RR Kabel acquires Luminous' home electrical business, plans IPO in Q4 2023

Equity firm TPG Capital-backed wires and cables manufacturer RR Kabel on Wednesday said it has acquired Luminous Power's home electrical business (HEB) from French engineering company Schneider.

This acquisition will further strengthen RR Kabel's consumer electrical goods business, which has a portfolio of fans, lights and appliances, company's Managing Director Shreegopal Kabra said while sharing updates about the deal in a virtual press conference.

Besides, RR Kabel plans to bring its IPO and get the company listed on stock exchanges in the last quarter of 2023, he added.

The Luminous Power deal is subject to closing adjustments and expected to complete in May this year, Kabra added.

When asked about the valuation of the deal, Kabra said:"Both the companies are unlisted and have decided not to disclose the amount."

Luminous' HEB consists of fans and lights and would help RR Kabel enter into the premium segment of this category.

Under this category, Luminous recently introduced its series of energy-efficient star-rated premium designer fans in India.

As part of the deal, RR Kabel would have rights to use the Luminous brand for four years for the existing product lines of fans and lighting under a Brand Licensing Agreement, Kabra added.

In 2011, Schneider had acquired 74 per cent stake of Luminous Power and later in 2017, it acquired the balance 26 per cent.

When asked about the synergy between the business of the company and the acquired entity, Kabra said Luminous is operating in the premium category, which was the "missing link" for the Fast Moving Electrical Goods (FMEG) business of RR Kabel.

Commenting on the development, RR Kabel CEO Consumer (FMEG) Business Vivek Abrol said, after the deal, the company is now "reorienting" its target for the segment.

"Earlier, our vision without this Luminous HEB was, touching Rs 1,000 crore business in next 3-4 years time. However, the goal is now reoriented. We want to touch about Rs 2,000 crore in next 5 to 6 years," Abrol added.

RR Kabel had a revenue of Rs 300 crore from the fan and light segment last fiscal year.

"We are getting exciting assets from HEB such as R&D, an entire sales infrastructure with 500 to 600 channel partners. This will add up and make it overall 1,000 channel partners," he said.

RR Kabel is a part of RR Global, a USD 1.25 billion conglomerate, in which TPG Capital owns 21 per cent stake. The US private equity firm had invested around Rs 630 crore in September 2018.

"They have a strategic role," he said adding the equity firm helps in the organic and inorganic growth strategy.

When asked about any plans to get the company listed on exchanges, Kabra said they are not in a hurry but it could be in the last quarter of 2023.

RR Kabel's overall revenue is around Rs 5,400 crore and the company expects to reach the Rs 10,000-crore mark in the next two years, said Kabra.