Havells aims to grow appliance business to Rs500 crore in 4 years

Electrical products maker Havells India believes its foray into the domestic appliance space will be a Rs500 crore business annually in about 3-4 years, said joint managing director Anil Gupta.

The company last year forayed into water heaters, which generated revenues of Rs24 crore.

Havells is now readying to launch electric irons, juicers, mixers and grinders.

“We started making fans and lighting about six years and today they make  Rs500 crore each. So in 3-4 years even our appliance segment will be that big,” Gupta said. By March the segment will contribute Rs100 crore, including  ¤60 crore from geysers, to the company’s topline.

Cables & wires are Havells’ biggest business, turning over Rs1,300 crore in 2010-11 followed by switchgears at  Rs900 crore.

Gupta said all the segments are growing at about 15-20%.

A May 27 report by brokerage Edelweiss Securities said Havells’ entry into new geographies and product segments will drive its growth in the coming years.

To aid its diversification plans, Havells has 115 exclusive retail outlets under the name ‘Havells Galax’ across the country and will add another 85 by year-end.
Havells has outlined a spend of about  Rs200 crore this fiscal for adding capacity at its facilities in India. This is  Rs60 crore more than last year.

“There will be no capacity addition at Sylvania,” he added.

Sylvania, Havells’ wholly owned US subsidiary, has four plants in Europe, two in Latin America and one in Africa.
Havells acquired SLI Sylvania in 2007 for $200 million and renamed it Havells Sylvania. Havells restructured the operations of Sylvania at a cost of 32 million euros. It shut down three of Sylvania’s plants and retrenched about 1,200 employees. Havells exports half of the 25 lakh compact fluorescent lamps it produces every month.

Sylvania, which was loss making at the time of acquisition, reported a profit after tax of 6 million euros (against a loss of 69 million euros in the previous year) on a topline of 450 euros in 2010-11.

Sylvania is expected to grow its revenues by just 6% this financial year owing to a lacklustre Europe, Sylvania’s biggest market. Havells’ domestic operations, on the other hand, will grow their turnover by 20% over the Rs2,881 crore posted in the last fiscal, according to director, finance, Rajesh Gupta.

“With the restructuring programme completed, we expect Havells to reap benefits of the same in its international business,” analysts Rahul Gajare, Amit Mahawar and Swarnim Maheshwari wrote in the Edelweiss report.