Havells India’s (Havells) management indicated that growth in Sylvania could become challenging, especially in Europe that accounts for over 70% of revenues. Further, the domestic business is likely to be negatively impacted by slowdown in construction activities and industrial capex.
Sylvania is witnessing troubled times with 6% contraction in its European revenues in Q2FY09. Other geographies such as Latin America and Asia, which offered Sylvania revenue growth rates of 14% and 6% in the quarter, respectively, have also started showing signs of slowdown.
The company is focused on cutting non-essential expenses and rationalising distribution and administrative costs. Havells is also working to improve working capital cycle in Sylvania. In the domestic business, the company is expected to write down its cables and wire inventory by ~INR 300 mn by Q3FY09 due to fluctuations in metal prices.
The company is aggressively cutting costs and striving to improve operating efficiencies in both domestic and international businesses. FY09 EPS is expected to take a knock and fall by 11% YoY to Rs 24.6 and expectations for FY10 is Rs 27.8 the same as that for FY08, mostly in-line with other industries.