There's faster recovery, thanks to pent up demand: Havells CMD3 min read . Updated: 02 Jul 2020, 03:06 PM IST
- Our product categories are more focussed towards urban and semi-urban. But a big shift happened -- we saw a major traction coming from the semi-urban and rural during these times. So we had to pivot here
NEW DELHI: Consumer appliances and electrical equipment company Havells India Limited made a quick pivot during the lockdown. Its offline-to-online or ‘O2O’ business model ensured business continuity for its offline dealers and comfort for consumers, Anil Rai Gupta, CMD of the company, told Mint. Excerpts from an interview:
From Havells perspective, do you see green shoots in the economy?
We see a recovery faster than what we initially had expected. When we went into the lockdown, we painted a doomsday scenario for the next 6-9 months. From that point, there is definitely a better recovery. We thought that things would take a lot more time because of the disruption in March and April. The faster recovery could be associated with many reasons. There was a pent up demand. Some construction sites are getting completed. We see more population in the smaller towns or rural areas with people going back home — better traction is coming from these areas. A lot of markets continue to remain in containment zones. That has changed the skew temporarily where the recovery of larger towns is slower. The industrial and infrastructure demand continues to be low. Overall, it's a mixed bag.
But we can’t say this has been a V-shaped recovery…it appears to be a U?
It is not a V-shaped one. Many sectors continue being challenged. In construction, though existing projects are getting completed, we are hearing that newer sites would take more time to start. Companies have delayed capex. Labour availability issues are there in construction as well as in infrastructure projects. We initially see more of a pent-up demand recovery and then things may slow down for some time. This is where more flexibility is required — flexibility in production systems, for example.
Were there any pivots in the way you sell in the new normal?
There were quite a few changes. Our product categories are more focussed towards urban and semi-urban. But a big shift happened — we saw major traction coming from the semi-urban and rural during these times. So we had to pivot here. There is also more online availability. For the first time, we made a marriage between offline and online. We have a strong offline presence. Though we were present online, we were fairly disciplined in terms of pricing so that it doesn’t disturb the offline channel. It was a peaceful co-existence. Now, there is a partnership model. Customers can come and place orders on our e-store and get it supplied through offline channels. That took care of everything — customers did not want to step out of their houses or go to an offline store. But in our industry, people want the comfort of knowing where they buy from and the service they can get. Once they place orders on our online store, the offline neighbourhood store supplies in 30-60 minutes. We have on boarded thousands of dealers onto the e-store. Online to offline was a big revelation.
How did Havells pivot into a more flexible production system?
One is preservation of cash —making sure we don’t carry too much inventory whether it is raw goods or finished goods. It means that the production needs to produce SKUs and changeovers at a faster pace than what it used to be. Second is flexibility in terms of manufacturing systems because of the hygiene requirements now. How do we revamp our assembly systems? Flexibility is also required in procurement systems. Making sure that we are in constant touch with our suppliers so that they follow the same flexibility that our plants follow. This may be a norm that goes on even in the future.