In a bid to improve growth by foraying into newer categories, dry battery major Eveready is planning to go in a big way into LED-based lighting solutions starting January to cash in on the emerging trend thereby replacing CFL bulbs.
"We are coming up with a range of LED lighting products which are going into sale starting January. With this we would see larger growth coming in," managing director Amritanshu Khaitan told dna.
The planned shift would see Eveready take on competitors like Havells, Philips and other Chinese imports, posing a challenge while at the same time offering it a chance of significant volume play.
"From January onward, LED segment would start contributing to our lighting business in a meaningful way. The value growth for the year in the lighting division would be around 30-40%. For LED, value growth now is about 25-30%, and with the launch of new products it would touch 40-50%," Khaitan told analysts during a conference call.
The lighting business will continue to remain at the break-even category during this fiscal, Khaitan said. The Kolkata-based company said it would raise prices of flashlights by 5-10% in November-December.
"While battery prices were raised in April, flashlights weren't touched in the first half despite rise in input costs, " said Khaitan. Price hike in batteries, coupled with a revival in its demand and a major brand push has helped the company post close to 4 times growth in profits on turnnover growth of 11%.
Overall volumes remained flat on account of poor monsoon. Battery category constitutes 60% of Eveready's business, and there margins have improved to about 13%. Overall margins is 9-10%.
"We should see 13-15% growth rate in the second half of the year," Khaitan said. As the company improve sales and goes into new categories, cash flow is improving which is being used partly to retire debt and also partly to replace high-cost borrowings for working capital resulting savings in interest costs, finance director Subhomoy Saha told analysts during a conference call post earnings.
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