Expect 15-20% revenue growth in FY13: Havells India

Havells India has declared its fourth quarter results. The company’s net profit stands at Rs 91.5 crore versus Rs 69 crore on year-on-year (YoY) basis.

In an interview to CNBC-TV18, Anil Gupta, joint managing director of Havells India says, the company is expecting 15-20% revenue growth this year. Below is the edited transcript of his interview on CNBC-TV18. Also watch the accompanying video. Q: Can you give us some perspective with your interest cost, it is at around Rs 19 crore versus Rs 6.5 crore on a year-on-year basis? What is the debt situation for the company? What is the trajectory that we could expect on interest cost front in FY13? A: The debt situation in the company is quite comfortable. The interest cost of Rs 19 crore includes Rs 9 crore of forex loss as well. So, it is a MTM loss. It is not really a interest loss. We normally would be expecting the interest at about Rs 8 crore per quarter. Last year was also about Rs 6 crore in this quarter. Interest rate would be commensurate to the growth, not out of the whack. Q: On the standalone performance, we have had a 25% growth, but that comes after the merger of Standard Electricals. Ex of Standard Electrical, has the growth been somewhere around 21-22%? A: That’s right. The standalone performance is around 22% growth. Q: Can you tell us a bit more about the consolidated performance? How is Sylvania doing? How is Europe looking at the moment? A: Sylvania has turned around very well for us. We are not expecting any growth in the European markets, but the profit growth has been very good in Europe last year. We achieve flat growth of 450 million euros, but the EBITDA has grown from 26 million euros to 37 million euros in Sylvania Global. That means a profit before tax of 17 million euros and a PAT of 10 million euros. That is quite a jump. This includes a pension liability loss, which is non-cash, of 5 million euros whereas as compared to that last year there was a 5 million euros gain. So, the operating performance has been quite good. There has been a 46% growth in operating profits in Sylvania. Q: What is the sense in the domestic market? While Sylvania is turning around, are you seeing any kind of signs of slow down in the domestic market? Do you stick by our guidance of 20% growth? A: We are expecting 15-20% growth this year as well. Though the first couple of months which have gone by April and May, we are seeing a better growth than. But given the fact that we are expecting some construction slowdown, industrial slowdown, we would like to maintain 15-20% growth guidance. Because of the branding initiatives that we have taken in the last one-two years, distribution strategy has been working very well. We have expanded the branches from 26 to 40 last year. Overall, distribution penetration is helping the company grow; we grew 22% last year. We hope to maintain a good growth this year as well. Q: What exactly is happening with Sylvania then? You said that it’s sort of met your guidance in FY12 and Europe is slow. What is your expectation in FY13? What sort of adjustments or cost operational adjustments are you making at this point in time in order to possibly just fire fight the European situation? A: There has been lot of close involvement of the entire team at Sylvania. We have now over 2,500 people. The team is entirely charged to make sure that the European situation is tided over with full earnestness. What is happening in Europe is that we are gaining in markets, which are doing well, UK, Germany, France. Even in Spain and Italy, our markets shares were lower. Hence, we are taking market share and we are growing. So in all, even if Europe remains flat there has been a tremendous turnaround on the margins front. We are quite confident that this year despite the flat growth in sales, we will be improving margins in Sylvania. Also, a couple of days ago we have refinanced the entire loan which was there in Sylvania which was taken up for the acquisition and that will bring down the interest rate burden by almost 3.5-4%. That will again go down as almost 4 million euros benefit on the bottom-line. So, overall Sylvania looks quite good in the coming year as well. Q: The sharp rupee depreciation and you have a lot of exposure to international businesses, how has that impacted both in terms of raw material cost and improved profitability perhaps from your foreign business? A: We are impacted by the dollar growth in India. But most of the manufacturing for us now takes place in India. So that way we are not so much impacted in India. The rest of the global markets, except Brazil, we do not face any issues. The dollar to euro range between 1.25 to 1.3, there has not been much issues on the foreign currency front. There is a dollar loan on the Indian balance sheet, which is about 20 million dollars. I think that is the only risk factor that Havells has on the dollar front. Our margins would remain stable, given the dollar depreciation as well.