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Havells India LtdOctober 2009

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• Founded in 1971 with the acquisition of ‘HAVELLS’ brand;

headquartered in Noida

• Leading domestic player in consumer and industrial electrical

products

• Expanded global reach through Sylvania acquisition in 2007

• Largest Indian electrical products company with revenues in

excess of USD 1 billion

• Presence across 5 continents, 50 countries with 94 branches and

over 5000 professionals

• Manufacturing facilities spread across India, Europe and Latin

America

• An Indian Multinational – capitalising on its domestic leadership to

generate superior global cash flows

GLOBAL FOOTPRINTS DOMESTIC LEADERSHIP

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EuropeMajor Presence through Sylvania 42% of Consolidated Revenue (70% of Sylvania)4 Manufacturing UnitsStrong Distribution Channel

India Major Presence through Havells India42% of Consolidated Revenue8 Manufacturing UnitsStrong Distribution Channel

AN INDIAN MULTINATIONAL

New Targeted Markets: China, Asean region and Latin America

Latin AmericaPresence through Sylvania16% of Consolidated Revenue (27% of Sylvania)2 Manufacturing UnitsStrong Distribution Channel

HISTORICAL GROWTH

-

10,000

20,000

30,000

40,000

50,000

60,000

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09

Acquistion: Sylvania

Merger: Crabtree EWA and Bath Fitting

New Products: CFL, Luminaries, Fans and Motors

Traditional: Switchgears and Cable & Wire

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History Rationalization Product Additions/ Merger/ Acquisition Growth

• 80-90s expanded distribution reach, foreign

collaborations, technology absorption, product

addition through acquisitions

• Early 2000 setting up World Class

manufacturing facilities with large scale,

- focusing on global competitiveness on cost

and technology

- setting up R&D centre

- Target export market – slow and tardy

operation

• Mid 2000 shift to branding, consumer products

• 2007 global acquisition

• 2009 consolidate and grow

in billions of Rupees

KEY GROWTH DRIVERS

• Construction and infrastructure segment

• Increased branding of hitherto ‘commoditised’ products – wires and cables

• Consolidation from unorganised to organised segment

• Strong focus on dealer relationship – deep, passionate, sustainable- a key differentiator in

distribution led Indian businesses

• Greater distribution penetration – reach out to towns upto 1 lac population by 2010

• Increased brand awareness creating consumer induced demand pull

• Globally benchmarked manufacturing plants for lowest cost, international quality products

• Cost rationalisation in Sylvania to generate superior, stable cash flows

• Sylvania to be global platform to launch higher value add products like switchgears

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6Management estimates, market data

Domestic Switchgears –Market Size ~INR 12,000 mn

Competitors Position - Mkt Share• HAVELLS ~ 20% • MDS/ Legrand• Schneider

Industrial Switchgears –Market Size ~INR 20,000 mn

Competitors Position - Mkt Share • L & T• Siemens• Schneider• HAVELLS ~8%

Electrical Wire AccessoriesMarket Size ~INR 10,000 mn

Competitors Position- Mkt Share • Anchor – Roma• CRABTREE – HAVELLS ~11%

Power Cables –Market Size ~INR 80,000 mn

Competitors Position - Mkt Share • Polycab• HAVELLS ~ 8%• KEI

Wire –Market Size ~INR 40,000 mn

Competitors Position -Mkt Share • Finolex• HAVELLS ~ 9%• Polycab

Energy Savings Lamp-Market Size ~ INR 10,000 mn

Competitors Position - Mkt Share • Phillips• HAVELLS ~ 9%• Osram

LuminariesMarket size ~ INR 20,000 mn

Competitors Position - Mkt Share • Phillips• Bajaj• Crompton Greaves• HAVELLS ~ 10%

FansMarket Size ~ INR 20,000 mn

Competitors Position - Mkt Share • Crompton Greaves• Orient• HAVELLS ~ 14%

Switchgears Cable & Wire Lighting & Fixture Electrical Consumer Durable

DOMESTIC LEADERSHIP – TOP 3 IN ITS PRODUCT CATEGORIES

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• Patronize cricket – strong brand connect, visibility and recall

• Sponsored Cricket T-20 World cup, IPL, ICC Champions Trophy, IPL Champions League

