Havells India plans to invest Rs 1,000 crore in FY25; announces strategic JV with KRUT LED for US expansion, ET Retail

New Delhi: Home appliances company Havells India plans to invest Rs 1,000 crore in 2024-25 with a primary focus on increasing production capacity and exploring opportunities to produce air conditioning compressors, Parag Bhatnagar, CEO of the company, told ERTetail.

The company is devoting this significant investment specifically to creating new production capacity for cables, refrigerators, lighting and fans, with the aim of meeting growing demand and improving the efficiency of the production process.

In the latest annual report, Anil Rai Gupta, chairman and managing director of the company, said, “In FY 2024-25, expecting a strong summer and good activity in the real estate market, we are hopeful of an increase in consumer demand. We strive to create long-term value by leveraging our diverse product portfolio and continuing to invest in key growth pillars.”

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Havells has invested around Rs 700 crore in capital expenditure (capex) in 2023-24, laying the foundation for future growth.

Currently, the brand is focusing on new channels, such as retail in a modern format or regional trade (MFR/RR), CPC/CSD canteens, e-commerce and fast trade.

Rural penetration

Havells began designing and developing some products to meet the needs of consumers in rural areas, such as water heaters, lighting and appliances, inverter bulbs and area lighting. “Havells intends to take rural consumers much more seriously in the future,” Bhatnagar said.

Thanks to the Rural Vistaar initiative, the brand has penetrated rural markets, having distributors in over 3,000 cities (10-50 thousand inhabitants).

Bhatnagar said, “There is another GTM to reach rural markets – based in cities with a population of less than 10,000.” To reach out to such cities, the brand has opened 24,637 exclusive Havells Utsav stores till the financial year.

US expansion

As it plans to expand internationally, the company intends to move its priority products to key geographical areas by partnering with local players. As part of this approach, Havells has formed a joint venture (JV) for its U.S. air conditioner business and continues to explore opportunities for other products and locations.

In a regulatory filing on Tuesday, Havells India Limited announced the formation of a joint venture (JV) between Havells International Inc (HII) and KRUT LED, LLC (Krut).

The purpose of this joint venture is to market and sell Havells India proprietary lighting products and solutions in the United States.

Havells International Inc (HII) is a wholly owned subsidiary of Havells India Limited and Havells Lighting LLC (HLL) is a wholly owned subsidiary of HII. Both of these entities are registered in the state of Delaware, USA.

Both HII and Krut have agreed to invest up to $12 million in one or more tranches, with an agreed ownership share ratio of 68.75:31.25. Upon closing of the contemplated transaction, both partners will make a total initial investment of $5 million, pro rata.

Havells India Limited will grant Havells Lighting LLC an exclusive license for its lighting products and solutions in the US for a period ending December 31, 2028, with the possibility of extension based on the achievement of certain revenue targets.

HII will retain the right to have majority representation on the HLL Management Board.