Havells Case Study: Business Model and SWOT Analysis

Havells is a well-known and multi-national electrical equipment company in Noida, India. It is a leading brand in the Indian market known for its quality, durability, and innovation.

The company is a major player in both the Fast-Moving Electrical Goods (FMEG) and power distribution equipment sectors. Havells’s product portfolio is enormous and fulfils the requirements across residential, commercial, and industrial sectors. Currently, it employs almost 6,822 people and has 15 manufacturing units. It was listed on stock exchanges in the year 2001, and since then it has shown persistent growth in its share price. Its share is currently traded at a price of INR 1,620.

History

Havells holds a rich history. In 1958, seeds of Havells were sown when Haveli Ram Gandhi set up a small electrical trading shop in Delhi. In the year 1971, Qimat Rai Gupta, a distributor of Mr. Gandhi, acquired the company from Haveli Ram and renamed it Havells India Limited. Gupta’s main -focus was on manufacturing rewirable switches and changeover switches. In the 1990s, Havells embarked on a series of strategic acquisitions and expanded its market reach.

Some of the major acquisitions of Havells are as follows:

• Year 1994 – ECS – A prominent switchgear manufacturer.
• Year 1999 – Standard Electricals – A famous brand for industrial switchgear and motors.
• Year 2001 – Crabtree India – A premium brand for electrical accessories.

Products

Brands of Havells include Lloyd, Crabtree, Standard, Reo, and Havells Studio.

The product portfolio of Havells is as follows.

1. Switchgear – Domestic Switchgears, Capacitors, Switches, Industrial Switchgears.
2. Cables – Power Cables, Flexible Cables.
3. Lighting and Fixtures – Professional Luminaires, Consumer Luminaires.
4. Electrical Consumer Durables – Fans, Appliances, Water Heaters.
5. Others – Motors, Solar, Pump, Water Purifiers, and Personal Grooming Products.
6. Lloyd Consumer – Air Conditioners, Televisions, Washing Machines, Refrigerators.

Business Model & Marketing Strategy

Havells emphasises research and development for producing and developing safer, smarter, and sustainable products and understands the needs of the consumers. It has built a long-term strategic relationship with the suppliers and focuses on assuring high-quality and efficient product development, which is supported by vertically and horizontally integrated manufacturing along with the in-house operations.

The company adopted an omni-channel distribution strategy that is supported by modern technology. The company ensures fast delivery of goods and services through its strong distribution network.

Havells holds a robust global presence and maintains brand attraction through national advertising, celebrity engagement, digital campaigns, in-shop advertising, etc. Moreover, it provides its customers with after-sales services to maintain long and healthy relationships.

We can say that the company’s major focus is on innovation, digitisation, and talent. It commits to ethical practices, thereby building brand loyalty and positive community relations. Havells has built a resilient and adaptable business model that allows them to navigate market fluctuations and stay at the forefront of the electrical and home appliance industry.

Advertising Campaigns

1. Havells had an ad campaign known as “Hawa Badlegi” that has been used for several years. This campaign tackled various social issues, such as gender equality, environmental awareness, etc., with its emotional stories.
2. #SwitchToHavells was an interactive social media campaign to encourage users to switch from their electrical products to Havells.
3. ‘Havells ka Devas’ campaign was launched, turning 100 Havells fans into a Ganesh idol on a billboard to celebrate the festive spirit.
4. Some of the famous TV commercials of Havells include #ZindagiKiSharing with Havells Smart Home Appliances, Havells Lighting #HarLightMeinDelight, Havells Water Purifiers (Sahi Paani Ka Sign Havells Alkaline).
5. Havells’s advertisement campaign – ‘Let’s End Darkness’, was launched with several known faces and highlighted the idea of efficient lighting solutions for homes and offices to dismiss physical darkness.

Havells – Awards & Recognitions

Year 2022

• Golden Pin Product Design Award for Freedom Architectural Light.
• CII Design Excellence Award for Lloyd Elante Washing Machine.
• Design Wall Awards, Platinum Winner, Delhi.
• DIA Design Intelligence Award for Vogue Highbay.

Year 2021

• India Design Mark 2021 for Silencio Mixer Grinder.
• India Design Mark 2021 for Puro Storage Electric Water Heater.
• CII Design Excellence Award 2021 for Freedom Adaptable Architectural Light.
• Good Design Japan 2021 for Nu Bulb and Lamb.
• ICSI CSR Excellence Awards FY 2021-2022.

SWOT Analysis

Strengths

1. Havells offers a wide range of products that includes home appliances, commercial, and kitchen appliances keeping in mind the consumer’s needs and preferences.
2. Havells has built a strong brand image over the years and is known for quality and reliability in the electronics industry.
3. Havells’s major focus on innovation accounts for one of the key strengths.
4. Havells is a global company with a presence in more than 50 countries operating internationally. This provides the company with a diversified revenue stream.
5. Havells holds a strong distribution network and reaches more than 14,000 dealers in India ensuring market penetration.
6. Balancing a strong brick-and-mortar network with an omnichannel distribution strategy for easy consumer access.

Weakness

1. Havells’s high debt-to-equity ratio at 2.44 as of December 2023 is a point of concern about the company’s financial stability.
2. Increasing competition from other FMEG companies creates pressure on Havells and can impact the market share and performance.
3. Havells is highly dependent on the Indian market and generates over 70% of revenue, making it vulnerable to economic fluctuations.
4. Havells has seen a decline in profit margins, revenue, and total assets in the recent annual reports, causing market concerns.

Opportunities

The increasing demand for infrastructure in India can pose an opportunity for Havells to supply electrical and power distribution equipment in the country.

1. Havells can enter and explore new markets in Asia, Africa, and Latin America for better opportunities.
2. Development of E-commerce platforms to tap the untouched segment of the market.
3. Developing and promoting eco-friendly products so that environmental concerns can be addressed will be a great opportunity for Havells to build a brand image.
4. Havells can also capitalise on India’s ongoing rural electrification drive to target rural customers and increase its product reach.

Threats

1. Increasing the cost of raw materials such as copper and aluminium can greatly affect production costs and profit margins.
2. Innovations from competitors can threaten the existing market share and customer base.
3. Other local brands offering cheaper electrical products, especially in rural areas can be a challenge for Havells.
4. Changing government policies and regulations related to energy efficiency or foreign trade can impact the business operations of Havells.

Conclusion

Havells success story is exemplary and stands as proof of hard work. The company’s business model is driven by consistent innovation and diversification of the product portfolio. Havells has a wide distribution network to reach various segments of the company. However, a high debt-to-equity ratio and dependence on the Indian market for revenue can be a matter of concern. Careful financial management can help the company mitigate risks and achieve long-term stability.

Frequently Asked Questions (FAQs)

1. Who was the founder of Havells?

Ans. Qimat Rai Gupta.

2. Is Havells a listed Company?

Ans. Yes, the company launched its IPO in 2001.

3. In which year Havells acquired Crabtree?

Ans. Crabtree was acquired by Havells in the year 2001.

4. What are the brands of Havells?

Ans. Lloyd, Crabtree, Standard, Reo, Havells Studio.

5. What is the full form of FMEG?

Ans. FMEG stands for Fast-Moving Electrical Goods.

Disclaimer: The securities, funds, and strategies mentioned in this blog are purely for informational purposes and are not recommendations.