Schneider Electric to pump up to Rs 400 cr into off-market Indian subsidiary

French industrial giant Schneider Electric, which operates two smart factories in India apart from a centre of excellence in Bengaluru for IoT enabled infrastructure, said on Friday it will invest up to Rs 400 crore (about $54 million) in its Gurugram based subsidiary Luminous Power Technologies, a power backup, home electrical, and residential solar technology company. 

The capital infusion will be purposed to doubling battery and inverter production capacity, generating new employment opportunities, and ramping solar business at Luminous, as per a statement. 

The development comes after Luminous made several headlines about a sale as part of Schneider Electric’s global portfolio realignment exercise. Finally, bids from the likes of private equity firms Blackstone, Apollo Global Management, Bain Capital fell through as they were made below Schneider’s expectations, as per an Economic Times report, citing sources. 

Luminous currently manufactures 3.12 million batteries annually. With its parent company’s investment, it expects to expand the production to 5.1 million by 2025, and increase its capacity by 63%. 

The power backup company also plans to develop a new plant that will support the production of Tall-Tubular Batteries (TTB). TTBs, as per Luminous India website, are larger in height than short tubular batteries and flat plate batteries but lesser in width, and provide slightly longer backup time. The new plant will be set up in two phases, the first phase will see the manufacturing capacity of 30,000 TTBs, which will be further ramped up to 65,000 in the second phase. 

Luminous is also eyeing to direct Rs 185 crore of funds to building the capacity towards upgrading technology for battery and next-generation inverter manufacturing, the statement said. 

Furthermore, Luminous will expand its existing seven plants in the country and will set up two new manufacturing plants, generating direct employment for over 2,000 people and thereby support over 10,000 people, the statement added. 

The new funds will also help bolster the company’s backward integration philosophy of key components, which is expected to come alive in the next 12-18 months. Additionally, Luminous aims to deploy a part of the new funds into its solar business, from where it expects to make 40% of the company’s sales by 2025. It plans to scale its rooftop solar solutions for residential and commercial buildings deployment with improved product and customer experience.  

“The power backup and home electrical market demand in India is experiencing robust growth, especially with a large population transitioning to a remote working or work-from-home environment,” Luminous Power Technologies managing director Vipul Sabharwal said. 

The company now aims a double-digit year-on-year growth to reach Rs 5,000 crore revenue in the next three to four years, Sabharwal added. Board member and Schneider Electric executive vice president Manish Pant added that the French energy and automation digital solutions company will invest significantly in the next few years to further scale Luminous. 

“The company revenue has increased from Rs 1,000 crore to Rs 3,500 crore without any additional equity investment. And all its investments have been self-funded since it was acquired by Schneider Electric almost a decade back. Currently, about 25-30% of its profits are reinvested in the company, which is expected to go up to 50% in the coming years,” the statement added. 

Schneider Electric had acquired Luminous Power in 2011 through a 74% stake purchase for about Rs 1,400 crore. Remaining shareholding was acquired in 2017, for an undisclosed sum.