havells india june 2012
TRANSCRIPT
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Havells India LimitedJune 2012
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US$ 1.2 billion Electrical Company, globally
Founded in 1971 with the acquisition of HAVELLS
brand
Started in India, expanded globally through acquisition,acquired Sylvania* brand in 2007
Expanded from a Switchgear company to Consumer
Electricals - backyard to living room
Strong Brand, wide distribution channel and broadproduct portfolio provide competitive strength
Expanding in new geographies and new products in
existing markets
Introduction
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US$ 1.2 billion company
EUROPEINDIA
LATIN AMERICACHINA
SOUTH EAST ASIA
*Globally except for North America, Australia, NZ
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Focus on branded products through
Distribution channel.
Broaden product range as consistent
with Distribution channel which furthergears up cross selling.
Create sustainable relationship with
channel through consistent policies,
transparency and growth initiatives.
Brand reinforcement through
continuous engagement with end users.
Core Strategy
Products
Distribution
Brand
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Europe Major Presence through Sylvania 27% of Consolidated Revenue (62% of Sylvania) 4 Manufacturing Units & distribution across Europe
India
Major Presence through Havells India 56% of Consolidated Revenue 15 Manufacturing Units Strong Distribution Channel
New Targeted Markets: China, ASEAN region
Americas
Presence through Sylvania mainly in South Americaand Mexico
17% of Consolidated Revenue (38% of Sylvania) 2 Manufacturing Units
Global Footprint
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Shareholders Promoters hold 61.6%, single business focus.
Key institutional investors includes:
Warburg Pincus
Sequoia capital
Nalanda Capital
0
100
200
300
400
500
600
Mar-05 Oct-05 May-06 Dec-06 Jul-07 Feb-08 Sep-08 Apr-09 Nov-09 Jun-10 Jan-11 Aug-11 Mar-12
Havells Closing Price vs NSE Closing Price
(Adjusted for bonuses & issue)
Havells Closing Price
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Introduction
India: Havells well positioned
Sylvania: Global Footprint
Agenda
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Competent distribution network of 5,600 dealers/ wholesalers and
100,000 retailers across India.
High regard and strong relationship with dealers/distributors,
nurturing over 4 decades. Leading brand in the electrical consumer products industry.
Aggressive brand building via media, premium positioned
Broad product portfolio, no. 1- 4 in each category
World-class manufacturing units.
Havells Galaxies - One stop shop, initiative to reach consumer
directly, increasing from 140 to 200 in next one year.
Havells India
Conceived as E-FMCG
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Consistent outperformer
* Growth on y-o-y basis (except Q3FY09 due to one time loss due to sharp fall in metal price)
in Rs crore
** based on average excluding investment
Consistent Growth10 years CAGR
Revenue - 34%
EBIDTA - 36%
Profit after Tax - 43%
34 quarters of consecutive growth*
As on March 2012 - Net debt Rs. (76) mn
High Returns on capital **
Return on capital employed52%
Return on equity42%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
0
500
1000
1500
2000
2500
3000
3500
4000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Net Sales EBIDTA(%)
0%
10%
20%
30%
40%
50%
60%
02 03 04 05 06 07 08 09 10 11 12
RoACE RoAE
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Domestic switchgearMCB
Market Size ~ INR 16,000 million
Market share ~ 28% (15% in 2006)
# 1Peers position
- Legrand (MDS &Indo Asian)
- Schneider
Modular Switches
Market Size ~ INR 14,000 million
Market share ~ 15% (5% in 2006)# 2
Peers position
- Matsushita/ AnchorRoma
- Legrand
# 5
Peers position
- L&T
- Schneider
- Siemens
- ABB
LV Industrial switchgear
Market Size ~ INR 30,000 million
Market share ~ 6% (7% in 2006)
*Contribution margins are derived after deducting direct cost and direct selling variables from net sales
Market size data and peers position as per best estimates of management
Broad Product Portfolio
# 2
Peers position
Cable Wire
- Polycab - Finolex
- KEI - Polycab
Cable & Wire
Market Size ~ INR 170,000 million
Market share ~ 9% (6% in 2006)
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Lighting - CFL
Market Size ~ INR 20,000 million
Market share ~ 11% (10% in 2006)
# 2Peers position
- Philips
- Osram
Lighting - Luminaires
Market Size ~ INR 25,000 million
Market share ~ 12% (3% in 2006)# 4
Peers position- Philips
- Bajaj
- Crompton
- Wipro
# 3Peers position
- Crompton
- Usha
- Orient
Electrical Consumer Durable - Fans
Market Size ~ INR 38,000 million
Market share ~ 15% (6% in 2006)
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*Contribution margins are derived after deducting direct cost and direct selling variables from net sales
Market size data and peers position as per best estimates of management
Broad Product Portfolio
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Peers position
- Bajaj
- Philips
- Recold
New
Strengthening product portfolio
Small Domestic Appliances
Market Size ~ INR 50,000 million
Launched Domestic Appliances in August 2011, to extend electrical consumer durable segment
Leveraging existing distribution network
Garment Care Brewing Home Comfort Cooking Food Preparation Water Heaters Air Coolers
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Improving margins through higher sales realization
and better cost management.
