Anchor Electricals is a reputed brand in the electrical products space, with an array of switches, fans and lighting products. The 55-year-old company, which was acquired by Japanese multinational Panasonic in 2007, is now looking to ramp up its presence in the EV charging infrastructure business. Dinesh Aggarwal, joint MD of Anchor Electricals, talks to Pankaj Joshi about the company’s future plans.
Can you summarise the Anchor acquisition and the thought behind it?
Panasonic acquired 80 per cent of Anchor from the original promoters in 2007 and after a two-year period took over the remaining 20 per cent. The rationale for the acquisition was firstly the synergy in product lines— switches, lighting products, switchgears and fans. Panasonic has been strong in manufacturing in Japan and neighbouring markets. It wanted to expand beyond its South East Asia presence and to tap other markets in Asia, the Middle East and Africa. From that view, Anchor again was a good fit for a manufacturing base. Post-acquisition, it was decided to maintain the strong Anchor brand and introduce the Panasonic brand in each category, to cater to the mass market and the niche categories respectively.
What were the main challenges in the post-acquisition period?
The challenges post-acquisition started with cultural integration. The family-owned company’s culture and thinking had to be married to the Panasonic way of doing things, values and code of conduct.
The next area of focus was strengthening the manufacturing infrastructure— the capacity, product quality, process improvements in areas of efficiency and productivity. We introduced concepts like Kaizen, 5S, Can-Ban and so on. In parallel, the sales infrastructure was strengthened. Branches were opened in each and every state rather than the previous C&F (carrying and forwarding) agency model. A formal hierarchy was put in place. We serviced all the states out of four regional warehouses (Mumbai, Delhi, Kolkata and Bangalore) and outsourced the entire logistics to third parties.
In brand building, we spent more on BTL, around 65 per cent of our budget. We focused more on influencers like contractors, electricians, consultants, architects, interior designers. Meets, events and incentive mechanisms were organised in a structured manner and with more intensity.
On the products side, Anchor’s focus was low on lighting, fans and switchgears, which we remedied. The growth in these specific categories have been around 20 per cent year-on-year.
Our turnover this year would be around Rs 3,600 crore. We aim for a target of Rs 5,000 crore across businesses by 2020. Drivers would be product-range expansion, larger project sales (B2B) and enhanced exports. Today exports are 6-7 per cent of revenues which we hope to raise to 10 per cent of the estimated Rs 5, 000 crore revenue.
Can you elaborate on the solar business?
The solar business was started in 2014. In a short period, we have managed to get it to Rs 150 crore. It was essentially selling of high-efficiency solar modules manufactured by Panasonic in Japan and other locations. Price-wise, these modules are 2.5-3 times the price of the Chinese modules which make up most of the market. The whole emphasis is on performance and capturing the upper segment of the market.
As of now, there is still no module manufacturing by Panasonic in India. However, from module sales we have grown to EPC projects as well. There is a strong EPC team in Bangalore. Our projects make up around Rs 90 crore and module sales around Rs 60 crore. Projects mainly consist of commercial/ industrial clients in the private sector.
What are your other growth plans?
If you talk of growth the obvious question is—how do we leverage this base keeping in mind the strong range of Panasonic? From the end-client perspective, there are housing products which could go through both B2B and B2C channels. We have opened three shops for modular kitchens in Bangalore since a year, and seeing the response we are looking at a flagship store now. We also have other housing products like wooden flooring, wardrobes and interior doors.
Panasonic, in general, has a huge array of products which go into a home and with that we are approaching developers. We can fit into the current demand trend of ready-fitted residences. Overall our focus is on three functional areas— energy saving, comfort and safety. In energy management at home segment, we have home automation systems and are developing a portfolio of internet of things (IOT) products.
Another area is smart metering where we think potential is immense. India has something like 25 crore households and 8-10 crore commercial establishments. Today the tenders EESL has put out are just about 50 lakh. We believe the market is easily ten times of that. Here we believe regulation sooner or later will widen the market. These meters address the power supplier’s two main headaches of leakage and collection.
We believe energy management systems are vital for India at a macro level. We are getting numbers about how India is getting to energy surplus and yet there are huge parts of the population with nil or limited energy access. Along with reducing losses and monitoring collections, it is equally important for residences and offices to monitor and optimise their energy consumption. All these will ensure that cost of energy comes down and the footprint of energy availability will increase to the required levels.
Another growth area is electric vehicle (EV) chargers— not many people know that Panasonic and Nissan worked together to develop an EV charger range which was among the earliest. For the Indian market we think there is a need of A/C current chargers and we are working on that. The first step is to market EV chargers as a product and gradually we aim to participate in the EV charging infrastructure build-up without being involved in operations. Everywhere EV adoption speed is a function of regulatory thrust, and India will be no different.
Are you looking at government tweaking its policies?
Broadly the emphasis is in the right direction, be it solar energy or the electric vehicles initiatives. However, solar policies have a lot of ups and downs in the context of panel imports and it would help if a good policy is decided and maintained.
The whole idea is to provide modules at a reasonable cost for projects in India, without financial or other barriers. This is vital because India is adding solar generation capacity aggressively and recently the 2022 capacity target was revised upwards to 200 GW. Thus, it means more imports. Now practically, it is only China that can service this growth in terms of module requirements, be it low-end or standard quality. So the rationale for the foreseeable future is that you have to depend on China for the core item and do the rest of the assembly here. It is understood that solar energy capacity creation is a strategic asset and to that end one could look at quality barriers, filtration of substandard overseas material. The BIS standard in that regard is again a good move, which will now shortly change from recommendation to enforceable legal status in a few months.