Mr. Ved Prakash Mahendru, Chairman and Managing Director, Eon Electric Limited. Mr. V P Mahendru, born February 18, 1933 in West Punjab, graduated from the Delhi University in the year 1951. In 1958, he promoted the Indo Asian Group (Now known as Eon Electric Ltd.) for manufacturing and marketing Electrical Distribution and Safety Equipment. The Group has since been growing exponentially with its various manufacturing plants in Jalandhar (Punjab), Sonepat (Haryana), Noida (Uttar Pradesh) and in Parwanoo (Himachal Pradesh), and Haridwar in Uttarakhand manufacturing a wide various of Low Voltage Electrical Switchgear, Fusegear, Protection and Lighting Equipment. Mr. Mahendru has been the head of various bodies linked with the manufacture of electrical/electronic products. He has also participated and led a number of delegations of industrialists and exporters to a number of foreign countries for export promotion and technology tie-ups. He was the member of the delegation accompanying former Indian Prime Minister, Atal Behari Vajpayee, to Singapore, Cambodia and Germany. He was also a member of the delegation accompanying Prime Minister, Dr. Manmohan Singh to Germany for inaugurating Hannover Fair in 2006.
Eon Electric Limited (formerly known as Indo Asian Fusegear Limited) is one of the leading manufacturers of lighting products, wires and cables in India. With its presence in markets across the globe, the company is today synonymous with high quality products for electrical distribution, protection and lighting equipments in India, Asia as well as other developed countries. Almost 50 years ago, on August 8, 1958, a group of young technocrats indigenously developed India’s first sheet steel enclosed rewirable switch at Jalandhar in Punjab. This marked the birth of Indo Asian, which grew into a multi-product, multi-location company specializing in manufacturing and marketing a wide range of high-tech electrical products used for distribution, protection, control and conservation of electrical energy. “Enriching quality of life by ensuring safe, efficient and convenient use of electricity" has been the company’s guiding force for development of new and better products. The culture of innovation and constant change has played a key role in its success. The company is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
In an exclusive interview with Hemant P. Maradia of IIFL, Mr. Mahendru says, “We are looking to the future with much more confidence because we believe that we have excellent products.”
Tell us about the whole restructuring exercise that you have undertaken? What prompted the sale of switchgear business?
Indo Asian Fusegear is a well-established name in the electronic and electrical industry in India for the past five decades. It was started in 1958 and has many firsts to its credit.
We have been expanding our operations at various factories across North India (Jalandhar, Ludhiana, Sonepat, Delhi, Noida and Haridwar). But, some of the existing businesses did not look that promising to us. They have a market, which is growing, but we do not foresee any substantial increase in their business prospects.
We are putting money in R&D of some of the new products that we are developing. Eon Electric is developing and providing energy efficient, green compliant, high technology products to its consumers for energy conservation and comfort for all stakeholders.
With this in view, we sold out part of our business about two-and-a-half-year back to French company Legrand.
Then we asked ourselves, what next, what new we can do? What can give customers much more comfort, joy and security? From India’s point of view, we thought of developing products that can save electricity. What new products should we develop that can deliver same results with less power?
CFLs use mercury, which is hazardous to the environment as well as for living beings. That’s when we decided to move into LED products. LED doesn’t use any harmful materials. It generates more power in a much more efficient manner compared to CFLs. They also have a life much longer than CFLs.
We have good technology and good products in the LED space. We have tied up with a Japanese company for our LED products. For LED Luminaires we have entered into partnership with a European company.
The LED products reflect the philosophy of the company i.e. to deliver energy efficient, eco-friendly products in a cost-effective fashion. We are not putting much thrust on CFLs right now.
We also decided to make switching products that don’t just allow you to turn electrical equipment on or off but are in tune with the current need of energy conservation and environment protection.
We have developed smart line Home Automation products keeping these considerations in mind. Switches are not merely switches anymore; they are a source of comfort and source of security as well. The intention is to make consumers’ life more comfortable.
Mobile phone has become an integral part of our life and will remain so in the future as well. Use of mobile phones is growing very fast across the board - be it in cities or in rural areas. To make it more convenient, more economical and more durable we are getting into the manufacture of Lithium Ion Batteries so that one does not have to recharge the mobile phone battery again and again. We will be the first company in India to manufacture Lithium Ion Batteries. Right now they are being imported.
