Best CEOs: Anil Rai Gupta, the man behind Havells India's transition into consumer-centric company

Six years ago, Havells India acquired the consumer durables business of Lloyd Electric. It marked the entry of the Noida-headquartered electricals major—which earns half of its revenues from cables & wires and switchgear sales—into India’s burgeoning Rs 1 lakh crore consumer durables market.

Since then, the company’s persistent focus on expanding its footprint in the consumer durables business and B2C operations has propelled it to the forefront of India’s white goods market. As a result, Havells’s portfolio is more evenly distributed between its B2B and B2C operations than earlier. In fact, it’s the consumer business—under the Lloyd brand—that is driving Havells India’s growth, pulling its revenue up by double digits despite macroeconomic challenges. The brand is expected to report revenues of Rs 3,500 crore in FY23, up from average annual sales of Rs 2,000 crore a few years ago.

However, this success didn’t come easy. Well-articulated planning for brand building and the localisation of its manufacturing played major roles. The data-driven analytical approach and vision for the brand that Anil Rai Gupta, Chairman and MD of Havells India, has for Lloyd were also deciding factors in its recent success, say people aware of the developments.

Gupta, who was instrumental in acquiring Lloyd and restructuring Havells’s business, is now focussed on positioning the brand as the leading full-range player in India’s white goods market. Along with expanding its portfolio into all four major categories—smart televisions, air conditioners, washing machines and refrigerators—he also wants to position it as a powerful mass premium brand alongside Korean rivals LG and Samsung. “Lloyd has lifted our consumer business over the past few years and there is ample gap in the market for a full-range consumer durables brand,” says Gupta, the winner in the Consumer Durables category of the BT-PwC India’s Best CEOs ranking. The company is also putting a “lot of effort into distribution and manufacturing” now, unlike when the brand was acquired. “Lloyd is distributed through premium retail outlets as a repute brand now,” he adds.

His efforts are bearing fruit. Havells India’s revenue surged to Rs 13,888 crore in FY22 from Rs 9,429 crore in FY20—a CAGR of 21.4 per cent, even during the Covid-19 years. In that time frame, Lloyd also saw a 50 per cent increase in sales, from around Rs 2,000 crore to over Rs 3,000 crore, contributing a higher share to Havells India’s revenues.

What was the secret sauce that made Havells successful even during the tough times of the pandemic? Instead of blindly following the prescribed road, Gupta “leveraged his inclination towards data analysis and used those insights during decision-making,” says an industry veteran who has been following the company’s progress over the past few years. “Moreover, his clarity of thought for Lloyd, from the beginning, came in handy,” the veteran adds.

While the company’s fundamental principles have not changed, significant adjustments have been made in recent years, “that have improved its performance”, says Gupta. “A lot of investments have gone into digitisation that has improved productivity. While we have previously made investments to improve our manufacturing skills, recently a significant amount of money was spent on developing in-house technology. Today, we have a 650-people R&D team and we design each product that enters the market ourselves,” he says.

Havells has made “huge investments in expanding its manufacturing” over the past two years. In FY23, Rs 700 crore was spent on capital expenditure; another Rs 500-600 crore capex is scheduled for FY24. As most of the company’s manufacturing facilities are in north India, Gupta plans to unveil two greenfield facilities in Sri City (Andhra Pradesh) and Tumkur (Karnataka) to bolster the company’s footprint in the South. While Havells’s newly launched industry 4.0-compliant AC manufacturing facility in Rajasthan can produce 1 million units annually, the Sri City facility will double the number. The Tumkur plant, meanwhile, would expand its capacity for cables & wires. Its Alwar facility already generates revenues of Rs 5,000 crore each year. “These will help us grow over the next three years,” Gupta explains.

Despite significant expansion in recent times, the challenges remain for Gupta and Havells. For example, profitability remained an issue in FY23 despite solid top line growth from Lloyd. Havells’s Ebitda margin also declined 180 basis points year-on-year in the December quarter, as the prices of raw materials remained high, says Anil Radhakrishnan, Research Analyst at Geojit BNP Paribas. But, that’s a temporary blip. “Although the impact of inflation may continue to negatively affect its profitability for a few more quarters, signs of improvements are already visible,” he says.

According to him, a cut in advertising spends and other cost-efficiency measures adopted by Gupta and his team have lifted Havells’s Ebitda margin by 250 basis points sequentially in the December quarter, indicating softening of pressure from rising raw material costs. Additionally, Havells’s consistent focus on expanding its footprint in smaller towns and the rural market—a mission that Gupta is passionate about—places it in a favourable position for quicker growth once the macroeconomic environment improves.

Meanwhile, Gupta is certain that he can steer Havells to its next growth cycle. Taking calculated risks in the toughest of times, much like Lord Krishna, whose paintings decorate the walls of his corner office off the Noida Expressway, could well prove to be his success mantra in the years to come.

@arndutt