THE UNCERTAINTY AND DISRUPTION caused by the pandemic have put to test even the most seasoned CEOs. As an increasingly large number of businesses failed to keep their heads above water, some managed to not only sail through, but also expanded their businesses aggressively. One such outlier is Anil Rai Gupta-led Havells. Barring FY20, the fast-moving electrical goods company has seen revenue growth in the last 10 years. In FY22, it posted a 33% jump in revenue at ₹13,889 crore, and a 15% increase in net profit at ₹1,195 crore — a three-year CAGR of 11.32% and 14.91%, respectively.
The company’s market capitalisation has also grown multifold to more than ₹80,000 crore since chairman and MD Anil Rai Gupta took over following the death of his father and Havells founder Qimat Rai Gupta in 2014. Qimat Rai started his business in 1958 by selling electrical goods in a small shop in Old Delhi. In 1971, he bought the Havells switchgear brand from businessman Haveli Ram Gandhi for ₹7 lakh and transformed it into a multi-billion dollar business over the next few decades. Following in his father’s footsteps, Anil Rai Gupta is now taking the legacy brand forward despite the pandemic blows. The only low moment was perhaps the devastating Delta wave of Covid last year, when the company lost 15 employees.
“That was probably the lowest point not only during the pandemic, but in the last 15-20 years,” says Gupta, sitting in his office at the company’s Noida headquarters — the QRG towers.
The pandemic has taught Havells to be better prepared to operate in a VUCA (volatility, uncertainty, complexity, and ambiguity) world, adds the economics graduate from Delhi’s Shri Ram College of Commerce, who also holds an MBA from North Carolina’s Wake Forest University. “If a leader is calm in these situations, not only will he/she find solutions, but will also be a big, calming influence on all the people and stakeholders around,” says Gupta, who managed to keep employees motivated and business growing despite the challenges presented by Covid-19.
Going ahead, Havells wants to focus on digitisation — of both products and manufacturing — and rural penetration for the next few years. “In the last two years, consumers have become far more digital-minded,” says Gupta, who plans to expand Havells’ offering of intelligent and connected products. Last year, the company introduced its IoT-enabled switch range and built a ceiling fan with an integrated air purifier.
“It’s not only affluent or high-premium customers, it’s actually the middle class who are saying that if they can get automation at their budget, why should they not have it,” says Gupta, adding that the company is working on making every product — from lighting to water heaters to air conditioners — smart.
According to consulting firm Frost & Sullivan, the IoT market is expected to grow to $9.28 billion by 2025 from $4.98 billion in 2020, driven by higher Internet penetration and a rise in adoption of smart applications, among other factors. Consumer durables companies such as Samsung have already launched a multitude of connected goods in India. Samsung’s SmartThings app, for example, can help people control all Samsung appliances in their homes.
During the pandemic, Havells gained market share in different categories as consumers moved from unorganised to organised goods. “During any disruption, organised brands and companies generally gain because the consumer starts believing in trustable products,” says Gupta.
Havells benefitted from the pent-up demand after markets started to open post Covid on the back of a large distribution network, strong brand name, and wide portfolio, adds Harshit Kapadia, vice president, industrials, consumer durables, electricals, and renewables, Elara Securities. However, raw material prices have been a key concern for the company, thereby putting pressure on their margins, he adds.
The company has been working on rural penetration for some time now. It has a direct presence in 3,000 rural towns covering 40,000 retail outlets. “The assumption is that people in rural areas require cheaper products. But actually, while they may not need all the features in the products, they still go for better quality. They are spending their entire life savings to build a house, so, they don’t want to compromise,” says Gupta, who wants to tap into rising income levels and electrification of villages to penetrate deeper into the market. According to the National Family Health Survey 2019–21, 97% of households in India have electricity, including 95% of rural households and 99% of urban households. “As electrification and income levels improve in rural markets, we are ready with an organised rural distribution network, with a unique product portfolio suitable for these markets,” Gupta said in Havells’ annual report for FY22. The company, which has around 700 brand shops across the country, is expanding them to rural markets as ‘Utsav’ stores, which display electrical products as well as large consumer durables under a single roof. It completed a pilot of more than 50 stores in FY22 and has set a target of 1,000 stores by FY23.
Making big, risky and bold bets is in Gupta’s nature. Soon after taking over, Gupta decided to sell European lighting goods company Sylvania, Havells’ major acquisition under Qimat Rai Gupta in 2007, but the deal did not fructify. The next was the acquisition of Lloyd’s consumer durables business for around ₹1,600 crore in 2017, which made the company a challenger brand in the segment.
But the foray wasn’t simple. Gupta says he had four key objectives that he wanted to fulfil with Lloyd — turn it into a mass premium brand, make it non-reliant on Chinese imports, reduce dependency on air conditioners as a category, and target the right consumer through its distribution channels.
Havells has achieved all four, he adds. Lloyd is now present across modern format and multi-brand stores. The company’s ‘World of Experience’ brand store displays the full range of both Havells’ and Lloyd’s electrical as well as large consumer durables.
Havells has invested heavily in washing machines, refrigerators and LED panels, bringing down the share of air conditioners in Lloyd’s portfolio to 65% from 95%. All products of Lloyd, like Havells, are manufactured in India. Manufacturing in India helps Havells in controlling technology and costs, and reduces dependence on Chinese vendors.
“We are now among the top three sellers of air conditioners in the country, and are looking to go much further,” says Gupta. The Lloyd business posted a 34% revenue growth in FY22.
Gupta is open to more acquisitions, provided they fill the gaps within the company’s existing product portfolio. For now, Havells is busy digitising its factories. Its advanced robotic manufacturing plant in Ghiloth, Rajasthan is already functional. The plant has a manufacturing execution system, a software system that optimises manufacturing and boosts production efficiency. The company plans to digitise all of its 14 manufacturing plants across the country. “If you can give a better quality product at a lower cost to the consumer, it will become a necessity,” says Gupta. “Today, it might look a little bit excessive. We are probably a little bit ahead of time in terms of digitisation of the factories,” he adds.
As the company and the sector evolve, Gupta is evolving as a business leader too. He sees himself becoming a bit more like his father. Even though data is extremely important for the organisation, Gupta trusts his intuition more. “The experience and position that you are in, you need to build intuition. There will be so many people in the organisation who are highly data driven... If everyone works in the same direction, there will not be a different thought process. My role has changed over time. I am a bit more like my father... may be more than what I used to be 10 years ago,” he says while signing off.