• Increasing media spends

• Consistent brand messaging and positioning through Havells Galaxy- one stop Havells products shop

SIGNIFICANT BRAND FOCUS

Unique initiative to promote electrical products on FMCG model and create lasting differentiator

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WELL SPREAD GEOGRAPHICAL MIX Revenues

North – 33%REVENUES

• Western markets traditionally weak – a challenge and an opportunity

• Strong growth in Eastern markets

• Significant leadership in Northern and Southern region

PRODUCTION FACILITIES

• Large investments in the recent past to create global benchmarked production facilities

• Largest facilities in India for MCBs, CFLs and Fans

• Low cost, global quality products to effectively compete against any international product in India and overseas

• Sylvania to source CFLs from Havells and possibility of launching switchgears

East – 20%

West – 16%

South – 31%

• 5-year EBDITA and PAT CAGR in excess

of 40%

• Stable margins holding competitive

pressure and high revenue growth (37% 5

yr CAGR)

• ROCE in mid 40s initially- declining in

recent years owing to lag effect in Sylvania

investment and new business of electric

motors

• Capex in existing products continue to

provide short pay-back periods [3 years]

• RONW decline steeper due to funding of

recent investment through issue of shares

0

50

100

150

200

250

2005 2006 2007 2008 2009

EBDITA

PAT

0%

10%

20%

30%

40%

50%

60%

2005 2006 2007 2008 2009

ROCE

RONW

SUSTAINED FINANCIAL GROWTH in millions of Rupees

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IMPROVING MARGINS

• Net Revenue growth in each segment except cable

& wire, which has also grown in volume terms.

• Increasing EBIDTA margins due to reduction in

fixed cost base, decline in material cost with better

price realisation and increased contribution from

cable & wire

• Branding, cost focus and dealer management would

sustain increased margins

• Growth to accrue from greater distribution network,

better product and distribution management and

aggressive marketing strategies

• Whilst new products are under consideration, the

existing product range could generate significant

growth in the next 2 years

Net Revenue

5,534 5,8534,860

5,736 5,862

-1,000

2,0003,0004,0005,000

6,0007,000

Q1 Q2 Q3 Q4 Q1

19.4%

12.3%

21.2%

10.3%

4.1%

12.4%

17.4%20.4%

11.5%

10.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Q1 Q2 Q3 Q4 Q1

Contribution % EBIDTA %

----------------------- FY 09 ---------------------

----------------------- FY 09 ---------------------

FY 10

FY 10

in millions of Rupees

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STRONG FINANCIALS in millions of Rupees FY07 FY08 FY09

Net Worth 2,624 6,490 9,319

Total Debt 560 358 703

Net Fixed Assets 2,422 3,852 4,655

Investment 35 1,648 3,879

Net Current Assets 844 1,662 1,659

ROCE 47% 39% 23%

RONW 47% 31% 18%

EV/ EBIDTA (times) 13 10 10

EV/ Sales (times) 1.25 0.9 0.9

• Private placement of shares to Warburg Pincus

for USD 110 mn at average price of Rs

650/share

• In addition to current investments in Sylvania,

there are debt and equity commitments of Euro

32 million

• Sylvania has a non-recourse loan of Euro 116

million which is neither guaranteed nor obligated

to Havells India Limited

• Sylvania has recently renegotiated its loans

facilities with banks providing for a deferment of

its amortisation for 2009 and 2010

• Sylvania provides a strategic long term value

platform in the high margins, vast European and

growth oriented Latin American & Asian markets

Ownership Structure

in millions of Rupees

FY09 Actual

FY10 Budget

Switchgears 370 350

Cable & Wire 170 1000

Fans 20 200

Lighting 450 400

Others – IT etc. 180 150

Total 1200 2100

• Capex to be substantially funded through

internal accruals and balance by loans

• Largely focused on meeting increased demand

in existing product categories

• There was some planned slowdown on capex

in FY 2009 resulting in ‘bunching’ in 2010

• The current capex would be sufficient for

doubling of revenues except for some

balancing capex

• It would also cater to increase supply of

products to Sylvania- CFLs/Switchgears

• Expected payback of 3 years

12 12

PLANNED CAPEX

HAVELLS SYLVANIA

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• Acquired in April 2007 with Enterprise Value of Euro 227.5 mn

