenses as a percentage of B2C revenues has nearlydoubled to 5.1% in FY 2018-19 over the previous year.
For the past two years we have been associating with Indian Premier League cricketingevent which is providing immense visibility to our brand. The 2019 IPL edition witnessed aviewership of over 30 crores in the first week which speaks of the boost that our brandgot. The impact was further ampli_ed with the performance of the team (Delhi Capitals) andplayers (Shikhar Dhawan Rishabh Pant and Prithvi Shaw) that we associated with. Our newproduct packaging feature these stars and they are finding greater acceptance fromretailers and the consumers. This is aiding network expansion and helping grow ourconsumer facing lighting and switchgear businesses. We are confident of boosting sales.
We have also worked towards maximising the impact of our trade channel through massiveoutdoor and in shop campaigns regular meets and incentive programmes to deepenrelationships. Our channel financing scheme is showing good progress. Apart from this weparticipated in various domestic and international exhibitions. I am sure theseinitiatives will have a lasting impact on our brand equity.
During the year we have launched multiple technologically superior products mostly inthe lighting solutions catering to various sectors like household retail and commercialon the back of our robust R&D. We have fortified our Solar portfolio with aBluetooth-enabled solar street light and a solar home light that is targeted to be anideal solution for the rural and remote areas. In the Switchgear segment we launched anadvanced version of Automatic Source Transfer Switch which would be user friendly andwould be an ideal choice for many critical applications in Industry an Domestic segment.Our efforts going forward will be to come up with more such products that meet theevolving requirements of our end customers in the domestic and international markets.
As a Company our focus will be on enhancing revenues and profitability and getting ourworking capital right. We have an ambitious target of growing our business and improvingreturn on equity. The single-most important factor that we believe shall enable us toachieve this will be capacity utilisation. We have enough capacity on hand which onfurther expanding with minimal capex towards adding a few production lines would becapable of supporting a much larger turnover. So this is something that we will betargeting to maximise shareholders' value. We will continue with cost optimisationinitiatives as well.
We see metering business grow significantly in the coming years. There is immense pushfrom the Government both at the state and central level and we foresee it to be a vitalfocus area for them. We are already witnessing huge inflow of enquiries and expect moretenders to be floated soon. We are well placed in the segment with our portfolio ofprepaid meters software communication driven meters and smart meters all of which havenecessary certifications. We will look forward to enhancing our pan-India network andmore so in the tier II and III cities where the next phase of growth is likely to come.
On behalf of the Board I thank all our stakeholders for their support and trust. YourCompany is fundamentally strong in terms of back-end like R&D specialised manpowerand manufacturing. We have got big time into solar and smart products. Our focus onexports and consumer business is building up quite strong. The coming years are going tobe more exciting and we will be committed to doing our best and take this Company togreater heights.
|Warm regards |
|Lalit Seth |
|Chairman and Managing Director |