Future at Havells: Balancing Man And Machine

Havells Chairman and MD Anil Rai Gupta shares how the business he inherited from his father, Qimat Rai Gupta, is changing in the age of internet and Instagram, and what it takes for a CEO to maintain the balance between people and technology

To understand the future, sometimes it is important to dig into the past.

For Havells, the story lies in a 1981 incident – exactly 10 years after Qimat Rai Gupta (QRG) bought Havells from Haveli Ram Gupta for Rs 700,000 with the vision of building a national electrical goods company that makes switches to fans (and even owns the television to refrigerators company, Lloyd) today.

Anil Rai Gupta (ARG), the younger son of late QRG, now the chairman and MD of Havells, was just 12 years old then. He remembers: “My father decided to buy a computer.”

In those days, computers were expensive. QRG spent 10 per cent of Havells’ Rs 6-million revenue and bought the computer for Rs 600,000 (a whopping Rs 11.4 million in present-day value).

“He was far more entrepreneurial (than I am),” says ARG. “If my turnover is Rs 100 billion, will I spend Rs 10 billion to buy something? I would never do that.”

But, for QRG, the writing was on the wall: technology was the future. The arrival of the computer was the beginning of Havells’ tech transformation which continues, just at a faster pace, driven by customer obsession and decision making triggered by social media and the internet.

Staying relevant in the Instagram era

The biggest change between QRG’s and ARG’s time is the access to information, thanks to the internet. “The consumer is far more aware than he or she used to be a decade or two ago,” explains ARG.

The buyer, he says, is not dependent on yesteryear influencers, which, in Havells case, were electricians, contractors, architects, consultants, and the retailer. “By the time the consumer reaches the counter, he or she knows what to buy,” says ARG

This is because of the internet where Instagram, Google and Facebook help people decide. For context, India has 180 million Instagram users and 340 million Facebook users, according to a German marketing and consumer data intelligence firm. “If we are able to make the consumer aware through all the digitisation (around us), that is a big change… we are able to access many more customers,” says ARG.

But the change has shifted the focus, too, especially in the way Havells communicates and advertises. ARG says there’s been a “massive shift” from television and print. “You focus on who your consumer is and depending on that, you can try to make a positive influence,” he adds.

Follow Havells on social media, and you would understand what ARG means. The company has more than half a million followers on Facebook and over 81,000 followers on Instagram.

ARG’s ability to change with time has kept Havells ahead of the pack. Its market capitalisation is around Rs 770 billion, on a revenue base of Rs 104.28 billion in FY 2020-21 with net profit of Rs 10.40 billion, and it continues to be the largest Indian electrical and lighting company. For context, Bajaj Electricals’ market capitalisation is Rs 120.81 billion, Crompton Greaves’ is Rs 291.19 billion, Dixon Technologies and Artemis Electricals stand at Rs 245.84 billion and Rs 1.44 billion, respectively.

The company’s value pegs ARG and his mother Vinod’s combined net worth at $4.3 billion (Rs 320 billion), making him one of the richest Indians in the world, according to the Forbes’ Billionaires list.

Paranoid to stay ahead of the pack

“I read somewhere many years ago that paranoia should be the mainstay of any CEO,” says ARG. “The speed of change in the last 5-10 years asks for some paranoia in the organisation, which is good and challenging.”

Havells, ARG says, is fortunate to be in a state where the company can utilise (its leadership position) over most of its competitors in the industry. “That increases our competitive power in the industry. That’s why, as the CEO of the organisation, I am happy,” he adds.

But, in the coming decade, ARG will have to ensure that Havells is closer to the consumer than before – understand them, their requirements and make products that delight them. That’s also the opportunity he is looking for. For example, during the pandemic, it launched Stealth Puro Air, an air purifier fan. It also launched anti-bacterial, anti-fungal switches and sockets to provide “safe touch” against the transmission of harmful microbes.

ARG also says that the penetration levels will explode for every product category. He gives the example of a tube light which is getting replaced by six downlighters, which, in the future, will be taken over by access lighting, time-wise lighting, and so on. “The amount of lighting used per square foot area is going up,” he says.

The kind of opportunity India has in the next 10-20 years, ARG explains, is far greater than what it was in the past 20 years. “Per capita income of each individual will grow; aspirations will grow and so will the demand,” he says. And, thanks to technology, the cost of products won’t change much. “Twenty years ago, an AC cost us Rs 30,000. The price is the same today,” adds ARG.

