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Faltering China makes Havells go swadeshi

Thursday, 20 February 2014 - 6:00am IST | Place: Kolkata | Agency: dna

Rising costs in China have pushed Havells, an electrical appliance-maker, to become swadeshi (or reliant on domestic supplies).

While most manufacturers are content to import cheap made-in-China products and affix their logos and brand names before selling them in India, Havells is going fully desi, said the company's associate director Y K Gupta.

That means, Havells lighting, fixtures and fans are made at its own plants. More product lines, including white goods like geysers, will be produced at its plants this year. Imports from China, which served the industry well for last several years, will stop sooner or later.

"First, the cost competency of China is not so high now. Electricity and manpower there are not cheap anymore. With both the dollar and the yuan appreciating, the margins that we used to get from importing are not high now. If we manufacture at our own facilities, you can have better quality control," said Gupta.

To be sure, Havells unveiled a range of to-be-made-in-India Standard-branded fans on Wednesday.

Asked if manufacturing in India would entail higher capital expenditure and higher interest costs, Gupta said: "Capital costs haven't been rising so much. We already owned the land for a very long time. And then, during the recession, we have invested close to Rs 1,100 crore in enhancing the capacities of our plants across the country. Those benefits are now coming to us. Now, with the plants in place, we need to only add newer lines to raise capacities."

So, not only critical parts like motors but plastic components will be made in India.

The company is confident of posting a revenue of Rs 1,000 crore from its fan business in 2014-15, he said.

The company sells pedestal, ceiling, wall, exhaust and table fans which are expected to net Rs 800 crore in revenue this fiscal, up from Rs 700 crore last fiscal.

Overall, Havell expects total revenue of Rs 8,000 crore this fiscal, up from Rs 7,200 crore last fiscal.

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