Havells India June 2012

8/11/2019 Havells India June 2012

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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 share ~ 15% (5% in 2006)# 2

Peers position

- Matsushita/ AnchorRoma

- Legrand

# 5

Peers position

- L&T

- Schneider

- Siemens

- ABB

LV Industrial switchgear



*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




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Lighting - CFL



# 2Peers position

- Philips

- Osram

Lighting - Luminaires


Market share ~ 12% (3% in 2006)# 4

Peers position- Philips

- Bajaj

- Crompton

- Wipro

# 3Peers position

- Crompton

- Usha

- Orient

Electrical Consumer Durable - Fans



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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


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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The information contained in this presentation is only current as of its date. All actions and statements made herein or otherwise shallbe subject to the applicable laws and regulations as amended from time to time. There is no representation that all information relatingto the context has been taken care off in the presentation and neither we undertake any obligation as to the regular updating of theinformation as a result of new information, future events or otherwise. We will accept no liability whatsoever for any loss arising directlyor indirectly from the use of, reliance of any information contained in this presentation or for any omission of the information. Theinformation shall not be distributed or used by any person or entity in any jurisdiction or countries were such distribution or use wouldbecontrary to the applicable laws or Regulations. It is advised that prior to acting upon this presentation independent consultation /

advise may be obtained and necessary due diligence, investigation etc may be done at your end. You may also contact us directly forany questions or clarifications at our end.

This presentation contain certain statements of future expectations and other forward-looking statements, including those relating to ourgeneral business plans and strategy, our future financial condition and growth prospects, and future developments in our industry andour competitive and regulatory environment. In addition to statements which are forward looking by reason of context, the words may,will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential or continue and similar express ions identifyforward looking statements. Actual results, performances or events may differ materially from these forward-looking statementsincluding the plans, objectives, expectations, estimates and intentions expressed in forward looking statements due to a number of

factors, including without limitation future changes or developments in our business, our competitive environment, technology andapplication, and political, economic, legal and social conditions. It is cautioned that the foregoing list is not exhaustive This presentationis not being used in connection with any invitation of an offer or an offer of securities and should not be used as a basis for anyinvestment decision.

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Havells India June 2012

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