Varun Sood, The Economic Times
Bengaluru, 11 November 2014
Wipro’s consumer care and lighting business could end this fiscal year with $1 billion (Rs 6,000 crore) in revenue, as the privately-held company expects the Narendra Modi-led government’s promised reforms to start reflecting on the ground, leading to a better second-half of the year for the company.
Wipro Consumer Care & Lighting, which reported a little more than Rs 5,000 crore in revenue in the year ended March 2014, saw a 25% growth in revenue in the quarter ended September, according to a senior company executive. "We did 11% volume growth (in the second quarter)," said Vineet Agrawal, president, Wipro Consumer Care & Lighting, adding that revenue grew 25% in that period on account of the 10-11% price hikes the company undertook.
This growth will be the envy of some of the goliaths, including Hindustan Unilever that saw a 5% growth in volume and homegrown Dabur that saw volume growing at less than 9% in the July-September period.
Significantly, four states—Karnataka, Andhra Pradesh, Maharashtra and Gujarat—account for over 70% of the company’s topline, while the company generates 53% of business from overseas, including China, Indonesia and Malaysia. Since a large chunk of revenues are accounted from international markets, Agrawal shies away from putting a number because a currency depreciation could prove to be the biggest spanner in the company’s e growth. Nonetheless, he remains optimistic that the Modi government will walk the talk and release money for the pending projects, thereby giving a boost to discretionary spending."The bigger struggle for now is liquidity. The money (is stuck) with our traders and distributors. Earlier, if they paid me in 60 days, now they pay me in 90 days," said Agrawal.
The fast-moving consumer sector growth has halved to 9% in 2013 from 18% in 2012 with some experts pencilling-in a lower growth for this year on account of "uneven demand", hurt by below normal monsoon, higher competition among companies and lower economic growth leading to less increments.
"Multiple reasons (including) Intensification of competition among firms, food inflation, lower monsoon and low increments suggest that growth for the sector as a whole will be lower this year," said Devangshu Dutta founder of Third Eyesight, a Delhi-based consultancy.
"So, against that backdrop, Wipro Consumer story is heartening. A lot of this success is also on account of overseas acquisitions made by the company. Also, in the last few years, the company has tried to reposition itself."
Wipro’s lighting and furniture business accounts for 18-19% of the company’s domestic sales of about Rs. 2,400 crore. It recorded a 14% growth during the second quarter. Although Wipro consumer’s two brands account for a large share of revenues, with Santoor alone bringing in 25% business and Yardley accounting for another 15%, Agrawal dismissed any talks of skating on thin ice.
"It is our strength. I would not like to have seven brands which each have a 5% share. For the simple reason, if you are not big, you cannot be profitable, you cannot defend or be aggressive," he said.
The management also believes that India could soon see a lot of more white goods being sold through ecommerce sites as the smartphone penetration increases. In China, which accounts for about 15% of its Rs. 2,600 crore business from overseas Rs markets, Wipro Consumer generates 9% business from internet users.
In India, like in Indonesia and Malaysia, Wipro Consumer currently
generates less than 1% of overall business from e-commerce sites.
(Published in The Economic Times)