No respite in material and supply chain costs in near term, says Havells

There will be no respite from inflationary pressure on raw material and supply chain costs in the near term, and this could create pressure on the customer's wallet, Havells India CMD Anil Gupta said.

There will be no respite from inflationary pressure on raw material and supply chain costs in the near term, and this could create pressure on the customer's wallet, Havells India Chairman and Managing Director Anil Rai Gupta said.

The homegrown company, for which self-reliance is a priority, is taking efforts to maximise in-house manufacturing to have better control over the quality, supply chain and margins, Gupta said while addressing the shareholders of the company in its latest annual report.

Moreover, the company is expanding its footprints deeper into the rural areas with a product portfolio suitable for these markets, as it sees an opportunity in demand for FMEG products after electrification and improvement in the income levels in those markets, he said.

There are short term challenges as the inflationary environment continues, however, Havells maintains a "positive outlook" on-demand growth and gradual recovery of margins.

"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 short term challenges, and the underlying demand remains strong, which could lead the way to recovery in margins," said Gupta.

While talking about the Fast Moving Electricals Goods (FMEG) industry, the Havells CMD said it has "enormous growth potential", given the improvement in electricity availability and demand for comfort, convenience, and hygiene.

"This will exhilarate the overall portfolio," Gupta said, adding today, the consumer is far more aware and aspirational.

The new age of technology, such as 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, he added.

"Rising internet penetration has further accelerated the adoption of smart solutions," he said, adding "We, at Havells, are cognisant of this opportunity, and are investing in R&D directed towards this".

Besides, Gupta also talked about the change in consumer behaviour, which now seeks borderless shopping, leading to change in retail 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-to-market strategy will evolve alongside," he said.

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," he said.

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 after-sales 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 end consumers and trade partners," he said.