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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 Strategic Management 1


Introduction

VISION

To be a globally recognized corporation that provides


best electrical & lighting solutions, delivered by best-in-
class people.

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.

26/8/2009 Strategic Management 2


Company 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.

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Company 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.
Shareholding Pattern (%)

17 Promoters
2 Warburg Pincus
7
Public
60 Mutual Funds
14
FIIs

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Havells Core Business Area

Circuit Protection Devices


Building Industrial

Motors
Power Cables & Wires
Business Space – Power

End to End solution provider for Sub Space – Electrical Power


Meters Fans
Power Distribution
Equipment Industry
Sub - sub Space – Power
Distribution & Electrical
Power Capacitors
Lighting equipment manufacturers
Consumer, Commercial, CFLs

Wiring Accessories
Modular Switches

Others
Bath Fittings & Accessories and Hospitals

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Competition

Switchgear Segment: 22%


Building Products Industrial Products
Competitor's Position Competitor’s Position
• Havells. • L & T.
• Legrand. • Siemens.
• Indo Asian. • Schneider.
• Schneider. • Havells.

Cables and Wire Segment: 18%


Cables Competitor’s Position Wires Competitor’s Position
• PolyCab • Finolex
• Havells • Havells
• Golster • Anchor

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Competition
Electrical Consumer Durable Segment: 13%

CFLs: Fans: Lighting Fixtures:

•Phillips. •Crompton •Phillips


•Havells. •Orient •Bajaj
•Osram. • Usha •Crompton
•Surya Roshni • Bajaj •Havells
• Havells

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Diversification timeline
1976 : Rewirable switches and changeover
switches

1979 : HBC fuses at Delhi

1980 : Energy meters


1983: Acquired towers and transformer ltd

1987 : MCB’s JV with GEYER Germany

1990 : Manufacturing plant for changeover


switches
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Diversification timeline
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


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.
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Diversification timeline
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

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.
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Installed and unused
Finished Products

as on Mar 2007 (Rs Cr)


METERS: 17.32%
Product Name Unit Installed of the capacity
Production utilized.
Capacity
Quantity
CABLE AND
Cables & Wires Kilometers 700,000
331,650
WIRES: 47.32%%
Electrical Goods Numbers 32,400,000 of the capacity
16,520,641 utilized.
Domestic Switchgears Numbers 39,600,000
21,466,738
Industrial Switchgear Numbers 2,600,000
2,517,679
EWA Numbers 20,000,000 Capacity
15,331,635 unutilized in all
Bath ware Numbers 750,000 but industrial
560,903
Meters Numbers 840,000
switchgear
145,522
Miscellaneous NA NA
26/8/2009 Strategic Management Source: money control.com 2007 11
Last Ten Years For Havells….

Thinking Big or Losing Focus?

• Sales turnover increased by 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.

• Ventured in Consumer electrical.

• Investment into hospitals.

• Ventured into bathroom fittings in lieu of


diversifying product portfolio.
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Diversification

“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
facilities”

-- Qimat Rai Gupta


Source: www.bnet.com

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Strategies
Mergers 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


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.

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Factors 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

4. Integrating into stores.

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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

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Straight 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

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Branding 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)
• Sponsorship of Paanchvi Pass, hosted by Shahrukh Khan on Star Plus
• 7 new TV Commercials being aired across Product Categories

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Integrating
• 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

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Porter’s Five Forces Model

Threat of New Entrants


LOW

Supplier Bargaining Rivalry /Competition Buyers Bargaining


Power Among existing firms Power
LOW MEDIUM MEDIUM - HIGH

Threat of Substitute
Products
LOW

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SWOT Analysis
Strengths Weakness
• International approvals • High debt ratio.
• World class infrastructure • Globally small Market share
• Leveraging upon Sylvinia network (10000 • Slowdown of real estates
distributor). • Slowdown in global markets will effect more
• Global presence (Latin America, UK, Europe) adversely now after Sylvania acquisition.
• Largest manufacturing capacity .
• R & D facilities.

SWOT

Opportunities Threats
• Global opportunities. • Unorganized market.
• Acquisition of Chinese firms for low cost • Unrelated diversification
manufacturing. • Global slowdown effected business adversely as
• Vertical integration into Havells retail outlets. is largely dependent on Sylvania.
• Leveraging upon motor business in India. • Delays in execution of power projects

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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.

But the Question…………………

Is the mighty falling into an unfocussed business or is sensibly


venturing into unrelated diversification?

Is still unanswered……..

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References
• fairwealth securities

• techno research report

• havells india site

• economic times

• money control.com

• ibef.org

• bnet.com

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Thank You

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