This differentiated product mix supported by intelligent marketing & branding campaigns helps us garner market share and outperform some of the sectors we are present in; says Sandeep Sikka, Group CFO, Hindware Home Innovation Limited
What are your views regarding the consumer durables industry’s performance in FY22?
The consumer appliances segment has undergone a shift where we have seen the pie of organised sector increase over the unorganised sector. The year FY22 witnessed muted demand, owing to high input & fuel costs, which put pressure on margins and we expect this pressure to continue over the next few quarters as well. There has been an increased demand for consumer appliances such as air coolers, water purifiers, and water heaters amongst others that have emerged from tier 2 & 3 cities. Since lockdown has forced people to spend more time indoors, there was a rise in categories such as dishwashers & room water heaters, which were not considered essential categories and we believe that we will see continued demand for these appliances beyond this financial year as well. Unfortunately, the air coolers category over the past couple of years has taken a hit because of the lockdown but given the ease of COVID restrictions in India, we expect this sector to pick up in FY23.
HHIL’s PAT for FY22 registered robust YoY growth of 271 per cent on a YoY basis. What are the key factors contributing to your stellar financial & operational outperformance?
We delivered a strong performance for the year despite the high input costs and supply-side disruptions that continued to impact demand. We continued to invest in high-growth categories such as our building products and consumer appliances segment, which helped us solidify our leadership position across various categories namely, sanitaryware, faucets, plastic pipes & fittings, and kitchen chimneys, etc. Our continued investments in increasing our digital capabilities helped us in establishing new connections with customers. This differentiated product mix supported by intelligent marketing & branding campaigns helps us garner market share and outperform some of the sectors we are present in.
Can you shed some light on your ongoing as well as future Capex plans? How do you fund Capex?
Our plastic pipes & fittings segment is a focussed business and its manufacturing is in-house to cater to the accelerated demand that we have for our products in the market, to ensure better operational efficiencies as well as optimised cost. Currently, the plant in Isnapur (Telangana) has a capacity of 35,000 MT and is in the process of being ramped up to 45,000 MT. Since this business continues to grow exponentially and to penetrate into new markets, we are setting up a greenfield plastic pipes & fittings plant in Roorkee, (Uttarakhand) with an investment of approximately Rs 180 crore. The plant will be spread across 12 acres and will have a manufacturing capacity of 12,500 MT per annum, which is expected to be operational by the end of March 2024.
In addition to this, we continue to invest in further strengthening our retail network and open display centre for all businesses in major cities & towns across India. We also plan to invest around Rs 50-60 crore annually towards the development of these display centres.
Could you elucidate the products that you have launched during FY22? Also, throw light on the new product launches that are in the pipeline for FY23?
Under our consumer appliances segment, we strengthened the existing categories such as kitchen chimneys, dishwashers, air coolers, and ceiling fans. Under our sanitaryware & faucet business, we launched a range of Aspiro – a range of premium quality faucets, mixers, and washbasins that are exceedingly well received in the market. We also launched a slew of touchless products under both sanitaryware and faucets as that is the current demand. During the year, we started manufacturing overhead water storage tanks from our Telangana manufacturing plant to cater to the South along with a few markets in the West.
What is the company’s earnings outlook for FY23?
Despite the challenges, we performed exceptionally well in FY22 on the back of strong fundamentals and our business strategy. We are on the path of an exciting growth journey and going forward, we will continue to unlock significant value for all our stakeholders.