LLYOD ELECTRIC – RTN asia

Havells India, one of the country's top cable makers, reported a 10% fall in its revenue, blaming an overall slowdown in economic activities in the country. The company, however, managed to maintain margins through cost cuts. "The deterioration in economic macros, sectoral liquidity challenges and slowdown in infrastructure segment has disproportionately impacted demand for industrial cables, professional lighting and industrial switchgear," the company said. "The switchgear category was largely impacted by a decline in Industrial switchgear owing to sluggish infrastructure and government-driven procurement. Power cables was weighed down by industrial and infrastructure slowdown and fall in prices of commodities. Professional lighting was negatively affected owing to projects logjam " Besides Havells and Standard, the company also owns the consumer durable brand Lloyd. Even though consumer sentiment in the consumer space was slightly better than that in the industrial segment, said the company, it was also weak compared to historical levels. "The general consumer sentiment has also been weak though we have managed to remain stable in consumer categories." "Domestic wires grew in low single digits. Consumer lighting has remained stable underpinning portfolio and distribution resilience. Lloyd revenues were impacted by disruption in LED TV business. Air conditioners performed reasonably," it added. TV PAIN Havells, which bought the consumer business of Lloyd Electric for Rs 1,600 cr two years ago, has found it more and more difficult to hold on to its market share in the flat panel TV business due to rising competition. The flat panel TV business is seeing the kind of disruption that the mobile handset business saw four years ago, associated with the entry of e-commerce in a big way, along with the associated proliferation of new brands and new, low-margin strategies that are nullifying the on-the-ground relationships of established players like Lloyd. Making and selling TVs is also becoming more and more complicated as consumers increasingly evaluate non-hardware elements -- such as latest software, the availability of constant updates and content tie-ups -- before making up their mind. The same trend is likely to come to play in various segments, such as ACs, washing machines and fans, as each of these items becomes 'smart' and consumers start expecting the latest features from their appliances. Companies without a strong software team will find it harder and harder to compete in the appliance markets. REVENUE SPLIT The share of cables and wires fell to 36% of the December quarter revenue from 38% in the year-ago period, reflecting the pain in the industrial cables business. Lighting too saw deceleration to 14% of the overall business from 15%. On the other hand, the consumer durables business, which includes items like fans, ACs and TVs, increased its share to 30% from 27% in the previous year. Within this, the Lloyd business saw a sharp fall in profitability. Gross/contribution profit in the Lloyd business fell to just Rs 24 cr from Rs 53 cr last year. It was less than 5% of the company's total gross profit of Rs 535 cr. "Lloyd margins were impacted due to loss in LED TV business," the company said.

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