Havells India the Sylvania Acquisition Decision case study analysis

1. GROUP-11
BARKHA KUKREJA
HUZEFA SAIFEE
JATENDU SUTA SAMAL
MADHU RAJAN
SHIVAM KUMAR SINGH
Havells India : The Sylvania Acquisition Decision

2. History Of Havells
1. This company was founded by Qimat Rai Gupta(QRG).
2. It was incorporated as HAVELLS INDIA PVT.LTD in 1983 which was later changed to
HAVELLS INDIA LTD. in 1992.
3. Initially it was leading manufacturer in electricals and with time expanded its business
to Lighting and lighting fixtures
History of Sylvania
1. SLI Sylvania was started in 1901 as a small entrepreneurial firm which started recycling
unit for burnt out bulbs.
2. Company started to manufacture light bulbs and radio tubes and was named Sylvania
Products Company in 1924.
3. Company went through many ownership changes and was eventually bought by GTE
4. Sylvania brand was incorporated in July 1992 as Sylvania lighting international BV(SLI)a
privately held company registered in Netherlands.

3. Domestic Acquisition
•It acquired Towers and
Transformers limited in
1983.
•Between 1997 and 2001,
HAVELLS also bought ECS ,
Duke-Amics electronics,
standard electrical.
International acquisition
•In 2005, HAVELLS made a
small acquisition in Greece
for 10 million euro
•HAVELLS collaborated with
ELECTRIUM for CRABTREE
•It lost the bid to acquire
CRABTREE to SIEMENS.
ACQUISITION OF HAVELLS

4. 1. What are the external factors that are favoring the acquisition? List
and explain each factors?
External factors are the uncontrollable situations outside the
boundaries of organization that are in support of the acquisition.
Parallel Distribution Channel
SYLVANIA;S distribution channel accounted to 10,000 dealers and retailers across 50+ countries, HAVELLS
was in need of a network and wanted to use it to expand their market globally. Acquiring SYLVANIYA would
have helped HAVELLS to enter the European and Latin American market.
Sylvania’s Need of Cash Infusion
In recent years SYLVANIYA were having huge losses thus were in short of cash flows to
pay its debts and current liabilities. Thus, SYLVANIYA was in the high urge of fresh
capital infusion after the major financial turmoil, leading them towards acquisition
target by the stakeholder bank.

5. High Consumer Acceptance
In European market, products of
HAVELLS were highly recognised
and accepted by the consumers.
Big brands & established
companies like ELECTRUM were
selling their products, it gave
them a reason to enter the vast
market of EUROPE & LATIN
AMERICA .
Well Built Association With Bank
With a strong name in electrical industry,
HAVELLS also was involved in international
acquisitions which made its relations strong
with DEUTSCHE bank and got prior
opportunity when SYLVANIYA was called up for
acquisition.

6. 2. What are the external issues (in the outside environment) that will
create challenges to the aquisition? List and explain each?
External issues had more role to play in the acquisition then the
favourables.
To manage and handle the work force of Sylvania.
Different work culture and discouraged work force was creating problems for HAVELLS to
setup its ideology in SYLVANIYA.
Government policies
Multiple standard setting organization where setup for better safety and distribution of
electrical industry each geographical market had different quality standards which was tough
to tackle by HAVELLS.

7. Competition
With increase production in Asian
market china was entering the
European and American market with
high pace and the other big players
where increasing their investments
which were to competitive with
HAVELLS in foreign market.
Economic slow down
While HAVELLS planed to acquire
SYLVANIA in European electric industry
was hit by major global financial crisis
leading towards heavy losses and slow
market growth which stood against S to
survive in this condition.

8. Analysis
1. Havells expanded its market presence and network due to its strategy of collaboration with
other companies either domestic or international.
2. Strategy of setting up R&D facility and adapting to achieve international standards kept
Havells a leading market player. The absence of international merger and acquisition
strategy resulted in Havells S loosing the bid for CRABTREE but in this process it developed
good relation with DEUTSCHE bank.
3. Learning from the past experience QRG and Havells management developed strategy and
managed to acquire SYLVANIA inspite of SYLVANIA being double the size of Havells.
4. The goodwill of Havells in the industry and its brilliant past records helped the organization
to manage the cash inspite of economic slowdown at the time to the acquisition.

9. YEAR HAVELLS LTD. SYLVANIA ELECTRIC
PRODUCTS
REVENUE AS A
PERCENTAGE %
2004 4,192 25,734 613.88
2005 6,659 27,277 409.63
2006 11,151 26,355 236.36
REVENUE COMPARISION TABLE OF HAVELLS & SYLVANIA
(in millions of rupees)

10. Conclusion
• Havells decision to acquire Sylvania was correct as per the market scenario of that time and it
gave chance to Havells to enter and grow in the global market.
• Acquisition of Sylvania made Havells a bigger work force as there was a significant increase in
the size and capacity of the company.
• After the reconstruction Sylvania it will become as an asset to Havells on which they can cash
upon in any worst scenario.