Havells India’s Anil Rai Gupta On The Biggest Challenge And Opportunities
Income levels have to continue growing to have a stable demand, says Havells India’s Chairman Anil Rai Gupta.
The biggest challenge facing Havells India Ltd. is to sustain demand even as the owner of Lloyd consumer durables segment witnessed some recovery in sales in the last two months after the nation eased the lockdown curbs.
Sales started to normalise from second half of May and entire June due to pent-up demand, said Anil Rai Gupta, chairman and managing director at Havells India, adding seasonal products such as fans and air-conditioners faced the brunt. “Going forward, the biggest challenge would be that consumer demand comes back on a sustainable basis. Income levels have to continue growing to have a stable demand.”
While issues such as migration of labour and non-availability of manpower are resolving faster than expected, the shutdown has forced the company to relook at its operational parameters and cost structures, Rai Gupta told BloombergQuint in an interview.
The virus struck India’s economy when it was already growing at its slowest pace in over a decade. The lockdown stalled all businesses, barring essential services, and capped consumption in April and most of May before the nation started easing restrictions. That pushed the economy to what may be its first full-year contraction in more than four decades. Consumer durables output contracted for the fifth straight month in May. The industry, especially air-conditioner makers, faced a huge pile-up of inventory last year on account of unseasonal rains and energy rating changes.
Havells India’s revenue fell by nearly half over the year ago in the quarter ended June. Its net profit also dropped. The company’s operating profit, though fell, managed to beat estimates, aided by lower employee expenses and negligible advertisement spends.
June-Quarter Highlights (Year-On-Year)
- Revenue fell by 45.5% to Rs 1,479.1 crore—against the estimated Rs 1,302 crore
- Net profit declined 64.1% to Rs 63.3 crore, compared with the Rs 18.9-crore forecast
- Ebidta was down 53% at Rs 130.8 crore, higher than the estimated Rs 66.4 crore
- Margin fell 150 basis points to 8.8%. Analysts had pegged the metric at 5.1%
Post Covid-19 Scenario
The company’s greater product categories and strong distribution channels built over the last four-five years will aid growth, besides its digital presence, Rai Gupta said.
Havells India also remains bullish over new export opportunities for the consumer-durables industry. The company, including its Lloyd segment, manufactures almost 95% of products locally, and has negligible exposure to China.
Capex Plans
Coming out of the Covid-19 pandemic, the company will re-evaluate its capex plans for the next two-five years to explore opportunities for branded manufacturers in India and globally, Rai Gupta said.
The outlook for capex will start looking positive from the second half of the fiscal ending March 2021, he said, adding the company is open to inorganic and organic modes of expansion.
Watch the full interview here: