Dry cell battery major Eveready, which has consistently been diversifying its product portfolio for higher turnover growth, expects its small home appliances division to generate around Rs 300-400 crore revenue in the next three to five years. On the profitability front, this new business is expected to break even on an operating level (Ebitda) in the next financial year. After the launching of products in a phased manner for the last 12 months, the company is currently pushing ahead with consolidating this new segment as it is looking to clock `100-crore revenue by selling ceiling fans and home appliances at the end of this fiscal. And, in this already crowded market space it will focus on expanding distribution network significantly and offering products at affordable price points. Eveready Industries will leverage its strong brand name to expand the newly-launched business nationally as it is competing with companies like Crompton Greaves, Bajaj Electricals and Havells India.
“We have extended the brand to lighting, which has been very successful. And now the next step is to extend it to the fan and home appliances. Our initial feedback has been positive. The brand has been well accepted,” Eveready Industries India managing director Amritanshu Khaitan told FE. The company, a part of the Williamson Magor Group, is the market leader in the Indian dry cell battery segment, commanding over 50% market share. It also commands over 75% market share in the country’s organised flashlights market. Before foraying into the consumer appliances space with a large range of products of ceiling fans, mixer grinders, irons, room heaters, water heaters, induction cookers and air purifier, the company had launched lighting solutions, mainly LED lights.
For Eveready, it makes greater sense to diversify product portfolio with launching of ceiling fans and home appliances from the turnover growth point of view. While the Indian market for dry cell batteries is now estimated to be worth over Rs 1,600 crore by value, market size for fans is about Rs 5,000-6,000 crore and for rest of the home appliances category it is estimated at around `10,000 crore. “Even a small market share in home appliances segment can add significant turnover to the company. It is about generating economies of scale, the strategy is to keep the business completely outsourced,” Khaitan said. The firm is sourcing the products from India and China.
In the next two-three years the company will be in the investment phase in terms of establishing the brand for the appliance segment. However, as Eveready is a strong pan-India brand, the investment required on this front will be much less. And once it achieves the economies of scale, the business should generate good profitability. Khaitan said more than gaining market share, he would like to expand the new business significantly large. “I think we will reach Ebitda break-even for the new segment in the next fiscal. But I am not focussed on Ebitda break-even. I am focussed on generating the turnover growth,” said the third-generation entrepreneur in the Brij Mohan Khaitan family, which controls Williamson Magor Group.
For battery and flashlights, it has over 4,000 distributors. Around 300 distributors have already been added for home appliances. The company wants to grow its distribution network to at least 15,000 for appliances by next fiscal, with more urban focus. On plans to bring more products under appliances segment, Khaitan said,” We are consolidating at the moment, and depending on the feedback we receive from the consumers we will increase the product range.” In FY17, the company’s net profit grew over 26% year-on-year at Rs 93.63 crore, while its net sales saw a marginal 2.4% y-o-y growth at Rs 1353.81 crore.