• World’s No. 4 Lighting Source and Fixture Brand

• 100 years old Strong Band with Global presence

• Revenue of more than Euro 500 Million

• Presence over 50 countries, 6 state-of-the-art plants spread

across Europe and Latin America

• Above 10,000 strong distributors across the Globe

• ~70% Revenue from Europe

• ~27% Revenue from Latin America, rest 3% from Asia

• Increasing presence in Developing Markets

Lighting Source & Fixtures

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• March 2007: Havells India Limited acquires Sylvania, funded through a non-recourse loan of

Euro 120 mn and recourse funding of Euro 80 mn (current outstanding Euro 20 mn)

• October 2008: Recession in Europe hits Sylvania; decline in revenues and profitability;

maiden covenant breach with lenders group

• January 2009: Havells assumes effective management control; Anil Gupta leads as COO with

senior Havells personnel deployed in key European departments. Phoenix-I initiated to

streamline fixed cost base, reduce working capital and procurement costs

• 28 August 2009: The restructuring agreement with new covenants based on revised

projections signed with lenders including deferment of amortisation till 2010 and fresh equity

injection of Euro 12 million by Havells India Ltd.

• September 2009: Prakram, a restructuring exercise to streamline fixed cost base and optimise

operational footprints, initiated

CHRONOLOGY

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Philips29%

Osram19%GE

9%

Sylvania5%

Others38%

Global Lamp Competitors Position

Others79%

Sylvania2%

Z umt o b el11%

Philips7%

GE2%

Global Fixtures Competitors Position

• Lamps Market Size: € 5 billion

Phillips being the Market Leader in each market

• Fixture Market Size: € 12 billion

Fragmented market with dominating local players in

each market

• Market included Europe, Latin America and Asia where Sylvania has presence.

Lamps– Market Matrix*

Segments Market Size SYLVANIAPosition

Market Share

Other Competitors

Europe ~€ 2,600 # 4 8% Philips - 38% Osram - 29%GE - 12%

LATAM ~€ 277 # 4 14% Philips - 27% Osram - 20%GE - 15%

Asia ~€ 2,200 - - Philips - 18% Osram - 8%GE - 5%

* The Market Matrix is as per the Best Estimate of Management

Euro In millions

MARKET SIZE

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• Sylvania amongst the leading lighting brand and

distribution companies in Europe

• Adversely impacted with recession in Europe coupled

with a high cost fixed base

• Market performer despite confusion, uncertainty,

communication breakdown and de-motivation in the

last 6 months owing to significant senior management

changes and lack of decisive leadership from Havells

• It underpins the relevance and resilience of Sylvania

brand in its operative markets

• Significant restructuring plans to reduce fixed cost,

drive efficiency and generate EBDITA

• Total restructuring costs of Euro 38 million- Phoenix

and Prakram

• Substantial growth in EBDITA expected post

restructuring with a 5% revenue growth

PERFORMANCE SNAPSHOTYear ending December 

in millions of Euro 2007 2008 2009(P)

Net Sales 505 495 406

Gross Profit 116 116 85

Gross Profit % 23.0% 23.4% 20.9%

EBITDA 19 12 ‐35

Restructured EBDITA 19 16 3

Restructured EBDITA % 3.8% 3.2% 0.7%

Million Euros

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2009 Projection vs Actual (till July)

Euros in ‘000

Particulars Jan Feb Mar Apr May June July

Net Sales (projected) 36,283  37,057  36,858  34,243  31,546 34,280 33,813

Net Sales (actual) 36,283 37,057 36,858 34,243 31,822 33,782 35,345

Gross Profit (projected) 7,591 7,694 6,566 6,484 6,126 7,803 7,262

Gross Profit (actual) 7,591 7,694 6,566 6,484 6,137 7,979 8,154

Restructured EBITDA (projected) 588 ‐306 185 ‐419 ‐1179 711 300

Restructured EBITDA (actual) 588 ‐306 185 ‐419 (238) 933 728

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PHOENIX – 1

• Sylvania initiated Phoenix-1 in January 2009 aimed at reduction in

– manpower

– working capital

– material costs

• The plan was funded through reduction in working capital and internal accruals

• Phoenix-1 has been largely successfully implemented with benefits on track

RESTRUCTURING PLANS

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• Sylvania needs to align its manufacturing base and be more lean and efficient- hence Prakram

