"Havells has strong brand salience in urban markets, and is expanding its footprint deeper into India. As electrification and income levels improve in rural markets, we are ready with an organised rural distribution network, with a unique product portfolio, suitable for these markets."
Our Valued Shareholders,
I am pleased to present the Integrated Report of your Company for FY 2021-22.
Despite the challenging macro context, business stayed firm, riding on focused execution and market share gains.
Another challenging year was well-managed, owing to the strategic choices and perseverance of team Havells India Limited. While navigating the short-term challenges of the pandemic and cost inflation, we continued with investments towards branding, expanding the distribution network, and innovation.
Our organic growth was strong, with broad-based market share gains. We limited the impact of unprecedented commodity inflation through efficiency and calibrated price increases.
Highlights of the year
COVID-19 continued to impact the business across sectors. With the onset of the second wave in Q1 FY 2021-22, demand for summer products was severely impacted. At Havells, we relied on agility and a pragmatic approach to manage the situation. We worked closely with our channel partners, ensuring their business continuity and well-being. We also pitched in with emotional, psychological and medical support for our stakeholders. Work-from-home and an accelerated use of technology were encouraged.
The latter half of the year was reassuring with revival in housing as well as infrastructure. Commodity costs remained volatile and inflationary, impacting our margins as we went for calibrated price increases.
We fuelled our growth agenda through disciplined cost management, and improving operational efficiency at all levels of the business. In combination with sales growth, this enabled reinvestment in product innovation, brand building, digitalisation and sustainability initiatives, while creating value for our shareholders.
We introduced the ‘Employee Ownership Plan’ (EOP) to recognise the exemplary contribution of our employees towards profitable growth of the organisation. The EOP is in addition to the existing ‘Employee Stock Schemes’, and aims at creating long-term wealth for our employees in line with the Company’s performance.
The FMEG industry has enormous growth potential, given the improvement in electricity availability and demand for comfort, convenience, and hygiene. This will exhilarate the overall portfolio. Additionally, the Internet of Things (IoT) is driving a digital wave in home automation, making it imperative for brands to offer innovative solutions that will help customers in realising their smart home aspirations. Today, the consumer is far more aware and aspirational. Rising internet penetration has further accelerated the adoption of smart solutions. We, at Havells, are cognisant of this opportunity, and are investing in R&D directed towards this.
Recently, there has been a lot of attention on self-reliance in manufacturing, as part of the central government’s ‘Aatmanirbhar Bharat’ project. Various government initiatives such as Production Linked Incentive (PLI) scheme, national infrastructure pipeline, and targeted investment towards manufacturing of electronics, among others, are charting a positive, long-term prospect for the economy, and consequently, the Company.
At Havells, self-reliance has always been at the core, as we strongly believe in maximising in-house manufacturing to have a better control over quality, supply chain and margins.
Omni Customer, Omni Havells
Customers seek borderless shopping, and our endeavour is to offer them a seamless experience. We are available to the customers, both at the traditional retail shops as well as at modern formats. In recent years, we have increased our presence on new-age digital platforms, such as e-commerce marketplaces as well as the Company-managed portal, O2O. As digitisation increases, e-commerce is expected to grow and mature as a channel, and our portfolio and go-tomarket strategy will evolve alongside.
Havells has strong brand salience in urban markets, and is expanding its footprint deeper into India. As electrification and income levels improve in rural markets, we are ready with an organised rural distribution network, with a unique product portfolio suitable for these markets.
Different channels have their own strengths. Modern retail shops offer larger displays and good ambience, e-commerce is synonymous with ease of shopping and delivery, and the good old local shops offer personal touch and comfort.
In addition to expanding its retail base, Havells is also increasing its participation in B2B projects to capitalise on large industrial and infra opportunities.
The two most important aspects of a multichannel approach are transparent and fair-trade policies across channels, and aftersales services that are channel agnostic. In this rapidly changing environment, we are partnering with our customers – large and small, digital, and physical. We are ensuring a unified experience for endconsumers and trade partners.
Sustainability has always been at the core. We remain committed to inclusive growth with due consideration towards social impact. The thrust in our value proposition has been to create opportunities for our stakeholders, where we can be partners in sustainable growth.
As a part of our commitment to combat climate change, we have almost doubled our solar-installed capacity since FY 2020-21, and are aggressively pursuing means and technologies of switching to cleaner fuels. Product stewardship would be a key approach in our climate action. In line with this, we are ramping up investments in R&D on aspects of energy efficiency, circularity, long-term durability and performance of our products, to provide our consumers sustainable and eco-conscious product offerings.
We track and respond to external and relative indices for ESG performance assessment as we believe in benchmarking ourselves to the emerging dynamic ESG challenges. We have consistently ranked in the top 10 global companies on the DJSI for our sector and have also been part of the RobecoSAM Yearbook for the third year in a row. Morgan Stanley Capital International (MSCI) has upgraded the ESG Risk Rating to ‘A’, and we are now part of FTSE4Good Indices family. In addition, CRISIL rated us 'Strong' in their recently published ESG ratings in 2022.
Empowered, agile and accountable organisation
Our Strategic Business Units (SBUs) are driving performance by responding quickly and directly to consumer and channel dynamics that are unique to their business units. This way, each SBU has an equal opportunity to grow with access to capital and resources. This has resulted in a simpler, faster, and agile way of operating, with focused and expert categories, and greater empowerment and accountability, flowing through the business.
Our value creation model is based on the balanced pursuit of topand bottom-line growth as well as improved capital efficiency. Our priorities are to invest in long-term growth and development of our business. Investing for the long term takes the form of R&D investments, brand support and capital expenditure to support organic, profitable growth.
The raw material and supply chain costs have risen substantially across the industry, and there is no respite as of now. This could create pressure on the customer’s wallet. We are of the view that these are shortterm challenges, and the underlying demand remains strong, which could lead the way to recovery in margins.
Anil Rai Gupta
Chairman and Managing Director