Havells: Punching above its weight, and winning
How Anil Rai Gupta's Havells is battling MNCs by aggressively unleashing its manufacturing prowess in consumer durables
Anil Rai Gupta, chairman and managing director, Havells India, began scouting for growth opportunities in India and reaped rich dividends
Image: Amit Verma
Circa 2005. The mood was upbeat in the Havells camp. The year’s turnover stood at around Rs 700 crore, with a net profit of Rs 30 crore. The interesting part, though, was the shocking pace of growth of the homegrown electrical and lighting products company in a decade: It had leapfrogged almost seven times. Havells, points out chairman & managing director Anil Rai Gupta in his book Havells: Untold story of Qimat Rai Gupta, had the potential to enter the big league and compete effectively with the likes of Philips and Siemens. “We were the young Turks of India Inc,” Gupta stressed. Success, he underlined, begets confidence.
Over the next two years, the company mustered enough success, and confidence, which fuelled its global ambition. Havells, founded by Anil’s father Qimat Rai Gupta, was ready to punch above its weight. And it did. In April 2007, Havells bought Sylvania, a Netherlands-based electrical major which was one-and-a-half times bigger than its new Indian owner in terms of revenue. “We were ecstatic,” Gupta recounts in his book. Sylvania was operating across 50 countries. Havells was now catapulted on the global stage by buying out a larger company.
Cut to December 2015. Havells sold 80 percent stake in Sylvania. “We felt that this was not the right place to invest our efforts for the next ten years,” Gupta explains in an exclusive interview to Forbes India. After turning around Sylvania post the global meltdown in 2008, the company was turning out to be a drag on Havells.
The global business landscape had also changed drastically. Europe, which accounted for 60 percent of Sylvania’s business, had turned sluggish. The traditional lighting market was making a transition to LED. “To change the dynamics in a slow growth economy meant pumping in loads of money and effort,” Gupta recalls. Havells was not prepared to do so. Not when the home run was starting to look promising. The Indian market was growing much faster than Europe and the US. Havells decided to put all its manpower and money into India. “Why even think of being a very big global player? We exited Sylvania,” says Gupta, adding that it was the only Indian company to exit a global business at a profit. Though making a profit and exiting might look like a consolation prize—emotionally too it was difficult to let go—for Havells, the business sense made the best sense. “We started scouting for growth opportunities in India,” he adds.
Two years later, in 2017, Gupta bought the consumer business division of Lloyd Electric at an enterprise value of Rs 1,600 crore. The deal plugged the fast moving electrical goods (FMEG) company into a consumer durable world dominated by the likes of Samsung, LG, Daikin and Voltas. Critics, and investors, were not impressed. While Lloyd’s share dipped as much as 17.1 percent—the day after the deal was announced— Havells’s reportedly tumbled by 3.2 percent. Gupta, for his part, was convinced that the acquisition would drive the company’s growth. “We have always realised the strength of brands, acquiring them, and nurturing them,” he says. Havells, Gupta underlines, too was a brand acquired by his father in 1971, although the patriarch had plunged into the business of electricals back in the late 1950s after opening a shop in Delhi’s electricals wholesale market.
The value in Lloyd became evident in the second quarter of fiscal 2021, when it posted a 56 percent jump in sales of Rs 280 crore, over a year ago. Although it is the fourth-biggest in terms of contribution to the revenues of Havells—the biggest is cables—Lloyd posted the highest growth; the growth was led by ACs, followed by washing machines and refrigerators, which wwere rolled out in September this year. Gupta is happy with the performance. “It’s satisfactory,” he says. Lloyd, the third biggest AC brand, he explains, makes Havells a complete consumer durable player. “We are a complete portfolio now with ACs, washing machines.”
Gupta shunned the herd mentality on another front. He didn’t fall in the trap of looking for ‘synergies’ to bring down cost. When Havells started selling fans in 2003, the easy way out was to use the sales team of wires and cable to peddle fans. “We didn’t do that,” says Gupta. “Today we have 25 different businesses and 25 different sales teams.” Every business, he lets on, requires dedicated infrastructure, input and manufacturing operations. “We treated each business as a separate business.”
While giving credit to the South Korean rivals for expanding the market and bringing in the right products, Gupta feels that the MNCs haven’t got a real fight yet. The Indian companies, he lets on, just went away. Some disappeared due to the financial mess they waded into, others faded away because of poor quality, and a few more just threw in the towel as family infighting crippled them. “Where was the big fight?” he asks. Havells, he points out, is again backing its instinct to make it big in the new segment. He uses the example of lighting, which it entered in 2003, when the odds were heavily stacked against Havells. It was a crowded and fiercely competitive market dominated by Bajaj, Crompton, Philips and Surya. Rivals mocked its audacity, and analysts predicted a regional role for Havells. “We are the second biggest in the segment today,” he says.
The highly automated Lloyd AC plant at Ghiloth, Rajasthan. In 2017, Gupta bought the consumer business division of Lloyd Electric
