Company-
Havells India Limited.
• It is one of the largest electrical
equipment companies in India.
• It has products ranging from Home and
Kitchen appliances, LED lighting, Fans,
Modular Switches, Wiring accessories,
Water Heaters.
• Current Leader in premium fan
segment.
• Has access to more than 20,000 dealers
across Latin America, Europe, Asia and
Europe.
FAN MARKET IN INDIA
According to “India Electric Fan Market Overview, 2016-2022”, the revenues for
organized electric fan market are growing with a CAGR of more than 10% from the last
five years.
Structure of Indian Fan Industry
FY1 • Crompton is the leading player in the Indian fans
market with its wide distribution network. The
8 company is now focusing more on increasing its
22% share in the high-end product category.
• Havells is a leading player in the premium fans
Crompton
segment and a well-known brand across various
consumer durables.
42% Havells
• Orient Electric is increasing its market share with
Orient Electric continuous innovations and introducing energy
efficient fans which include lesser wear and tear,
Bajaj reduced electromagnetic interference, noiseless
16%
Electricals operation, improved efficiency, increased reliability,
Others and a longer lifespan.
• Bajaj Electricals is one of the prominent players in
fans, lighting, and luminaires segment where fans
8 contribute to 24% of its revenue.
12%
% • Other major players in the market include Usha,
FY 18 Market Value: INR 10,000 Cr
Khaitan, and several unorganized players.
COMPETITOR
COMPETITOR ANALYSIS
ANALYSIS
Competitor Analysis
The main players in the industry are:
1) Havells PROFITABILITY
14
2) Crompton 12
3) Bajaj Electricals 10
4) Orient Electricals. 8
Percentage
6
4
• The profitability of Havells India Limited dropped from 8.75% in 2
the year 2017-18 to 7.87% in the year 2018-19. 0
2019 2018 2017 2016 2015
• Profitability decreased by 1.01% over 5 years. -2
Year
• Crompton Greaves has the highest profitability rate in the Havells Crompton Bajaj Orient
industry at 8.85%. Its profitability increased by more than 8%
over the past 5 years.
• Both Orient Electrics and Bajaj Electricals have almost similar
profitability over the past few years.
Crompton has the competitive advantage with greater profitability and higher market share than its competitors.
INDUSTRY- PESTLE ANALYSIS
Forces Important exemplars Potential impact on the Firm/Unit
Political Trends Increase/Decrease in GST Rates With increase in GST rates input cost will increase which will further increase
the selling price and reduce the demand and vice versa.
Economic Trends Rise in Crude oil prices With the rise in crude oil price, it has led to lower corporate profit margins due
to rise in input costs like plastic and increase in transportation cost.
Socio-cultural Trends i)Changing family structure i)
Now-a-days, newlywed couples tend to have a place of their own and thus buy
ii) Increased interest in their own apartments or homes. This shift in family structure from Joint to
maintaining social status Nuclear has increased the sales of fan.
ii) With the increase in interest of maintaining social status, customers prefer
fans which are premium.
Technological Trends IOT (Internet of Things) enabled IOT enabled fans have become a choice for the consumers. This is a great
fans, opportunity for the firms to produce IOT enabled fans.
Energy Efficiency Norms
Legal Trends Energy Efficiency Norms Currently the Energy efficiency norms set by BEE (Bureau of Energy Efficiency) is
voluntary but it is suspected to become mandatory in the coming years. So, it is
a great opportunity for companies like Havells who are using energy efficient
components in their products to have the advantage over other companies.
Industry Analysis
Threat of New Entrants
MODERATE
• The fan industry is not capital intensive allowing
various unorganized players to enter easily.
• However, brand building and distribution network is
complex and takes time and effort.
Supplier Bargaining Buyers Bargaining
Rivalry /Competition Power
Power
Among existing firms MEDIUM – HIGH
MODERATE
HIGH
While various brands under the industry The buyer has a lot of
Competition is very high
produce the components used in the options to choose from in
among the existing
production of fans themselves, the the fan market.
players.
others have a wide market to procure
raw material from.
Threat of Substitute
Products
LOW
There are almost no
near substitutes to fans.
Key Success Factors
Brand Image Technology
Brand Image plays an important role. . Latest technology plays a very
Havells India fans have are preferred important role. It helps in introducing
by consumers since they are innovative product and it will lower
considered as premium fans. down production cost and improve
quality of the product.
