havells strategy

Presented By

Abhishek Bhartiya – 04 Amarjeet Singh – 08

B.Aditya Mohan – 24 Gargi Banerjee – 34

Kavita Rai – 44 Namrata Srivastava – 55

Nishtha Sharma – 59 Wasim Shaikh – 131

26/8/2009 1Strategic Management

VISION

To be a globally recognized corporation that provides

best electrical & lighting solutions, delivered by best-in-

class people.

IntroductionIntroduction

MISSION

To achieve our vision through fairness, business

ethics, global reach, technological expertise, building

long term relationships with all our

associates, customers, partners, and employees.


Company OverviewCompany Overview

• Havells India Ltd. is a billion-dollar-plus organization.

• It is one of the India’s largest electrical and power distribution

equipment manufacturer company.

• Havells India is in four segments namely: Switchgears, Cable &

Wires, Lighting and Fixtures and Electrical Consumer Durables.


• It is amongst the top three players in most of its products and is

fast increasing its

market share through aggressive brand building.

• In 2006, the Company acquired European Electrical Equipment

manufacturer Sylvania’s lighting business in Europe.

Company OverviewCompany Overview

• SLI Sylvania, which is headquartered in Frankfurt, is a leading global

designer and provider of the lighting systems for lamps and fixtures.

• International operations contribute 68 percent of Company’s revenues.

It has a strong dealer network of 4000 dealers and 94 branches which

offer wide range of products.

• It’s majority stakes are family owned, following is the shareholder’s


•

pattern of Havells.

6014

7

2

17

Shareholding Pattern (%)

Promoters

Warburg Pincus

Public

Mutual Funds

FIIs

Havells Core Business Area Havells Core Business Area

Business Space – Power

Sub Space – Electrical Power

Building

Circuit Protection Devices

Industrial

Power Cables & WiresMotors

End to End solution provider for


Sub Space – Electrical Power

Sub - sub Space – Power

Distribution & Electrical

equipment manufacturers

Fans

Lighting

Consumer, Commercial,

Wiring Accessories

Modular Switches

Power Capacitors

Meters

Others

Bath Fittings & Accessories and Hospitals

CFLs

End to End solution provider for

Power Distribution

Equipment Industry

CompetitionCompetition

Building Products

Competitor's Position

• Havells.

• Legrand.

• Indo Asian.

• Schneider.

Industrial Products

Competitor’s Position

• L & T.

• Siemens.

• Schneider.

Switchgear Segment: 22%


• Schneider.

Cables Competitor’s Position

• PolyCab

• Havells

• Golster

Wires Competitor’s Position

• Finolex

• Havells

• Anchor

• Schneider.

• Havells.

Cables and Wire Segment: 18%

CompetitionCompetition

Electrical Consumer Durable Segment: 13%

CFLs:

•Phillips.

•Havells.

•Osram.

•Surya Roshni

Fans:

•Crompton

•Orient

• Usha

• Bajaj

Lighting Fixtures:

•Phillips

•Bajaj

•Crompton

•Havells


•Surya Roshni • Bajaj

• Havells

•Havells

Diversification timelineDiversification timeline

1976 : Rewirable switches and changeover

switches

1979 : HBC fuses at Delhi

1980 : Energy meters


1980 : Energy meters

1983: Acquired towers and transformer ltd

1987 : MCB’s JV with GEYER Germany

1990 : Manufacturing plant for changeover

switches


1992: Technical JV with Schiele Industrieworke,

Germany, for ELCBs.

1996 : Acquired a Manufacturing plant for power

cables and wires. JV with Electrium for MCCBs and

with Crabtree for MPS

1997: Acquired Electric control and switchboards


1997: Acquired Electric control and switchboards

noida, for customized package solutions

1998: Introduced high-end Ferraris electronic

meter in JV with DZG, Germany

2000:Acquired controlling stakes in Duke Arnics

Electronics meters, and in industry major Standard

Electricals.


2001: Acquired MCCBs business of Crabtree and

merged ECS ltd in the company.

2002 :Attained IEC & CSA certification. Standard

electrical became 100% subsidiary of company.

2004 :Manufacturing plant for CFL’s and Ceiling

fans Noida

2005 :Manufacturing plant for fans in Uttaranchal

2006 :CFL plant at Haridwar


2006 :CFL plant at Haridwar

2007: Acquired Lightning business of Sylvania

group. QRG group entered healthcare business

acquiring majority stakes(70%) in Central Hospital

and Research centre Faridabad

2008: Ventured into Motor business

2009 : Set up of fully automatic switchgear manufacturing plant at Baddi.

Consolidation of CFL manufacturing plant at Neemrana for domestic and

export purposes.

Installed and unusedInstalled and unused

Finished Products

as on Mar 2007 (Rs Cr)

Product Name Unit Installed

Production

Capacity

Quantity

Cables & Wires Kilometers 700,000

331,650

METERS: 17.32%

of the capacity

utilized.

CABLE AND

WIRES: 47.32%%


331,650

Electrical Goods Numbers 32,400,000

16,520,641

Domestic Switchgears Numbers 39,600,000

21,466,738

Industrial Switchgear Numbers 2,600,000

2,517,679

E W A Numbers 20,000,000

15,331,635

Bath ware Numbers 750,000

560,903

Meters Numbers 840,000

145,522

Miscellaneous NA NA

WIRES: 47.32%%

of the capacity

utilized.

Capacity

unutilized in all

but industrial

switchgear

Source: money control.com 2007

Last Ten Years For Havells….Last Ten Years For Havells….

Thinking Big or Losing Focus?

