Tuesday, July 3, 2012

>HAVELLS INDIA LIMITED: New product launch to aid future growth…

We met the management of Havells India Ltd (HIL) to get an insight into the business model and future plans. Established in 1983, HIL is a leading Indian electrical manufacturer focused on products including switchgear, cables and wires, consumer durable, lighting and fixtures. Havells enjoys market dominance across a wide spectrum of products, including domestic & industrial switchgear, cables & wires, motors, fans, modular switches, home appliances, electric water heaters, CFL lamps and luminaries. The company has focused on developing strong distributor relationships and operates through over 5,000 dealers and more than 1,00,000 retailers across India. HIL further plans to add ~700-800 dealers per annum to increase its dealer base.

Strong segment performance
Havells is well positioned in the organised switchgear market with the segment comprising domestic switchgears mainly miniature circuit breakers (MCB), modular switchgear and LV industrial switchgear (market share of 28%, 15% and 6%, respectively). Standalone revenue from the switchgear segment has grown at a CAGR of 13% in the last five years. In the domestic cable segment, HIL manufactures underground cables and wires with a market share of 9% with the segment’s revenues growing at a CAGR of 15% in the last five years. Under the lighting and fixtures segment, the company operates in the energy saving lamps (CFL) and luminaries markets (with market share of 11%). Revenues from this segment grew at a CAGR of 18% in the last five years.

Focus to expand consumer durables segment
In the fan industry, HIL has significantly increased its market share by gaining over 14% with revenue CAGR of 24% in the last five years. Consumer durable division sales were supported by new appliances launched during the year with growth in water heater sales. Havells’ advertisement expenses have increased at a CAGR of 16% during FY10- 12 mainly due to the creation of strong brands in the consumer durables segment. Further, HIL is expected to keep promotion & advertisement expenses at ~2-3% of sales, going forward, to promote its new launches.

HIL has been one of the well known players in the Indian branded electrical product space. The company’s standalone revenue has grown at ~24% CAGR over the last three years, supported by strong performance by consumer durable and lighting & fixtures segments. In addition, improvement in Sylvania’s performance in FY12 (PAT growth of 46% YoY) & entry into new product categories in the consumer durables segment will support revenue and profitability growth, going forward.

To read report in detail: HIL