LED biz sales may triple to Rs 300-400 cr in FY17: Eveready Ind

Meanwhile, the company also plans to enter the more profitable luminaire product space over the next 6 months.

Eveready is the market leader in flashlights with 70 percent market share and dry batteries with 52 percent share and commands pricing premium over peers. The company has an unmatched distribution network of 3.2 million outlets Analsysts expect digitization of television to generate high demand for batteries.Below is the verbatim transcript of Amritanshu Khaitan\\'s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.Sonia: It has been a stellar performance as far as the stock is concerned. It has seen 68 percent uptick in the current year. Begin by telling us the new initiatives in the light-emitting diode (LED) lighting segment. The government is giving that segment a boost, isn\\'t it? Efficient Energy Services Limited is taking out a lot of tenders. Are you benefiting from that, have you applied?A: The Company has forayed into LEDs in the last 12 months and we had set a target of achieving about Rs 100 crore topline from the segment. We are on track to achieve that this year and this whole thing has come through the B2C segment which is leveraging on Eveready\\'s vast distribution network and the brand. We are in the process of setting up a manufacturing facility in India which should start from the month of January and once that is commissioned, we will start taking part in the government initiative as well, as we are one of the lowest cost sellers when it comes to retail products. We think we can play active role in achieving good amount of turnover from the tender as well in FY17.\\Sonia: The manufacturing facility that will commence from January. What is the capacity and how much will it grow to in the next couple of years?A: It\\'s an outsourced facility where we will have a dedicated vendor making the product for us. The capacity is fungible. It depends on how much orders we do get from the government and how our sales proceeds, so we do not have any capacity constraints. We are planning to start production at about a million pieces a month and we can scale that up to whatever the demand. It is not such a big concern.Latha: At the moment what does it constitute - LED business as a percentage of your total revenues?A: In the current fiscal it will be about 7-8 percent of the total revenue.Sonia: I understand that you have about 7 percent of market share as well in the LED space. Is that correct and how much do you think you can grow it by because there are so many larger players, the likes of Syska etc. How do you plan to combat competition?A: At the moment we are only focused on the bulb segment and that also only in the organised segment. In that we are already in the top three players behind Syska and Phillips. Our product offering is by far the best in terms of quality and we are competitive on price. We will be happy to maintain 7 percent to 10 percent market share in the organised segment and then comes the government tenders which in the coming year you should expect 40-50 million bulbs to be distributed by the government and we would aim to get at least 15-20 percent of that. Therefore, if you take a combined market share between the government initiative and the organised market, I think Eveready should be aiming over 10 percent in the bulb segment but in the LED market per se there is a luminaire section and tube lights, those are areas where we have yet not entered but we do plan to enter in the next six months and that is a bit more profitable than the bulb segment.Latha: By FY17 end, what will be the contribution of LED to your overall revenues and profit?A: If the LED market does see a quantum shift next fiscal and we aim to maintain 10-15 percent market share. The turnover of LED business for Eveready could go from Rs 100 crore odd this year to as high as Rs 300-400 crore in the coming year. If that does happen then the share of LED business to the total topline would go up to around 20 percent.Latha: But legacy business is not doing too well in the battery segment. What kind of growth in that space for FY16 and FY17?A: FY16 the volume for Eveready will remain flat and that is similar for the organised industry as there has been dumping taking place from China. However, from profitability point of view the business is very stable and very profitable today. We are hopeful that the dumping duty on AA battery should get imposed in the next few months by the government and if that happens, the traditional business actually should see a double digit volume growth in the coming year because the category itself is seeing 10-15 percent volume growth which today we are not enjoying due to the dumping taking place. Sonia: You said Rs 100 crore to Rs 300 crore by FY17, so that is a threefold jump is what you are expecting in revenues in one year?A: If the market does shift with the prices coming down and we are able to even actively participate in the government tenders which we will start doing so from January because the government tenders will be valued at at least Rs 1,000 crore odd in the coming year.