The Hindu Business Line : Philips India scouting for M&As; identifies companies

Looking ahead
Maps out its vision for 2010, says it is hoping to double turnovers.
As part of the vision, Philips is expecting organic growth to contribute about 60-70%

Ramesh Sharma

Change of guard: Mr K. Ramachandran (right), outgoing CEO, Philips Electronics India, and Mr Murali Sivaram, Executive Director and CEO Designate, at a press conference in the Capital on Tuesday. —

Our Bureau

New Delhi, Sept. 18

Mapping out its vision for 2010, Philips Electronics India Ltd said on Tuesday that it was hoping to double turnover to Rs 5,000 crore. It also said that it was scouting for mergers and acquisitions in the country, as a part of its growth strategy in the coming three years.

“We are looking at doubling the current turnover of Rs 2,649 crore by 2010-11, which will not be possible to achieve from organic growth alone, so we are also looking at mergers and acquisitions in the country,” said Mr Murali Sivaram, Executive Director and CEO Designate, Philips Electronics India, who will take over as the head of company next month.

The company has already started identifying companies across the health care, lighting and consumer durable domains in India as part of its inorganic growth strategy.

‘Sense of urgency’

On the timeline for the possible acquisitions, Mr Sivaram said, “There is a sense of urgency, but these are early days yet.”

The outgoing Philips Electronics India CEO, Mr K. Ramachandran, said, “Things are still on the drawing board and could formalise within the next 12 months in as many as five to six new areas that Philips is still not present in.”

On the amount allocated by the company for the upcoming M&A activities, Mr Sivaram said, “Finance will never be an issue as we already have a cash surplus of Rs 500-600 crore on the balance sheet that we will use for M&As.”

He added, “We have sufficient cash and borrowing capacity within the company to support our plans and will go for a company, which will help us enter an adjacent space we are already in or new price points where we are not present.”

‘High expectations’

Globally, Philips had earlier announced that it would double its earnings by 2010 and there has high expectations from emerging markets like India, China and Latin America. The company is targeting a growth at around 15-16 per cent in India.

2010 vision

As part of the 2010 vision, the company is expecting organic growth to contribute about 60-70 per cent and the rest coming from inorganic activities. Mr Ramachandran said healthcare and consumer segments were expected to drive Philips’ growth in India, which could be about 1.5 times of the lighting business.

As part of its growth strategy and renewed focus on consumer lifestyle, healthcare and lighting sectors, the company has earmarked an investment of Rs 10 crore by the end of 2007, for a series of marketing programmes targeting the school children, educational institutes and consumers.

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