Havells India’s acquisition of the consumer durable business of Lloyd fits into the former’s strategy of going deeper into consumer’s homes, and driving domestic expansion.

Chairman and Managing Director of Havells India Anil Rai Gupta said “Since we divested our stake in Sylvania, we had been looking at such opportunities...”

In a interview with BusinessLine he said Havells India will continue to ride on Lloyd’s brand connect in consumer durables business. Excerpts:

What was the key trigger that led you to this acquisition?

We had been contemplating on foraying into the consumer durables business for the past few years. So far, our organic expansion into new product categories was done leveraging on our existing brand and distribution channel. However, for consumer durables, we realised that we would need to develop capabilities for a new distribution channel, which is more of a consumer electronics distribution channel rather than an electrical products channel. Therefore, we decided to go for an acquisition.

It also fits into our strategy of going deeper into consumer’s homes, and driving domestic expansion. Entry into consumer durables segment is also synergistic to our current business. The country’s consumer durable business is pegged at $15 billion and growing at double digits. So this acquisition puts us in a very strong position and also fits our company philosophy which is focused on brand and distribution expansion backed by good product technology and strong manufacturing capabilities.

How are you funding this acquisition? Will this be putting any pressure on your financials?

Since we divested our stake in Sylvania, we had been looking at such opportunities. Although the company has the ability to fund this acquisition entirely through internal accruals, we believe having a prudent mix of internal accruals and debt is ideal. Hence, it will be a mix of internal accruals and debt.

Will you continue to retain the Lloyd brand? Does this acquisition require you to set up new manufacturing capabilities?

Havells is known more for its electrical consumer products and is strong in the electrical products distribution channel. Lloyd has a strong brand connect in the consumer durable space. So, we would definitely ride on the strength and capability of this brand franchise. We will continue to maintain both the brands.

The brand franchise, the distribution franchise, the service franchise and the talent are the key success factors for this business and that’s what we get through this deal.

We will continue to source products from Lloyd Electric and so we will have access to their manufacturing capabilities. At the same time, we will also focus on developing our own new manufacturing capabilities.

Though Lloyd has presence in several segments, is AC the biggest strength?

It is among the top three brands in the air-conditioners category with a strong nationwide presence in tier I and II towns. It has also utilised the brand effectively by adding more product categories over the last few years.

So, definitely, there will be a lot of focus on the AC segment. We will also continue to focus on adding new categories.

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