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Jan 03, 2013 12:25 PM IST | Source: CNBC-TV18

Expect improvement in Sylvania's margins this year: Havells

Things have improved in Europe, but the problems still exist. In an interview to CNBC-TV18 Anil Gupta, joint managing director of Havells India says Europe remains sluggish, but other markets are holding up. "Our market share has improved in Europe," he asserts.

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Things have improved in Europe, but the problems still exist. In an interview to CNBC-TV18 Anil Gupta, joint managing director of Havells India says Europe remains sluggish, but other markets are holding up. "Our market share has improved in Europe," he asserts.

He expects an improvement in Sylvania margins this year. "FY14 Sylvania margins will be better on year-on-year (YoY) basis," he adds.

Havells Sylvania is an international designer and manufacturer of lighting products. It has plants throughout Europe, Asia, North Africa and Central and South America. It is owned by Havells.

According to him, new product launches will drive domestic growth.

Also read: Buy Havells India; target of Rs 684, says Firstcall Research

Below is an edited transcript of Anil Gupta's interview on CNBC-TV18

Q: What is happening with Sylvania? Are you more confident about this calendar year and the performance from Sylvania in specific?

A: Sylvania went through tough times in 2009-2010. We were able to come out with very good results in 2011 with a successful turn around in the organisation. Europe remains sluggish in 2012 as well and that brought down the performance to a certain extent. This year we are expecting EBITDA margins to be around 6 percent but it is very healthy as compared to the competition and looking at the sluggish markets in Europe. We have taken a lot of actions and are expecting good results in Sylvania this year. America has continued to do well and we are looking at some good performance from Sylvania in the coming year.

Q: The domestic performance which continues to chuck along at 15-20 percent has been the saving grace. You have been launching some new products, do you see double digit high growth in 2014 as well?

A: Yes. We are looking at the next two years to maintain this growth with more product additions, deeper entrenchment of distribution. We are launching a couple of products in our switches and sockets segment which takes us more into the C class towns in the rural sector. Despite being a brand associated with reliability, we are seeing a lot of traction for our products in the C class towns in rural markets. We have launched certain new products to cater to those markets and that is coming along very well giving us a good growth. We are expecting a similar growth in the coming couple of years.

Q: Aside of the issues with the European markets, there are also issues of competition with regards to fillips in those markets. Have you lost any market share or has Sylvania performance being subdued only because of macro factors?

A: In terms of market share, there are two areas; one is Europe and the other one is America. America’s market share is quite strong as compared to our competition, in lines with similar to, in many countries we are market leaders also. In both Europe and America we are gaining market share.

Q: What are the issues of market share in Europe?

A: In the European markets, the market share has improved for us. We have taken a lot of actions to deepen our distribution, improve our product mix and that has helped improve our market share. In the southern European markets, specially the de-growth that has happened in the sales in markets like Italy and Spain has not seen that kind of a de-growth.

We have seen sales growth in UK, France, Germany, Belgium and Holland which are our key markets. We have improved market share in the last couple of years in the European markets as well.

Q: You did bring down your margins guidance though for FY13. Where do you expect the margins to stabilise and what kind of combined, blended sales do you think can do with domestic and overseas operations this year?

A: Considering 2013-2014, we are expecting the margins to come up again in Sylvania. We will see flattish growth in Europe and maybe a 10-15 percent growth in America’s market which will give us a blended. Sylvania’s growth is about 6-7 percent. Indian markets will continue to see 15-20 percent growth with similar margins of about 12-13 percent.

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