Philips' warning of a profit cut due to decreasing demand from Western Europe has sent electronics companies into the red. The stock of Havells India witnessed quite some volatility post the announcement of cost restructuring in Philips due to waning demand, and is now trading 5% lower. Citi Brokerage has a 'Sell' call on Havells while JP Morgan has a 'Buy' rating.
In an exclusive, Anil Gupta, joint managing director, Havells India tells CNBC-TV18 that the company has not faced any slowdown in demand yet. Even if it does happen in future, the company is poised to grow its margins as per earlier projections, even against headwinds, he assures. "Waning demand in Europe is irrelevant for Havells since only 20% of EBITDA contribution comes from the region," he says. Below is the verbatim transcript. Also watch the accompanying video Q: How concerned are you about what Philips had to say about European business? Do you think it will affect your business as well from that part of the world?
A: Actually we are a bit concerned about this statement because we are quite confident about our prospects globally. As far as Europe is concerned, in all our projections, we had not taken any growth assumptions till 2013. So after a high point in 2008, the sales had come down in 2009, after which, we had started our restructuring programme. We had projected a flat sale growth till 2012.
The whole focus was on building up profitability due to our restructuring programme, cost reduction, as well as margin improvement. So there has been a considerable improvement in that, and that is why whatever projections that we had given as far as 8-8.5% EBITDA is concerned, we are already achieving that. As for Europe, we don
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