The phenomenal success of V-Guard in the recent years has taken everyone by surprise, so in order to spill the beans of this success story team WCI interacted with Mr. Mithun Chittilappilly, MD, V-Guard Industries Limited about the evolution of VGIL, its wire & cable division, marketing strategies, expansion plans, growth drivers etc.
WCI: Tell us about VGIL Inception?
Mithun Chittilappilly (MC): Sensing the need for a reliable and quality product with a good after sales backup my father Mr. Kochouseph Chittilappilly started the stabilizers manufacturing facility with a borrowed sum of Rs. 100,000 and 2 workers to assist him. With its effective marketing strategy, quality and reliability he was able to capture the market quickly. Soon V-Guard became a household name and company grew slowly and steadily and now enjoys a pan Indian presence. With the untiring commitment for performance, cutting edge technology, innovative design and dependable service standards V-Guard has become a trusted brand.
WCI: Highlight about your wire & cable division?
MC: Our wire and cable division together contribute about Rs. 340 crore in revenues or 34% of our turnover. Total sales in the wire segment grew by 38% in value terms in FY12. As far as the region wise growth is concerned, north zone has grown by 60% and the south and west zone both has grown by 34% each. The major strength of this product segment is good network for distribution, increased brand image in south and rest of Indian markets and better quality of products. With the construction industry expected to grow further, better penetration of rural and semi urban markets and better brand equity in new and existing markets, we expect plenty of efforts to be made to procure more projects.
WCI: Kindly brief us on the expansion plans in wire & cable division?
MC: We have 2 plants for PVC insulated wires in Kashipur and Coimbatore. Our current capacity entails 400,000 coils per month. We intend to spend another Rs. 18 crores this fiscal to enhance the capacity to 650,000 coils per month by installing the state of art technology from renowned suppliers. Our Coimbatore plant manufactures LT power and control cables with the capacity to produce 12,000 KM of cables per year.
WCI: You intend to be amongst the top 3 Indian wire & cable companies and it requires a definite strategy. Kindly elaborate?
MC: We are currently in the top 3 brands in south Indian electrical retail market. We don’t do much of project sales in wires. In the next 5 years we hope to achieve similar market share figures in all states outside south India. We are one of the few wire brands that invests in brand building. Our total corporate annual spent is about Rs. 50 crore per year, probably one of the biggest spent in our category. Apart from brand building and network expansion we are an ethical and transparent company that distinguishes us in this sector. We intend to increase our share in the other markets too. During the time of our IPO 96% of our revenue comes from south India. But now south India contributes 75% and 25% comes from the newer markets. In the coming time this ratio will change to 60% and 40% respectively.
WCI: What are the growth drivers for VGIL success?
MC: VGIL has created a wide distribution network with over 9,500 retailers, 208 distributors and 353 service centers spread across all states in India except North-East and Jammu & Kashmir. In India, the dealer plays a vital role in the sales pitch of consumer products, which is highly fragmented by nature. To cash in on the strong dealer and customer relationship VGIL is planning to increase the channel partners, by adding more distributors, direct dealers and suppliers for outsourced products. As a result of this aggressive strategy, the company is enjoying the dominant position in southern market and will be able to penetrate in northern market where it has to compete with already established players. Of the total 28 branches owned by VGIL, 18 are located in rest of India, which is expected to aid growth with greater brand visibility in the coming years. Besides this our USP of continuous focus on quality and innovation has helped us to become a leading brand in south India.