Havells looking for more buys to grow faster: CMD Anil Rai Gupta

Havells posted a three-fold jump in profits in Q4 even though it faced headwinds in overseas businesses. Speaking to Bloomberg TV India , Havells India Chairman and Managing Director Anil Rai Gupta says the company is looking at growing the business both through organic and inorganic opportunities. Lower commodity prices and cost efficiency helped in improving profit margin, he said.

Can you run us through the reason behind the margin expansion and the some of the key developments of Q4?

Like we’ve been saying earlier, there is a slight uptake in demand generation in the second half. So the second-half sales started growing at a faster pace. Our growth in the second half was as high as 9 per cent, despite the fact that our cables and wires division grew at a slower pace than the volume growth because of rising commodity prices. And once volume starts building up, there’s generally a higher leverage in the margin expansion. It was also helped by the fact that there was a lot of focus on cost efficiency as well as some of the benefit of the commodity cycle. All these factors put together led to the margin expansion and definitely a good result for the quarter.

I think the lighting segment witnessed a good growth because of the LED segment. But on the other hand, there was significant pressure on conventional lighting. So overall the growth was limited in the final quarter of FY16. But I think overall lighting is still very positive. About 50 per cent of our businesses are coming out of LEDs. I think given all this, the current year looks promising for the lighting industry.

International business is now very small in size. But what’s happening in Brazil where revenue seems to have declined?

On the international size, first of all we have exited all tinvestments in Sylvania. So what are left are exports from India. There we saw decline for two reasons. One is, part of our exports were to Europe and Sylvania. But there again we saw a massive decline in the consumption of CFLs. So that led to some decline. There were some foreign exchange fluctuations in one of the larger markets of Africa. So that led to some degrowth in switch gears in the current year. But there’s a lot of focus now, especially after the divestment of Sylvania on the international business, on how we can grow our exports from India. And I think we are definitely looking at some sizeable growth this year.

Any further plans of asset monetisation?

No. I think we are very clear that from now on we are looking at growing the business through both organic and inorganic opportunities. This is something we thought we would be able to utilise capital in a much better fashion if we can properly allocate these resources. And it turned out to be a good decision for the stakeholders. From here, the growth phase restarts for the company.

Picking on the inorganic growth, what would be the targets set or segments where you see acquisitions this year?

We are looking at more companies which could offer us brand, technology or a product category. We have four business segments — switch gears, cables and wires, lighting and consumer durables. We’ll continue to scout for any opportunities within this to expand our brand with technology differentiation.

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