Quality Product innovation
Product Quality is also a key success Product Innovation is one of the major
factor it includes performance, success factors, such as, eco friendly,
features, reliability, durability, fast, decorative fans.
serviceability, aesthetics and
perceived quality.
Economies of scale
Distribution It plays very vital role as the entire major fan
Distribution plays a vital role in manufacturers are heavily engaged in renovating
success because when and where to and building production facilities to gain economies
market is very critical. It is crucial to of scale. E.g., reducing labor cost and
make distributors and channel manufacturing cost.
partners
Value Chain
Create integrated Infrastructure to provide an unparalleled customer
Firms experience through world-class products. Over 90% in-house
Infrastructure manufacturing, Quality certifications Reduction in manufacturing rework M
Create conducive work environment to deliver value. Major focus is to Retain and A
nurture talent. No. of training hours: 48,181 Employee Satisfaction score: 4.09 R
Human Resource G
out of 5 I
Intellectual Capital (brands, patents and design registrations) enables to attain technical N
Technological
superiority, create product differentiation, and maintain leadership position
Procurement Natural Capital (raw materials, water and energy) has helped meet the statutory requirements
for our operations, while minimizing impact on the environment.
Havells understands the Central quality structure has
importance of raw materials to Havells has
been created cutting across all
manufacturing processes, and business verticals. Business Established a strong M
therefore aim to optimize its service network for
consumption. They continue
wise product quality reviews, A
mitigation plan devised and prompt after sales R
with the strategy of reducing monitored periodically.
waste and increasing the share service of our G
Effective controls have been I
of recycled and alternative placed for induction and products thus
materials as input in the N
production process to improve
rightsizing of suppliers. New increasing customer
product introduction has been
material management for satisfaction and
reinforced with gate-wise
greater resource efficiency. quality deliverables. recall.
Logistics Operations Services
Problem –
Stagnant Market
Share of the Company
at 14% for the last
three Financial years.
Source: Statista
DIFFERENTIATION
STRATEGY
• Consumer Electricals brand, portfolio and distribution: Havells’ should
make its product portfolio much more diversified and evolved. The company
should continue to invest in brand shops (414 galaxy, 72 gallery and 27
standard gallery stores), showcasing its diversified product base
• Focus on manufacturing, brand and innovation: Strategy of focusing on
in-house production (v/s outsourcing at just 5-7% of total revenues) is the key
differentiator for Havells enabling total quality control and thus a premium
positioning in the market.
• New Product Introduction: Havells India (HAVL) should add new product
lines/segments which should enhance its revenue.
• Bringing innovation to after sales service: HAVELLS should also set up
new industry norms in after sales customer service and for the first time a
network for the electrical appliances industry that is comparable to consumer
durables segment. To cater and provide service support to consumers of
Havells, it should design a user friendly mobile application that serves all the
service related queries like product installation, maintenance (AMC), services
and repairs.
• Superior channel financing/dealer incentive lead to strong bonding:
Channel financing is an important initiative for the dealers, which will lowered
the working capital requirements.
Strategy Overview
Marketing Strategy Human Resource Operations Research and Development
• Increase engagement with •
Acquire unorganized • Focus on staffing with • Operational excellence is ‘end- • Havells should be committed to
customer by creating to-end’ holistic philosophy to building capabilities in the areas of
customer apps.
players in the fan highly qualified people improve quality, drive efficiency Go-to-Market, Brand and Portfolio
• Develop a unique brand industry. in customer service, and standards across sourcing Management, Innovation and
position through multi • Havells should aim at product/service sites at Havells. Havells should Operational Excellence. This journey
development, human remain focussed on continues through robust
media. differentiating implementing IT, undertaking
• Market to niche audience, products, that provide relations, marketing cost rationalisation, lowering
recruitment and succession
i.e. Premium segment. meaningful consumer and social media, to operating costs and reducing planning initiatives. This should be
• New Launches in 2018-19 increase market share inventory – with a larger vision supported by data and state-of-the-
benefits, deliver art technology, and the emergence
has helped strengthen the superior performance, to get ahead of the to continually improve business
product portfolio based on performance. and strengthening of key processes
and are designed with competition. and structures in Consumer & Trade
consumer insights to
deliver greater value to consumers in mind. • The endeavour is to provide Marketing, Channel Development,
consumers. improved availability of the Procurement, Rural and Institutional
products by increasing our direct Sales, Physical Distribution, and
and indirect reach across the Qual.
country.