• Prakram driven by-– Rationalise fixed cost base– Increase outsourcing from LCCs including China/India– Increase savings in material costs, value engineering, process optimization– Enhanced managerial participation by Havells

• Funding Plan -– The lenders would defer payment of amortisations falling due in 2009 and 2010

aggregating Euro 24 mn– Havells India would invest Euro 12 million as fresh equity to part finance Prakram

restructuring

RESTRUCTURING PLANS- PRAKRAM

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in millions of Euro

March 2009 June 2009

1. Equity invested by Havells in Sylvania at the time of investment (2007-08) € 50 € 50

2. Sylvania debt with recourse to Havells

- recourse debt repaid € 7 € 10

- recourse debt to be repaid over 2009-2012 € 23 € 20

- additional working capital debt guaranteed by Havells* € 14 € 8.5

Total current exposure (1+2) € 94 € 88.5

3. Additional equity proposed in FY10 -- € 12

HAVELLS FINANCIAL EXPOSURE TO SYLVANIA

Strategic• Europe, though sluggish, continues to be a large market with attractive margins for a low cost

manufacturer• It is a tough market to access without an established brand and distribution network• The low cost product cannot be a sole penetration criterion as reflected in absence of any Chinese or

Indian products in these markets• The Sylvania acquisition provides Havells a platform to introduce more products in particular,

switchgears• We believe that rationale for acquiring Sylvania has not eroded but would require leadership and

directional support from Havells, hitherto being exercised on sidelines

SYLYVANIA – STRATEGIC AND FINANCIAL RATIONALE

Financial• Sylvania revenues for 2009 are estimated at euro 400 million (INR 2,680 crores)• Havells has initiated restructuring plan to reduce the fixed cost base, rationalise manpower, increase

margins through select outsourcing whilst retaining European identity• Havells has limited further exposure of Euro 28 million with no recourse to existing loans of Euro 116

million• Sylvania could provide sustainable ROCE of 14% and RoE of 16% with superior, stable cash flows

and marginal capex requirements• We believe Sylvania would contribute significant shareholder value in the medium terms to Havells

Shareholders

• Havells is well positioned for growth in domestic markets through a stronger brand, distribution

network and vast product range

• Sylvania would be cost competitive through current restructuring and presents a good platform for

electrical products having a strong brand lineage and distribution network across Europe and

Americas

• Havells has robust cash flows and comfortable leverage to meet its planned capital expenditure for

medium term

• The Company is open to inorganic growth in domestic markets in its related areas

• The economic environment including the thrust on infrastructure and upturn in real estate markets

augur well for Havells end user markets

• We believe that Havells is uniquely positioned to aggressively target growth through organic and

inorganic means in the medium term

EPILOGUE

The information contained in this presentation is only current as of its date. All actions and statements made herein or otherwise shall be subject to the applicable laws and regulations as amended from time to time. There is no representation that all information relating to the context has been taken care off in the presentation and neither we undertake any obligation as to the regular updating of the information as a result of new information, future events or otherwise. We will accept no liability whatsoever for any loss arising directly or indirectly from the use of, reliance of any information contained in this presentation or for any omission of the information. The information shall not be distributed or used by any person or entity in any jurisdiction or countries were such distribution or use would becontrary to the applicable laws or Regulations. It is advised that prior to acting upon this presentation independent consultation / advise may be obtained and necessary due diligence, investigation etc may be done at your end. You may also contact us directly for any questions or clarifications at our end.

This presentation contain certain statements of future expectations and other forward-looking statements, including those relating to our general business plans and strategy, our future financial condition and growth prospects, and future developments in our industry and our competitive and regulatory environment. In addition to statements which are forward looking by reason of context, the words ‘may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential or continue’ and similar expressions identify forward looking statements. Actual results, performances or events may differ materially from these forward-looking statements including the plans, objectives, expectations, estimates and intentions expressed in forward looking statements due to a number of factors, including without limitation future changes or developments in our business, our competitive environment, technology and application, and political, economic, legal and social conditions. It is cautioned that the foregoing list is not exhaustive This presentation is not being used in connection with any invitation of an offer or an offer of securities and should not be used as a basis for any investment decision.

Disclaimer

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