3 Billion leading Fast Moving Electrical Goods (FMEG) Company
with a strong global footprint. Havells enjoys enviable market dominance across a wide spectrum of products, including Industrial & Domestic Circuit Protection Devices, Cables & Wires, Motors, Pumps, Fans, Modular Switches, Home Appliances, Electric Water Heaters, Power Capacitors, CFL Lamps, Luminaires for Domestic, Commercial and industrial Applications.
Havells in 2007 created history by acquiring worlds renowned lighting company Sylvania thus registering itself amongst top 4 lighting companies in the world. Today, Havells owns some of the most prestigious global brands like Havells, Crabtree, Sylvania, Concord, Luminance and Standard. Its global network constitutes of 6500 professionals across 91 branches & representative offices in over 50 countries. Its 11 state-of-the-art manufacturing plants in India located at Haridwar, Baddi, Noida, Sahibabad, Faridabad, Alwar, Neemrana and 7 world class manufacturing plants located in Europe, Latin America, Africa & China are manufacturing globally acclaimed products, synonymous with excellence and precision in the electrical industry.
A 20000 strong global distribution network continuously strives to set new benchmarks in prompt delivery and service to customers powering their smiles like none other electrical brand in the country. Further to this the company pioneered the concept of exclusive brand showroom in the electrical industry with Havells Galaxy. Today over 210 Havells Galaxies across the country are helping customers, both domestic and commercial, to choose from a wide variety of products for different applications. Havells became the first FMEG Company to offer door step service via its initiative Havells Connect. Thanks to the quality of products and quicker service, it has minimum customer complaints and highest customer satisfaction.
Havells alongwith its brands, have earned the distinction of being the preferred choice of electrical products for discerning individuals and industrial consumers both in India and abroad. Havells offers same quality products for both Indian and international markets. Havells products & processes have acquired a number of International quality certifications, like BASEC, CSA, KEMA, CB, CE, ASTA, CPA, SEMKO, SIRIUM (Malaysia), SPRING (Singapore), TSE (Turkey), SNI (Indonesia) and EDD (Bahrain) thus complying with stringent quality norms at even the most testing markets, worldwide. It is committed to keep powering the world with its state-of-the-art innovations and energy-efficient solutions. Currently 70% of its product offering is energy efficient.
Social and environmental responsibility has been at the forefront of Havells operating philosophy and as a result the company consistently contributes to socially responsible activities. For instance, the company is providing mid-day meal in government schools in Alwar district, covering 35000 students per day. Besides this company has acquired land for constructing a larger kitchen with all the modern facilities to serve freshly cooked food to 35000 students in the area. The group company, QRG Healthcare runs a 140 bed hospital in Faridabad and will soon launch another 450 bed hospital in Faridabad by end of the year. In the past, the company has generously contributed to the society during various national calamities like the Bihar Flood, Tsunami and Kargil National Relief Fund etc.
The essence of Havells success lies in the expertise of its fine team of professionals, strong relationships with associates and the ability to adapt quickly and efficiently, coupled with the vision to always think ahead.
Some of the Firsts from Havells: Sets up India's First New Generation CMH Lamp Plant at Neemrana in the year 2010 Launched India`s 1st HPF CFL in the year 2009 Havells launched India's 1st BEE 5* Rated Fan in the year 2009 First Indian CFL manufacturers to have adopted RoHS, European norms on Restriction of Hazardous Substances in CFLs in the year 2008 First Company to get the ISI Certification for complete range of CFLs in the year 2006 Awarded the KEMA certification by The Dutch Council for Accreditation, making QRG the only group to attain this certification in the year 2005
VISION MISSION AND VALUES Vision "To be a globally recognized corporation that provides best electrical & lighting solutions, delivered by best-in-class people." Mission To achieve our vision through fairness, business ethics, global reach, technological expertise, building long term relationships with all our associates, customers, partners, and employees Values Customer Delight : A commitment to surpassing our customer expectations. Leadership by example. A commitment to set standards in our business and transactions based on mutual trust. Integrity and Transparency : A commitment to be ethical, sincere and open in our dealings. Pursuit of Excellence : A commitment to strive relentlessly, to constantly improve ourselves, our teams, our services and products so as to become the best in class.
Research and Development
Innovation is the hallmark of every vital development at QRG Group. New ideas, inventions deepen scientific knowledge and give its work force a new impetus towards technical progress. QRGs technological strengths and its endeavor towards continuous research & development have allowed it to fulfill its responsibilities towards its customers. The responsibility of providing its customers the best products and zero defect services to enable them to be comfortable and secure in usage of electricity. Havells has recently invested 50 crores in the QRG Center for Research and Innovation, set-up at the company's Head Office premises in Noida, U.P. The objective of this centre is to provide the theoretical & experimental foundations for all segments of electrical engineering. The centre closely cooperates with the various departments so as to provide the best and the latest in terms of technology and design. Quality Control The essence of quality is closely wrapped in the way we think, plan and work. It finds its true expression when we extend beyond ourselves to exceed our customers expectations. To deliver products those are safer, faster and simply better. Each time, every time. Building customer confidence through teamwork is a top priority to provide a wide variety of products and services. Realising and respecting the basic needs of customers to feel more secure, we've committed ourselves to make our products better, safer and smarter than what he or she is looking for. That's a passion that began 30 years ago and that's how it continues to be even today. Our customers rely on us and it is our responsibility to give them the very best. All our products are as per IEC standards. QRG has a simple rule on quality. If it doesn't exceed customer expectation, it's not quality performance.
Brighter than before Upgrade to OUTPERFORM: We upgrade our rating on Havells to an OUTPERFORM (from Neutral) with a revised target price of Rs455 (up from Rs431), led by our view of continued recovery in Sylvanias financial performance (raise EPS by 12-17% for FY11-13) and potential deleveraging, which reduces risk. Strong consumption trends to drive performance: Havells continues to benefit from strong consumption trends in India and increased preference for branded products. We expect domestic revenue for Havells to grow faster than end-market growth, led by market share gains in the lighting and consumer business, introduction of new consumer products and recovery in sales for industrial products. Furthermore, a better-than-expected performance at Sylvania supports earnings growth. For Sylvania, we estimate EBITDA margin at 5.5%/7.5% for FY11/12, above our prior estimates of 4.5%/5.1% on better-than-expected benefits from restructuring and increasing gearing towards emerging markets. Deleveraging reduces risk rating: While we are not as optimistic as management on Sylvanias near-term fortunes, we share management optimism on longer-term growth for Sylvania, led by expansion into emerging markets (higher growth, higher margins). We, however, believe the key benefit that Havells derives from a recovery in Sylvania, is its ability to deleverage (D/E: 2.3:1) through equity fund raising, with limited dilution. Earnings upgrades key driver: We believe strong execution from Havells in the domestic market as well as Sylvania could trigger consensus upgrades, driving stock price performance. Its underperformance over the past three months also provides an attractive entry point, in our view. Our target price is based on 12x EV/EBITDA (domestic business) and 7x for Sylvania. Key risk to our view is a substantial slowdown in Europe.
Share price performance 0 200 400 600 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 0 100 200 300 400 Price (LHS) Rebased Rel (RHS) The price relative chart measures performance against the BOMBAY SE 30 SHARE SENSITIVE index which closed at 19405.1 on 29/11/10 On 29/11/10 the spot exchange rate was Rs45.82/US$1
Performance Over 1M 3M 12M Absolute (%) -10.0 -7.2 115.3 Relative (%) -7.1 -13.9 84.6 Financial and valuation metrics Year 3/10A 3/11E 3/12E 3/13E