Low Debt, high assets turnover ratio.
Low working capital due to channel financing made
available to dealers i.e. direct funding by bankers
having limited recourse on the company
Operational highlights Balance Sheet highlights
In millions of Rupees
Financial Highlights
FY10 FY11 FY12
Net Revenue 23,714 28,817 36,156
EBIDTA 3,055 3,373 4,591
EBIDTA % 12.9% 11.7% 12.7%
Net Profit 2,282 2,421 3,054
Net Profit % 9.6% 8.4% 8.4%
CAPEX 2,140 1,420 1,373
FY10 FY11 FY12
Net Worth 11,352 13,408 16,083
Net debt 476 844 (76)
Net Fixed Assets 6,012 7,303 8,339
Investment(Sylvania) 5,317 7,155 7,751
Net workingcapital 1,041 1,534 2,661
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Agenda
Introduction
India: Havells well positioned
Sylvania: Global Footprint
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Europe
Latin
America
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Sylvania is one of the leading lighting product
companies in the world.
Full-spectrum provider of professional and
architectural lighting solutions, built on over a
century of expertise.
Presence across five continents, 56 countries,
10,000 dealers & distributors network.
Acquired in 2007 at an enterprise value of Euro 227
million to capitalize on brand and distribution
network.
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Fixtures LampsComplete range of products
Architectural /
accent
Industrial /
commercial
Fluorescent Energy
Savings
(CFL & LED)
Incandescent Halogen High
Intensity
Discharge
(HID)
Others
Net
Revenue
CY2011
70 mn
78 mn
82 mn
74 mn
25 mn 28 mn
33 mn
52 mn
Major peersZumtobel
PhilipsZumtobel
Philips
PhilipsOsram
(Siemens)GE
PhilipsOsram
(Siemens)GE
PhilipsOsram
(Siemens)GE
PhilipsOsram
(Siemens)GE
PhilipsOsram
(Siemens)GE
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in millions of Euro
Strengthen pricing discipline
Fixed cost variabilizationincreasing outsourcing from LCC
Optimized fixed cost - Restructuring
Net Revenue & EBIDTA Margins %
Global Europe Americas
128105
135143
5.2%8.2%
9.6%9.3%
2008 2009 2010 2011
495
406438 441
3.2%
0.0%
5.5%
8.4%
2008 2009 2010 2011
340
283 279 274
1.9%
-2.9%
3.8%
7.0%
2008 2009 2010 2011
Sylvania - Complete Turnaround
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CY09 CY10 CY11
Net Revenue 406 438 441
Gross Profit % 21% 26% 31%
EBIDTA 0.5 24 37
EBIDTA % -- 5.5% 8.4%
Exceptionalcost 54 4 --
Net Profit (73) (7) 8
CY09 CY10 CY11
Net debt 117 138 126
Net FixedAssets* 49 42 37
Goodwill 53 53 53
Net workingcapital 109 153 145
Operational highlights Balance Sheet highlights
* before fair value adjustments
in millions of Euro
Sylvania - Financial Highlights
Refinancing due in 2012 & 2013 hasbeen completed
New debt to be paid by May 2016
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FY10 FY11 FY12
Net Revenue 51,626 56,126 65,182
EBIDTA 3,114 5,489 6,780
As % to NR 6.0% 9.8% 10.4%
Net Profit afterexceptional
items (2,241) 3,034 3,704
FY10 FY11 FY12
Net Worth 4,004 6,537 9,556
Net Debt 9,183 9,395 7,934
Net fixedassets 9,210 10,204 10,946
Net WorkingCapital 8,734 10,402 11,883
in millions of Rupees
Operational highlights Balance Sheet highlightsConsolidated performance
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Strong Brand & Channel: Emerged as a trade focused and trade friendly consumer
brand.
Margins Focused: Driving margins through product innovation and product mix.
Sylvania Turn Around:Generating profits, improving margins.
Exploring New Markets:Geographical expansion in Africa, China & ASEAN region.
Cross Selling: Introduced Havells brand in UK leveraging upon established Sylvania
channel.
Summary
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