French electrical equipment maker Legrand plans to scale up its manufacturing capability in India as it diversifies its presence here and scouts for acquisition opportunities with an eye on the local market potential.
“Our target is clear: We are the fourth largest subsidiary at group level and our target is to become the third,” Legrand India chief executive Tony Berland told ET in his first interview since he took charge in March. “This step is quite important as we have to overtake the Italian subsidiary, which accounts for 9.1% of revenue. But when you analyse our growth in India last year, nothing is unachievable. We can realistically take the third position.”
For the €6-billion group, which has been present in India since 1997, the country accounts for 5% of its sales and 15% of employees worldwide. The Indian arm aspires to double its revenue contribution to the parent and find a spot in the group’s top three markets.
The firm aims to grow in India both organically and through acquisitions, as it has done in the past. “We are continuously investing. We would first invest internally. Thanks to our previous investments, we are producing 86% of our products; we want to go close to 100%,” said Berland.
The company aims to reach 100% localisation in manufacturing in the next three years. “We still have a big appetite for acquisitions. We really want to continue to grow in India,” said Berland.
However, the company is mindful of the challenges ahead. “We saw the latest figures of GDP slowing down. If the demand was really shrinking in the long run, then it would be complex to continue to expand. Our dynamic strategy of growth will be under stress,” said Berland.
The biggest growth drivers for the company in India have been three businesses – power protection systems, wiring devices and uninterruptible power supply (UPS) systems. Given the dependence of these businesses on real estate sector, which is going through a rough patch, the company has initiated a diversification plan.
“If real estate was slowing down, it could have an impact on us. But during the past years we diversified our activities. We are now involved in government projects in infrastructure. We are significantly well-established with our solutions in residential projects, but when you start to address some projects like the Metro projects, opportunities are massive,” said Berland.
Source: Economic Times