We plan to develop batteries that can last really long - if you charge it today you can use your mobile for seven days. That is our thought and plan at the moment. Their price will also be cheaper than that of current Lithium Ion Batteries. We plan to make Lithium Ion Batteries that will be more reliable and will not malfunction.
What’s more, Lithium Ion Batteries will be used not only in mobile phones but also in several other devices. Even future hybrid cars will use these batteries.
What was the rationale behind the restructuring?
We had been in this switchgear business for the past 55 years and we have grown substantially over the years, not only in India but also in overseas markets. But, then we felt that we must change our strategy and make more and more energy-efficient and eco-friendly products.
We have enjoyed excellent relations with our bankers. They have always stood by us and helped us tremendously. Our shareholders too have stood by us. Today we are a zero-debt company.
So, we decided to foray into the new areas of business by disposing off the switchgear business to Legrand India and use that money for new businesses.
Is the demerger of Metering and Power Generation business over?
Yes, that exercise is also over. There were two kinds of products that we were traditionally manufacturing for the past few years. Consumer products sold through dealer network and the Metering & Power Generation business.
The Metering and Power Generation business is also an excellent business but it needed a totally different approach as it deals with the government agencies. To ensure that both these businesses grow strongly, we decided to demerge the Metering and Power Generation business.
The demerged Metering and Power Generation business will be called Advance Metering Technology Limited (AMTL). The demerger will come into effect from the appointed date of April 1, 2011. AMTL will continue to engage in the business of Energy meters, Generation of Power, Energy Management Services and related businesses.
Yes, AMTL will soon be listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). We are committed to the shareholders for the same. We will list AMTL shares over the next few weeks once we receive all necessary permissions.
As per the Scheme approved by Punjab and Haryana High Court for which formal Order is awaited any day, all the shareholders of Eon Electric Limited will be entitled to one share of Re 5/- each in the two companies against one share of Rs 10 each in Eon Electric Limited.
What led to the change in corporate brand identity?
That was necessary because the switchgear business that we sold was reflected in the old name of the company. We didn’t want consumers to get confused by retaining the old name. Eon is a Latin word which means long-term, for eternity.
Rebranding to Eon Electric from Indo Asian Fusegear represents dynamism of the organization to consistently evolve with the changing times.
We want to ensure that the consumers get the best of products with the most energy-efficient technology available in the world. Our vision is to enrich the quality of life by ensuring safe, efficient and convenient use of electricity.
What is the road map over the next few years?
We are looking to the future with much more confidence because we believe that we have excellent products built through innovations. All the new line of products - be it LED lighting products, Home Automation products or Lithium Ion Batteries - have great future. All these businesses have the potential for strong growth.
What kind of investments have you made in new businesses?
We have invested Rs 750mn in new business in FY12 and are looking at spending another Rs 1-1.25bn in FY13. In the next 4-5 years, our investments will increase as we plan to hit annual turnover of Rs 10bn by then.
Any plans to launch Home Appliances?
Not right now, although we may look at it in due course of time. First of all, we want to concentrate on the new line of businesses. We will soon come out with energy-efficient fans.
There is also lot of scope for innovation in the home appliances space. So, we could look at home appliances in the future but we want to ensure that our products are different from what is available in the market.
What are your growth-cum-expansion plans?
After the sale of its Switchgear Business, Eon Electric has taken several initiatives for growing its existing product portfolio of Wires, Lighting and Wiring Accessories by augmenting capacities and adding specialty Cables, cutting edge LED technology in Lighting and Home Automation Devices.
The company is investing to double capacity of special Wires & Cables, and is targeting 300% growth in revenue in this segment in FY13.
Eon Electric is also launching a wide range of energy efficient Fans to widen its product offerings to the customers. Eon Electric has worked on new technologies of Fans which will be able to save upto 30% of power vis-à-vis Fans available today in the market.
The Company is also working to set up India’s first Greenfield plant for Lithium Ion Batteries with an investment of about Rs 1bn. The new factory will go on stream by the end of FY13.
This will substantially add to the company’s revenues in the coming years. The market for Lithium Ion Batteries is growing by over 20% globally.
What kind of revenue and capex are you looking for?
The product portfolio of Eon Electric is growing multifold every year. The company is projecting to close FY13 with a turnover of Rs 2bn, which is 400% growth on the turnover of FY12.
Eon Electric is investing ~ Rs 1.25bn in FY13 to augment its existing capacities as well as in Greenfield ventures.
We will look at tapping capital markets for new investment in the future but not immediately. We have enough capital with us as of now. We are a debt-free company.