V-Guard eyes 50 pc revenue from non-South markets

Company spent Rs45 cr on ad campaign during fourth quarter

KOCHI: V-Guard is eyeing 50 per cent revenue contribution from non-South markets over the next five years.

Commenting on the performance for the fourth quarter and the full year 2017-18, Mithun Chittilappilly (seen in the picture), managing director of V-Guard Industries, said efforts on innovation, R&D and product development would continue to be made in order to roll out differentiated offerings in a competitive industry.

While consolidating its leadership position in the South markets, the company aims to facilitate increased visibility, brand penetration and expansion of the product portfolio in the non-South markets, which contributed 37 per cent of revenues in the reporting year from 35 per cent last year.

The company envisages adding 3,000-5,000 retailers across the country every year over the next five years with higher addition in the non-South region.

The managing director believes the cash-positive balance sheet provides the company opportunity to pursue inorganic opportunities, if valuations favour.

“We are looking at companies having product range synergy with V-Guard, providing manufacturing capabilities or strong regional players where V-Guard can expand its geographic footprint,” he said.

The board has already approved raising of funds up to an aggregate of Rs500 crore through debt or equity or a combination of both, and this would help the company in inorganic expansion when right opportunities arise.

In August last, V-Guard acquired 74 per cent stake in Guts Electro-Mech Ltd for a total purchase consideration of Rs6.18 crore, which represents amount paid to promoters of Guts and subscription to fresh issue of equity shares of Guts.

Guts is a public limited company engaged in the business of switchgear. The company and the original promoter have a call option and put option respectively, in respect of the balance 26 per cent equity stake, whereby the option can be exercised by either party as per the share purchase agreement.

Chittilappilly said V-Guard was also working on a digital strategy for the company that includes looking at the predictive maintenance in plants, using Artificial Intelligence. “We are focusing on Six Sigma, TPM, lean manufacturing, etc at our 10 plants in India. The manufacturing execution system (MES) acts as an enabler for Industry 4.0, providing real-time factory data,” the MD added.

The net profit of the company for the reporting quarter fell from Rs39.11 crore to Rs27.58 crore, whereas the full year profit after tax (PAT) was  Rs133 crore after falling 8 per cent compared with that of the previous year at Rs145 crore.

In fact, the other expenses for the reporting quarter at Rs112.91 crore were 64 per cent higher than that of the corresponding period last year at Rs68.85 crore.

The company said that it had incurred a one-off expense of Rs45 crore during the quarter against advertisements for promoting the new brand identity.

 

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