But he knows that staying ahead of the pack is always work in process. “We have a 300-member technology team working continuously on the products and process,” ARG discloses.

Even in the pandemic year, Havells did not stop innovating or launching new products. To address technological obsolescence and meet the new customers’ expectation, it launched energy-efficient brushless DC fans. It also came out with a new range of juicer mixer grinder called Silencio (50 per cent reduced noise); and a high recovery, point-of-use water purification system with 55 per cent water recovery.

“The consumer wants technology-oriented products which are not just mechanical,” ARG says. Havells is changing from an electrical and mechanical company to an electronics company where many products will converge.

Convergence: Fan or light, or both?

ARG remembers Bill Gates telling this in 2003-04 that the computer, the television, and the mobile phone will converge. Truly, mobile makers have brought television viewing to the palm but the phone’s main purpose still remains communication.

Similarly, the AC will continue to provide cool air; the water purifier will give pure water but some of these products might converge. “A purifier might converge with the AC, or a fan may converge with an AC. A lot of convergence will happen in kitchen appliances,” says ARG.

These conversations, ARG says, have already started but how effective or cost-effective they will be is yet to be seen. But there is one thing he is sure of: “Over a period, form factors might completely change. Fan and lights are getting converged – and that form factor will completely change.”

In 2020-21, Havells spent Rs 960 million in research and development. While a lot of these changes will be driven by technology and analytics, ARG believes that the role of people in companies will evolve faster and will become critical. The process started some time back. “Most of the talent is coming from outside our industry,” he says. The reason is simple. “In our industry, the company sizes are not very large. So, we are hiring a lot of talent from the telecom and FMCG industry, and most of our senior guys are coming from there,” he adds.

People, not just machines

In Havells, since it started becoming a digital organisation, there has been a lot of data generation. “I keep telling... Don’t get bogged down by data. Use data for knowledge. The action must be taken by human beings,” says ARG.

He has his reasoning for that. “The data looks at the past. The person must look at the future.” All the data, whether it is through machine learning and artificial intelligence, or general data available through analytics, needs to be looked at by humans, emphasises ARG.

But what about rising automation and building factories of the future? ARG says that is where Havells will continue to disproportionately invest. “That is where we can strive to give value to our consumers and investors. Automation should bring efficiency, and if efficiency brings a better product at the right price to the consumer, that’s what you should be looking at. So, if you do automation in the supply chain, and if that reduces your cost from 3.5% to 3.25%, then the 0.25% can be added to research.”

Factories, too, will change. “Every new factory that we build is a lot more automated than the previous one.” Havells’ newest factory in Ghiloth, Rajasthan, is India’s first robotic AC manufacturing unit, claims ARG, adding that the plant is Southeast Asia’s most advanced and fully integrated AC manufacturing facility. “The high level of automation, along with backward integration gives us greater control over quality while optimising costs and boosts consumer confidence in the brand,” he says.

Also, one big change automation has brought is gender equality in factories. “In factories, the heavy machinery that is now also being used by women, was always thought to be men’s job, and women were employed on assembly. It is a change of mindset,” says ARG.

He adds that skilled, semi-skilled, and unskilled manpower is an old mindset. “If they can operate a mobile phone, they can operate a machine,” he says.

The CEO of the present and the future

As the CEO of the company, ARG must understand this delicate relationship between people and technology. He does that by spending less time on day-to-day matters, empowering a team, and focusing on the future.

“If I don’t do anything for the next six months to one year, this organisation will continue to run, the management will take care of it,” says ARG. “That means my role becomes more to see things that will give results in the next two-five years. This needs a careful balancing that you need to do – if you are not spending enough time on the future, or if you are spending all the time for this month or this quarter then you are not the right CEO.”

Over time, ARG has trained his mind to delegate more. “As organisations get larger, you need to keep delegating stuff and not be a day-to-day manager,” he says, most of which he learnt from his father who took Havells from Rs 700,000 in 1971 to Rs 47.20 billion in 2014 (the year he expired).

“Fortunately, my father was there (when I joined the company). He was a master and was very good at professionalising the organisation and that has continued,” says ARG.

“He was a born entrepreneur; I am a trained entrepreneur,” admits ARG. Undoubtedly, he trained well as Havells continues to be referred to as the “stock market’s darling”.

Sunny Sen is the co-founder and CEO of ConsCent, a payments and analytics company building the future of content monetisation. Before ConsCent, he was a business journalist with Network18, The Economic Times, Hindustan Times, among others.