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Eros to diversify via JVs, acquisitions

By Issac John DUBAI -- Eros Group , one of the fastest growing electronics and appliances companies in the GCC, is looking beyond its core business to propel itself onto a higher growth trajectory, the group's chief executive said. The Dubai-based group, which has been growing at an impressive pace over three decades to post a turnover of Dh2.3 billion in 2010, has decided to venture out with new businesses in a drive to diversify growth opportunities to sustain the current pace of growth above 30 per cent.

"Our board has given the final go-ahead for this strategic diversification programme which will see us making forays into areas such as food, restaurants, solar energy and other business sectors that offer growth opportunities. We are a drawing up a plan to implement the strategy -- which envisions Eros Group to morph into a dynamic and diversified multinational conglomerate in five to 10 years -- through joint ventures and acquisitions over the next two to three years," said Deepak J Babani, Eros Group Chief Executive Officer.

Babani, who has just marked a shining milestone in his career --30 years at the helm of Eros Group -- fostering it from a Dh6 million company of around a dozen staff to a group with a turnover of over two billion and employing more than 1,300 people, believes that to maintain the stride his group has to look at newer and wider horizons. Plans are afoot to enter new markets within and outside of the region in the coming months. Eros Group , which has offices and retail outlets across the UAE, plans to make its debut in Qatar and Saudi Arabia soon. To spearhead expansion in the African continent, which Babani believes holds huge growth opportunities, the group set up an office in Dar Es Salaam. "While future growth potential for consumer electronics in the Middle East will remain more or less steady, with its huge population base Africa is expected to show an exponential growth. In the near future, we will fortify our presence in the continent by entering Kenyan, Tanzanian and Ugandan markets."

Babani, an electronics engineer from the Manipal Institute of Technology in Karnataka, India, who joined Eros Group 30 years ago when it just had only Hitachi, said the next milestone he aims to achieve is to position Eros as the number one consumer electronics company in the UAE by 2015. "Basically, our vision is to become the number one player in consumer electronics in the next four years. The plan, set in 2009, seeks to drive the group's growth at a more vibrant pace through a homogeneous mix of consumer brands, more retail showrooms, stronger domestic distribution networks, dealerships and re-exports," he said. New brands joining Eros bandwagon include TCL, one of the fastest growing consumer electronics brand in China, Candy and Sonos Multi-Room Music System. The group's Electronics and Appliance Business Group also handles Benq and Stardust brands. It has export rights for Hitachi to Oman, Qatar, Bahrain, Tanzania, Kenya, Iraq and Afghanistan.

"We want to remain competitive and dynamic. For this, we will continue to enhance our operational efficiency by investing heavily on expanding our infrastructure, including warehouses, showrooms and offices, to keep pace with growing market dynamism," said Babani.

In 2010, the group, which has Samsung and Hitachi as its flagship brands, recorded 37 per cent growth, its highest in the past five years, and in 2011, it is on target to achieve 20-25 per cent growth to boost its turnover to close to Dh2.8 billion.

He said the group's remarkable sales growth last year was driven by an almost 100 per cent jump in flat panel business, which was triggered by the fast growing demand for LED range. Also fuelling the sales growth was the group's new found IT division, recording Dh150 million in sales within a year of its launch. Eros also added Cisco brand to its bandwagon recently. In flat panel sales, the group's Samsung and Hitachi brands account for 48 per cent of the market share. Samsung alone has 43 per cent of the market. The introduction of TCL will further consolidate Eros group's leadership in flat panels segment. Another growth driver was the mobile phone segment growing by 35 per cent, said Babani.

On the overall market scenario, Babani sounded upbeat. "While the appliances business is set to growth five to seven per cent, the UAE's consumer electronics sector will grow at a healthier pace. It is poised to grow 15 to 20 per cent, notwithstanding the setback in the re-export sector caused by the United Nations sanctions on Iran and the regional unrest. However, re-exports to Egypt and Oman are more or less getting back to normal," said Babani. In 2011, the overall growth will largely be driven by smart phones that are expected to have a penetration o f 45-50 per cent of the mobile phone market, he said.

© Khaleej Times 2011