Amritanshu Khaitan, the third generation in the Brij Mohan Khaitan family, has been reinventing Eveready with new-age products like light-emitting diode bulbs and chargers for cellphones. He has tasted quite a bit of success and in an interview with Probal Basak speaks about the company's plans. Edited excerpts:
What is the biggest contributor to your turnaround?
Our core business has become profitable. A few years ago, the market was stagnant as a product shift was taking place from bigger batteries to smaller ones. We have coped up with that and improved our margin. We will continue this growth with diversification in lighting. If you see reviews on e-commerce sites, our LED is better than others. The turnaround is over, Eveready is now a growth story.
Are you apprehending the battery market will stagnate again?
With more digitalisation and more devices using remote control, the battery market should continue to grow in the double digits. The market is now growing at 10 per cent annually. Close to eight per cent of the demand has shifted to Chinese batteries. If we remove that, organised Indian players can be stable.
Eveready LEDs, not batteries, are in focus...
The product offering is just a tool to connect with the brand. The idea is the brand should remain relevant to the youth. If a consumer sees an Eveready LED advertisement, he will pick up our batteries as well. The opportunity is in lighting. Government estimates say by 2020 the LED market will be Rs 20,000 crore. We want 5-10 per cent of that market.
How you are preparing for growth in LEDs?
We have been successful in outsourcing flashlight manufacturing. The same model will be followed for lighting. Most of the lighting industry works on the outsourced model. But battery is all in-house manufacturing.
If lighting takes over from battery as your largest revenue earner, what will it mean for Eveready financially?
Now battery is more profitable. Till last year batteries and flashlights contributed almost 100 per cent of the profit. Last year, lighting was at breakeven and now it is profitable. Margins are improving because of our entry into LED. If LED drives lighting, which it has been doing, it will improve our bottom line.
What next after LEDs?
LEDs alone have a huge potential. We are focusing on strengthening our electrical distribution network. We will look at other products in the segment. In the long run we would like to have a portfolio like those of Philips or Havells.
Are you going ahead with plans for a qualified institutional placement of Rs 120 crore?
We have taken an approval in principle for the the QIP. We may need some funds partly to pay off debt and partly for investment in the lighting business. We will make the placement as and when required. Our debt is around Rs 200 crore and we want to be debt free by next year.
