INDIA BUSINESS WORLD - MAY 2006
THE MONTH THAT WAS...

WIPRO BUYS NORTH-WEST'S SWITCH BIZ FOR RS 102.2 CR

 WIPRO Consumer Care and Lighting has acquired the switches business of the Delhi-based North-West Switchgear for an upfront consideration of Rs 102.2 crore in an all-cash deal. The deal gives Wipro the North-West brand and the Faridabad plant and machinery of North-West Switchgear for a period of five years.

 The deal marks Wipro Consumer Care and Lighting's foray into the Rs 400 crore switches market, growing at 25-30% annually. The company also gets, as part of the deal, license to sell wires under the Equilay brand of North-West Switchgear, a Rs 37.6 crore company, also present in the sockets and miniature circuit breaker business.

Explaining the rationale behind the high valuation of the switches business, Vineet Agrawal, president, Wipro Consumer Care and Lighting, said that North-West is a reputed brand with a strong presence in markets like Punjab, Haryana, Mumbai, Delhi, Ahmedabad, Hyderabad and Kolkata with a strong growth potential.

North-West Switchgear will do the manufacturing for Wipro as part of the deal, in return receiving a portion of the margins, and will have to change its name in the next 3-4 months. Wipro will put in place its own sales and marketing team to head the business in the next few months.

Wipro Consumer Care and Lighting is in the process of expanding its toilet soap manufacturing facility in Baddi, Himachal Pradesh by 50%, and is also setting up a new lighting unit there which will produce compact fluorescent lamps (CFLs), till date largely imported from Vietnam. The division reported revenues of Rs 600 crore in FY06, 65% of it accounted for by its consumer care segment with brands like Santoor, worth Rs 300 crore alone, and Chandrika. Wipro, which entered the office modular furniture business one and a half years ago, is now actively expanding its presence in North India. It has till date worked for over 100 corporate clients, including BPOs, banks and insurance firms.

The lighting business grew 31% in FY06, against the industry's growth of 12-13%. CFLs, fluorescent tubelights and retail lighting are areas that would drive growth for the company, Agrawal said.