Aftermath of the Demonetization:
- It appears that Havells have gained market share in Q3.
- In the longer-term , the company would definitely be getting market share from the unorganized sector.
- Company has gained market share not only from the unorganized sector but also from the organized sector in some of the categories.
- The normalcy is coming back into the market whether it is in terms of availability of cash or the demand.
- The requirement of such schemes would not be required there may be a soft landing for the dealers, so within this quarter most of the things will be taken back to normal level.
- Because of certain delays in payments the dealers would have lost out in cash discounts or interests therefore the company compensated a bit for that.
- The demand progresses but also the sales boosted up 50% so that the dealers do not lose out on achieving their targets.
- The GST date announced is 1st of July now and not 1st of April, were not seen an impact coming through the demand from the dealer side on reducing stocks just before GST coming.
- The contribution of the cables and wire was slightly slower, so there is some impact on the gross margin.
- The residential demand was not so much dependent upon cash in the market place, so it might not affect that.
Product’s market overview
- Cables and wires market have gone quite up, due to the general tendency of the dealers to stock more products whenever there is increase in commodity. Now standing at 16%
- The LED growth rate have increased, a 30% kind of a growth rate is expected
- The lighting and fixtures are at 10%-14%
- Fan, Water-heaters and other appliances combining 3%-15%
- MCB and Switches are at 15%-28%
- The other hand margins have gone up from 22% to 28% in lighting
Category growth trend
- The volume growth was 21% higher in industrial segment and 17% in domestic cable business
- A revenue growth of 18% in cable business. This is because there was a price increase of almost 15% in copper. It takes tme to pass on the higher raw material cost to consumers
- Standard’ and ‘Reo’ are extended to new categories
Market share overview
Launch of new products and Brand Investments
- Branding of new product is being overviewed
- The REO switches have been upgraded to REO modular
- Launch of all new REO Circuit Protection is soon to be exhibited.Also, new product in REO categories are soon to be announced
- Brand advertisement investment is expected to be 3%-4% of revenue
- IT and Supply chains are targeted, connected with last mile retailers and electricians, 300,000 registered users under multiple schemes
- Currently, 91% of sale is from in-house manufacturing, setting up new plant in east and south for national footprint
- Large Network for entire product category – covering 400 cities, 7 vernacular languages + Hindi & English, 560 channel partners with 2,000 people + 250 Havells’ employees
Benchmarking with the best corporate governance
- Promoters- Single business focus
- Transparent and detailed communication to shareholders
- Committed to high standards of corporate and shareholder governance
- The company have decided to advertise more
- Plans for investment in advertisement is being executed
- Ad spends will be 3-4% of revenue