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Interaction | June 2015

Acquisitions are part of our growth engines

Legrand entered India by acquiring Morarjee Dortmund Smith in 1996, which was followed by acquiring Indo-Asian, Numeric UPS, and Adlec Systems. That said, Sameer Saxena, VP-Marketing, Legrand India, told POWER TODAY that the company is looking for right opportunities in ´smart´ space, M&A, and providing customised solutions to rural India.

I believe, Legrand has started its ´Make in India´ initiative recently. Update us on its present status?
The philosophy of Legrand is to understand the market first- its size, its product requirements, its acceptability, and our targets. As a company, we have an advantage of being in India, mainly due to less reliability on import element and focu son product manufacturing.The manufacturing activities are mainly for the Indian market, with only a small percentage catering to the export market. Meanwhile, having manufacturing activities in India helps us understand our existing customers in terms of introducing new products and creating aware¡ness, addressing their grievances, and involvement in research and development activities. So today, most of our product groups are doing better in terms of their position in the Indian market. Some of our product range includes cablofil and busbar systems, which is attributed to niche markets. Ironically, we have not been hampered by competition, which will help us expand in the Indian market.

Which areas does the Indian market lack focus? How well can these strengths be utilised to tap the potential?
In India, we have focussed on the residential, commercial, industrial, and infrastructure verticals, across all price segments. We innovate to improve our services in the electrical and digital network to enable more energy saving, more communication, and more safety for the customer as also usage behaviour for the Indian market.

You are talking about cablofil and busbar system. Can our readers have an understanding of these two products and their applications? 

Cablofil is a cable management system, an innovative solution designed for efficiency. Cablofil wire mesh cable trays provide the highest quality cable management solutions for any environment. The Cablofil range has various products such as wire mesh cable trays, ladder cable tray, V-through, FAS power manufactured wiring devices, fiber through, etc.

These can be used in residential, commercial, and industrial projects. Cablofil allows distribution of VDI (voice, data and image) cables and power cables from the point of entry to the workstation. It protects and prevents cables from any kind of hazards. The application of Cablofil ranges from heavy power cable pathways needed in oil drilling platforms to data installation above the ceiling in modern office buildings. As far as busbar system is concerned, the brand ´Zucchini busbar system´ has one of the most comprehensive ranges of busbar power distribution systems in the market. It can handle power distribution from 25A lighting to 6,300A high power systems, including rising mains. Zucchini busbar systems are widely used for power distribution in both industrial and commercial applications. Available in various ranges such as low busbar (LB PLUS), medium busbar (MS/MR), and high power busbar (SCP), they:

Make power designs in offices and industries quicker and easier to install as well as ensure much needed flexibility to cope with changing layout.
Help in distributing power throughout the building from one given point to another
Offer simple and cost effective alternative to traditional cabling when installing lighting and power distribution systems in commercial and industrial environments These products have been accepted in the market not only by the consumers but also by consultants. We see a double digit growth for these two niche projects.

How about the growth of Legrand in India?
If we look at the last six years, we have outperformed our competitors in the market, that is, if the market is growing at seven per cent, Legrand has grown at nine per cent. There has been an increase in the market share as well, which has enhanced production activities. In terms of market share, we are leaders in MCB product line, switchgear industry, and power devices but I will not be able to share the figures.

Since you have three manufacturing facilities in India, and with the ´Make in India´ campaign, would it be right to say that the expansion plans are in the offing?
Indeed. Enhancing productivity by improving automation and change of machines, which happens at regular intervals. With the help of state-of-the-art machineries and automation, the same plant can be used efficiently from X to 2X. In terms of expansion, keeping in mind the growing demand for our products, we are undertaking capex plans for our units. Apart from growing the organic way, we have been involved in acquiring few companies in India, which has helped us to optimise our brand´s place in the various power equipment market segments.

Can you tell us about the companies that Legrand has acquired?
We have acquired the switchgear business of Indo-Asian Fusegear. Despite this acquisition, both the companiesùLegrand and Indo Asian-will keep their current network intact.

Since, we are mainly operating in wiring accessories and cable management systems space for the last four decades, this acquisition has helped us to improve our business in the low and medium switchgear market.

Also, two years ago, we acquired the UPS unit of Numeric Power. The acquisition included the electronic equipment manufacturer´s overseas subsidiaries. This deal has strengthened our presence in India through Numeric Power´s sales and service network, and certainly, could mark a change in the dynamics of India´s power backup industry. Therefore, we don´t feel the need to setup greenfield manufacturing units in India. For e.g., by acquiring Indo-Asian, we directly have nine manufacturing units under our belt.

So is it right to say that Legrand´s business model is based on inorganic rather than organic growth?
Indeed. Our organic growth is through aggressive product launching, which has already outperformed the market. As far as inorganic grow this concerned, in the last five years, we have acquired four companies. So you can clearly gauge that this is a part of our business model.

Can you suggest the top markets to watch, viz., smart energy, smart grids, smart buildings, etc., in India?
I think there is a uniform market for each and every product that we manufacture in India.
I look at it in two ways. One, there are metro cities where the room for new development may not be there and if it does, it has to be through smart thinking. Meanwhile, what we are witnessing is more traction in Tier-II cities, where companies like us have scope for more business. So, the opportunities are limited in towns which are already developed as compared to the towns where most of the greenfield projects are coming up.

Can I have your frank opinion on having 100 smart cities in India. Do you sense any opportunity in this segment?
Typically, our approach has been realistic- an internal analysis of the opportunities is carried out before we pursue it.
We neither get excited by mere announcements nor get depressed by market conditions. For e.g., for others in the same space that we operate, FY 2012-13 was not up to the mark, however, our growth was better than our competitors. Meanwhile, today there are still policy issues for smart cities required to be cleared by the government. By just conducting seminars and progra¡mmes, the target of constructing 100 smart cities in India will not materialise. So, we´ll take our time to see what kind of opportunities the government is likely to place on the platter. Meanwhile, we will be concentrating on smart build¡ings, smart offices, smart homes, etc.

Can you outline the scope for electrical equipment industry in India? Can we say opportunities are in the process for EE players?
Let me first tell you about the two challenges that the country is facing. One is lack of accessibility in terms of electricity. The other is, even where electricity is available, its quality is not good in the rural areas. The current government has taken some bold steps by merging existing schemes pertaining to electricity with new, in which Legrand is participating through its broad product range. Our endeavour is to contribute to energy preservation, energy saving, and energy quality.

-Rahul Kamat
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