Consumer lighting business set to drive growth for Havells this fiscal

Abhishek Law Kolkata | Updated on June 17, 2020

As economic activities resume, more demand seen from smaller towns, rural areas

Electrical equipment and white-goods maker Havells India is seeing “some green shoots” in its consumer business, especially in verticals like lighting, with smaller towns driving growth as economic activities resume post Covid-19 lockdown.

While the replacement market is gaining traction, the industrial lighting segment has been hit due to project delays and lack of new projects.

According to Parag Bhatnagar, Senior Vice-President and SBU Head, Havells India, it is “still difficult to make a sales prediction for FY21. But, there is a “good chance” that consumer business could see an uptick with “faster normalisation” in smaller towns and rural areas. Havells will focus on consumers in towns with population less than 50,000.

The consumer business has a potential of ₹700 crore. In FY20, it was in the range of ₹500-600 crore out of the total lighting and fixtures business of ₹1,132 crore.

The Nodia-based company reported a turnover of about ₹9,430 crore in FY20. Cables, consumer durables (under Havells and Lloyd brands) and switchgear are other major verticals.

“The consumer lighting business has potential and we are witnessing some normalisation in smaller towns with increased queries coming in. The next two to three months will be crucial. In the B2B segment, a lot depends on how the economy shapes up and projects take off,” he told BusinessLine.

Efforts are on to increase reach in thesmaller towns by ramping up distributor-dealer network. Havells currently has a reach across 100,000 electrical outlets pan-India and 500-odd exclusive brand stores.

Offerings like decorative lighting and LEDs will be amongst the categories driving growth. Improved electrification is another factor for growth in this category.

Local manufacturing

According to Bhatnagar, as a conscious decision, nearly 80 per cent manufacturing has been localised at its Neemrana plant in Rajasthan. As demand picks up towards the second half of this fiscal, the company will look at putting in place plans for fully localised manufacturing.

About 15-20 per cent sourcing (in value terms) is done from China.

“We are also working on having fully India-sourced products and to manufacture them locally. It could take some 6-9 months time for it to happen, including putting in place the ecosystem,” he said.

The company is working with 60-70 per cent capacity (in terms of manpower) with labour being sourced from villages near its plant.

Published on June 17, 2020

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