“Our plan is that anything the consumer buys from Havells should be Internet ready or IoT enabled”

As the Indian electronics manufacturing sector grows, we look at examples of firms that are not only manufacturing in India, but do so at standards that allow them to compete globally. Nijhum Rudra from Electronics Bazaar speaks with Vivek Yadav, senior vice president, Havells India Limited, about the current prospects and the future of the Indian electronics industry, as well as the various challenges Havells is facing and its business model.

EB: The electronics and manufacturing industry is booming in India, but at the same time the sector is facing many challenges. Can you please highlight some of the hurdles the industry is facing? How is your company addressing them?
Our nation’s biggest strength is software development and application development. And in this particular segment, within Havells too, we are investing a lot.

On the other hand, the hardware sector is what I think is the negative side of the Indian electronics industry. The industry and the government are unable to do enough to improve and perk up the sector. And that’s why, all industry leaders need to invest in the government’s Make in India initiative to help create a sophisticated infrastructure.

On that front, Havells is taking small steps with the objective of developing and manufacturing our own hardware. In a nutshell, India’s electronics industry is largely dependent on hardware that is coming from outside. If India’s electronics manufacturing ecosystem and infrastructure develops, and greater efforts are put into hardware innovations, it will help the electronics industry flourish.

EB: What does the future of the Indian electronics manufacturing industry look like to you?
The future is definitely very bright because everything is getting digitised today, which means there is a need for electronics hardware to cater to that trend. But at the same time, I think that the infrastructure in India is not geared up for this. Therefore, we are dependent on China, Korea, Taiwan and other Southeast Asian countries for components.

Overall, manufacturing costs are still very high in the country. It is always a Catch-22 situation – without volumes, costs of components remain high; but the situation is such that Indian manufacturers are struggling to scale up to the level of their Chinese or Taiwanese competitors. Yet, we have to start somewhere and build up volumes. Today, I think the starting point is with high-end work, which is not happening in the country. Big developers need to set up their bases here for high-end chip development, electronic component development, etc. And all this needs to be manufactured in India itself.

The demand for electronic products will continue to increase. Currently IoT development is happening so fast that small products, too, are becoming intelligent. We have just worked on one such product, having invented a smart socket—the hardware inside is electronic. A small product like this can become intelligent, too. You can imagine that, as IoT evolves, everything you need or use inside the home will become electronic. So, from that point of view, the future of the industry is very good and demand will explode in the times to come. But the question of what gets developed in India and what’s coming from outside is something that the government and the industry should work on. Together they can create an atmosphere that inspires innovation and trust.

EB: The recently approved National Policy on Electronics 2019 is expected to be a game changer in the electronics industry. What are your views on the policy? Tell us something more about the benefits of acquiring Lloyd back in 2017.
If the policy promotes the development of electronics hardware and infrastructure within the country, then it is definitely going to help companies like Havells, which are looking at products and solutions that go deeper into homes. The policy can definitely change the future of the Indian electronics industry and promote more exports. However, our manufacturing sector needs to improve and only then can we compete with other countries.

If you look at developments within Havells and the new product categories it is entering, we are broadly targeting home owners. We can service this segment right from the house construction stage, to the final AC installation, covering refrigerators, washing machines, all kitchen appliances, etc. This kind of range is offered by nobody else today. So the NPE 2019 is going to help companies like Havells.

Our intent and aim is to manufacture the product on our own. This is why we invested in backward integration, and bought Lloyd about two-and-a-half years ago. Before that, Havells, an already strong brand, was largely involved in trading.

We have invested heavily in Lloyd to create our own manufacturing footprint. There is a huge state-of-art factory coming up —it’s fully automated with robots running operations and handling material movement. And we are looking at doing all electronics development in-house within a very short period of time. In that sense, NPE ’19 is going to aid companies like Havells considerably.

EB: Can you please explain the business model of Havell’s sub-brand, Crabtree?
Havells acquired Crabtree in early 2000. It’s a UK based brand which has, of course, changed hands a lot, and is almost 100 years old. Crabtree is a pioneer and inventor in a lot of segments, and is largely known for domestic switchgear equipment. In India, we started with switches, went into domestic switchgears, and now are going more and more into electronics. So, all the products and solutions that we are making, particularly for the home, are going to be under the Crabtree brand.

All our IoT development that is linked to home automation is under the Crabtree brand. In the past too, the Crabtree brand entered the market through the architects’ route. All old practising architects and interior designers know about our brand. In the future also, our target audience will remain the premium segment, as we look to target high net worth individuals (HNIs). We are also looking at addressing the requirements of architects, interior designers, and the designer community at large through industry associations.

We are already addressing around 2500-3000 specifiers in this field through our own team of close to 30 people across the country, whose job is just to display and demonstrate our products to them. Crabtree is also looking at using our existing channel partners, who are addressing HNIs by creating an experience centre in their own shops with the help of our premium products.

As the technology is becoming simpler to use, easy to install and easier to manage, it is now possible to reach a wider customer base.

