Your core business comprising of battery and flashlights has been hit hard, what steps are you taking to combat this situation?
Our core business of battery and flashlights has been very profitable but the last one year has been very sluggish in terms of volume growth. Batteries have been facing the heat due to dumping from China and the industry has written to the government to impose anti-dumping duty to save the domestic industry. I am very hopeful that the anti-dumping duty will be imposed in the coming months which will relieve the stress from this segment.
So you are expecting a revival in domestic dry-cells once the anti-dumping duty is enforced?
Anti-dumping duty should spur demand. The category per se is seeing a 10 per cent growth so we are preparing for the surge and putting up a 400 million battery capacity plant in Goalpara in Assam across 17 acres, which will become operational by March 2017. In the first phase, an investment of Rs 80-100 crore will be made, which will be funded from internal accruals as well as debt. We'll be getting fiscal benefits for 10 years from the state government.
There are talks that you are planning to enter other FMCG categories.
e are actively looking at joint ventures and opportunities with multi-national companies who want to come to India. If we tie up with anyone, we'll look at a joint-venture, which will encompass manufacturing, marketing as well as distribution. But it has to be products that are non-competing to the existing portfolio we have. Could be food, could be personal care, could be detergents, any category.
We are open to discussions where these companies, using our strong distribution network can get a quick entry into India.
Why are you not going alone in this space?
It is always better to go with someone who already has expertise in these fields instead of venturing afresh. At the moment, the Assam plant has been put up for batteries but if we enter other FMCG products, then we'll have the option of manufacturing it out of this plant because the size of the land is pretty big.
Although you have entered the appliances space, LED bulbs seems to remain the face of the company.
The brand face will continue to be LEDs and we'll be unveiling a new campaign with the coming season of IPL this April. We have also taken up sponsorship of fall of the wickets. We'll be able to cut across all the regions to our target audience with the IPL.
We hope to maintain a 7-8 per cent market share in the LEDs apart from the government tenders where we are also participating. This category should continue to see rapid growth for us. We are going to expand our product range in LEDs from bulbs to tubes and luminaires to professional lighting as well. We have expanded our electrical outlet distribution also by adding close to about 25,000 outlets in the last one year and plan to double that in the coming 12 months.
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But what made you foray into appliances when LED is the key focus?
From a 2-3 year perspective, since we have successfully got established in the LED bulb category, we felt the need to enter the electrical appliances category. Both lighting and appliance as a category, value-wise, is 10 times larger than the battery category. So with a 50 per cent market share in the battery category we have a Rs 800 crore topline from this segment. So, we can clock another Rs 800 crore by having only five percent market share in these two segments. These can contribute to increasing the topline of the company substantially. In the next two years we hope to garner at least 4-5 per cent market share in the appliances segment. We'll campaign in Diwali or the following year depending on how the business moves.
What's your agenda for 2016-17?
As a company, our aspiration is to grow the brand and grow the company to a larger level than where it stands today. Once our topline is healthy, its benefits will automatically flow in to our bottomline. Last year, it was more flattish, which resulted in our bottomline also remaininig flattish. Now with our topline poised to increase by what we are doing, it should also reflect on our bottomline.
We are also looking at how we can reduce our interest cost - our focus is to improve the operational performance and grow the EBIDTA margin. Currency appreciation today and raw material prices remaining benign, should be favourable for us in the coming years if it remains like that. I personally feel we are entering into a good year. Hopefully the monsoons will be good too this year which will pull up demand for the flashlights which is 70-80 per cent consumed in rural India. Our worry-point in the past has been this category, which saw a decline.