• Sales turnover increased by 9934.52%, 9934.52%, from

around Rs. 50 Cr. In 1997 to Rs. 5000 Cr. In 2008.

• PAT 2.3 Cr in 1997 to 160.3 Cr in 2007.


• PAT 2.3 Cr in 1997 to 160.3 Cr in 2007.

• Ventured in Consumer electrical.

• Investment into hospitals.

• Ventured into bathroom fittings in lieu of

diversifying product portfolio.

DiversificationDiversification

“Havells is not shy of investing in unrelated field. The acquisition

marks the beginning of our entry into the healthcare segment.

We have spent over Rs 20 cr for the acquisition and are investing

an equal amount in expanding the existing facilities in the

hospital. In the next phase, we are likely to go for more such


hospital. In the next phase, we are likely to go for more such

facilities”

-- Qimat Rai Gupta

Source: www.bnet.com

StrategiesStrategies

Mergers And AcquisitionsMergers And Acquisitions

• Towers and Transformers Ltd in 1983.

• 1996 Joint Venture with Crabtree Modular Plate Switches, Duke

Arnics, DZG Germany.

• LEARNING FROM MISTAKES : Lost bid for Electrium to Siemens by 8


• LEARNING FROM MISTAKES : Lost bid for Electrium to Siemens by 8

million pounds. Learned how to mobilize funding and to deal with

complex issues of merger and acquisitions.

• GRAND TAKEOVER March 2007:-

• SLI SYLVINIA: 235.5 million Euros led by Barclays Capital

finances

• Entry into Europe, Latin America and Asia Pacific.

Factors for successFactors for success

1. International approvals: such as

CSA, KEMA, CB, CE, ASTA, SEMKO, SIRIUM (Malaysia), AENOR

(Spain), etc. for its various products.

1. Entry into international markets.

2. Strategic Alliances and Continuous enrichment of existing business

3. The production of Fans in tax free zones of Uttaranchal


3. The production of Fans in tax free zones of Uttaranchal

4. Integrating into stores.

How Strategic the acquisition was?How Strategic the acquisition was?

• Can keep existing manufacturing facilities in Europe, but will

create additional capacities in low cost India

• Havells substitute Chinese export to Sylvania

• Havells will leverage Sylvania distribution in Europe, USA and

Latin


• America for margin rich switch gear products

• Sylvania R & D practices can transform Havells

• Havells can use Sylvania multi brand strategy for different

markets

Straight from the horses mouthStraight from the horses mouth

"Sylvania's acquisition is a first step towards attaining leading

position in the global lighting industry with a strong presence

in the developed markets of Europe and high growth Latin

American markets. This acquisition will provide us a platform

with strong brands and established distribution channels on

which Havells can build on. Further, the management team

responsible for SLI Sylvania's turnaround will continue to

remain with the business and grow the combined organization"


"The management team is extremely excited about the

Transaction and believes that SLI Sylvania is well-poised

to effectively exploit the opportunities ahead with

significant synergies to be realized by the combined

organization"Mr. Paul Griswold, CEO SLI Sylvinia

Branding and PromotionsBranding and Promotions

Aggressive brand building initiative by patronizing cricket, high

brand visibility on mass media.

• 70cr Spends in 2007-08(100% Inc over previous yr), Rs100cr spends in

2008-09

• Sponsorship of Cricket T-20 W-Cup, India – England Series India – Australia

Series, IPL (Indian Premier League)


Series, IPL (Indian Premier League)

• Sponsorship of Paanchvi Pass, hosted by Shahrukh Khan on Star Plus

• 7 new TV Commercials being aired across Product Categories

IntegratingIntegrating

• One Stop Shop for Havells Products

• 15 Galaxies opened in different cities.

• Target to reach 100 by year end.

• The sales turnover of dealers, who have opened galaxy’s has shown

significant growth


Porter’s Five Forces ModelPorter’s Five Forces Model

Rivalry /Competition

Threat of New Entrants

LOW

Buyers Bargaining Supplier Bargaining


Rivalry /Competition

Among existing firms

MEDIUM

Threat of Substitute

Products

LOW

Buyers Bargaining

Power

MEDIUM - HIGH

Supplier Bargaining

Power

LOW

SWOT AnalysisSWOT Analysis

Strengths

• International approvals

• World class infrastructure

• Leveraging upon Sylvinia network (10000 distributor).

• Global presence (Latin America, UK, Europe)

• Largest manufacturing capacity .

• R & D facilities.

Weakness

• High debt ratio.

• Globally small Market share

• Slowdown of real estates

• Slowdown in global markets will effect more adversely now after Sylvania acquisition.


Opportunities

• Global opportunities.

• Acquisition of Chinese firms for low cost manufacturing.

• Vertical integration into Havells retail outlets.

• Leveraging upon motor business in India.

Threats

• Unorganized market.

• Unrelated diversification

• Global slowdown effected business adversely as is largely dependent on Sylvania.

• Delays in execution of power projects

SWOT

Future…Future…

• Plans for acquisition of Chinese firms.

• Opened a representative office in Shanghai in a bid to penetrate

into the fast growing Chinese electrical equipment market.

• Tremendous focus on global market.

• Low market share globally, thus miles to go ahead.


• Low market share globally, thus miles to go ahead.

But the Question…………………

Is the mighty falling into an unfocussed business or is sensibly

venturing into unrelated diversification?

Is still unanswered……..

ReferencesReferences

• fairwealth securities

• techno research report

• havells india site

• economic times


• money control.com

• ibef.org

• bnet.com

Thank You


Thank You

havells strategy

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