Another thing we are doing under the Crabtree brand is not just targeting the absolute top-end segment. Every home owner aspires to upgrade his or her lifestyle. So, we are looking at different budget levels, at which we target aspirational products. All of these products, too, will come under the Crabtree brand.

EB: How are you increasing your reach among consumers in India?
The export market is developing very fast for us. Currently, a large portion of our export business is coming from switchgear equipment and, over the last couple of years, from our consumer durables too, as well as the Lloyd range of products.

In the Indian market, we have multiple brands and each one is positioned for a particular target segment.

We have a brand called Reo for reaching out to rural areas. If it’s about aspirational products for the young, our ‘Standard’ brand addresses this segment. And we sell mass premium products under the premium brand Havells. Ultra-premium products targeted towards home owners are sold under the Crabtree brand.

EB: How many R&D centres do you have in India and globally? Any plans to set up more in India?
Currently, we have one in Noida, which was expanded very recently. We are going to create an innovation centre in Bengaluru. The work is already underway, with the place identified and people being recruited. R&D for products that will be launched over the next three to five years will be done at Noida. The Bengaluru innovation centre will look at creating a long term product roadmap for the company, beyond the next three to five years.

EB: You have launched an experience centre in Jalandhar. Tell us more about the thoughts behind this strategy?
Crabtree is a brand for HNIs who crave premium products. Therefore, it becomes very important to showcase our products, and to provide the ‘touch and feel’experience so that architects, interior designers and consumers can decide cautiously. We are creating exclusive spaces along with our channel partners, where these products will be displayed live. Potential customers can experience the products before deciding what they want to buy. The first one opened up in Jalandhar recently. We plan to create 100 such experience centres in the next two to three years.

EB: Back in 2007, the renowned brand Anchor was taken over by global firm Panasonic, and experts claim that it is still a tough competitor for Havells. What, do you think is the USP of Havells’ products?
We ensure we stay ahead of the competition not only through differentiation in our existing products but also in how we reach our consumers. We have invested heavily in R&D, and we already have a team that is creating a design centre, where we will plan for products of the future. Also, all the inputs are not only coming from businesses, but are also coming directly from consumers.

We carry out consumer research, take feedback and design products for the future, taking inputs in terms of usage, storage, installation, maintenance, etc. All this adds up to being ahead of the curve all the time. Unless you are in that league, the life of your products and solutions is limited. So, that’s the continuous work you need to do and the continuous investments you need to make.

We have tough competition from multinational players who have deep pockets for R&D; so we need to constantly innovate and invest.

EB: What is your current market share? How much do you plan to grow in 2019-2020?
The company’s philosophy is that whichever product category or market segment we enter, we should be at least among the top three. Take the example of our old businesses like domestic switchgear and switches, in which we are among the top three. If you look at our consumer durable products, we launched our geysers about three years ago. Today, we are the market leader in this segment. We are expanding capacities in almost all our factories. We have a high double digit market share across all our product categories. We want to be among the top three and, wherever possible, the industry leader.

EB: Crabtree/Havells is now focusing on IoT enabled products. Tell us more about this.
Our plan is that anything the consumer buys from Havells should be Internet ready or IoT enabled. So, from that perspective, there is a lot of work going on to create a Havells’ platform, on which all the devices in the house—kitchen appliances, ACs, TVs, sockets and switches, and so on—are controlled through the Internet.

We started working in that direction a couple of years back. Our home automation solution is ready—we have a scalable solution, a portable solution and a wired solution. We now have IoT enabled geysers, fans and ACs. In the times to come, as per our blueprint, even if you buy a geyser that is not IoT enabled, we will give you a socket with a small chip embedded in it, that will be plug-and-play and IoT enabled. So, that’s the endeavour from our side.

EB: Could you highlight a few new smart products from Havells?
As I said, some are already out in the market. We have a Bluetooth enabled fan. The most interesting category is home automation, wherein we have a plethora of products. One such product is our smart socket, which is Wi-Fi enabled. It’s a standalone product that ensures portable automation. So, any socket point inside the house can become automated with this. You plug in any device, let’s say a non-intelligent microwave, geyser or air-conditioner, and this socket lets you control it through your mobile. Existing switches can be made intelligent too—small match-box sized electronic devices that go behind the wall plates can make normal switches smart, and you can operate them through your mobile.

At another level, if you want to upgrade your existing switches, but don’t want to damage your walls, we have a solution for this as well. So, you can mix and match the normal as well as intelligent switches within the same plate.

EB: Do you plan to have a separate brand ambassador for Crabtree?
As of now we do not have any plans for a brand ambassador, but there’s a possibility we might have one in the future. Currently, we are looking at promoting Crabtree through above the line (ATL) advertising. Havells is a unique company—when you have a problem with one switch priced at ₹ 25, service people will come to your home and repair it.

EB: Moving ahead, what are your plans?
All the IoT products are going to be rolled out in the next two to three months and, meanwhile, other new ones are in the pipeline. We have products that are radio frequency based and those that are Wi-Fi based. Since both these technologies are widely used, it’s not that their compatibility needs to be taken care of or there are connectivity issues. As I said, the team has already started working on products based on emerging technologies and trends, for a time frame beyond three years from now.