havells project
TRANSCRIPT
EMPOWERING MINDS
1
A Report on
ORGANIZATIONAL STUDY
At
Havells India Pvt Ltd, Manipal trade center,
BANGALORE
(SPECIAL TASK: “XXXXXX”)
SUBMITTING IN PARTIAL FULFILLMENT OF THE REQUIREMENTS OF AIMA FOR THE AWARD OF DEGREE OF
POST GRADUATE DIPLOMA IN MANAGEMENT
SUBMITTED BYT Raju Ranjith
REG NO: 421020337
UNDER THE GUIDANCE OFPROF. Shweta Shetty
Acharya Institute of Management & Sciences1st cross, 1st stage, Peenya, Industrial Area
Bangalore – 560 058
2010-2012
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ACKNOWLEDGEMENT
I wish to express my heartfelt thanks to Mr. XXX branch manager of Havells India Pvt
Ltd, Manipal trade center, their cheerful induction of my first visit to company’s office
helped me to know about XXXX Scenario and the activity I had to perform. I want to give
my genial and sincere thanks to Mr. Byra Reddy (dean of AIMS college, Bangalore).I
would like to sincerely thank Mr. XXX my mentor (guide in this project.) For his valuable
suggestion and guidance and making it possible for us to accomplish the project. Above all,
I thanks for giving me patience and Strength to overcome the difficulties, which crossed my
way in the Accomplishment of this endeavor.
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DECLARATION
I, T Raju Ranjith, hereby declare that this Internship project Report titled “AN ORGANIZATION STUDY AT Havells India Pvt Ltd, Manipal trade center, BANGALORE” is based on the original project study conducted by
me under the guidance of PROF. Shweta Shetty
This has not been submitted earlier for the award of any other degree/diploma by AIMA, New Delhi or any other university
Place: Bangalore
Date : T Raju Ranjith
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CERTIFICATE FROM THE COMPANY
MR.XXX
Havells India Pvt Ltd, Manipal trade center,
Bangalore
I certify that this Internship Project entitled“ORGANISATION STUDY IN XXXX” submitted
to Havells India Pvt Ltd, Manipal trade center, Bangalore, in partial fulfillment of the
requirements for the award of PGDM, is a record of independent Internship project work
carried out by Mr. T .Raju Ranjith under my supervision and guidance. This work has not
formed the basis for award of any Degree and has not been submitted previously to any other
College/University.
Bangalore Mr. XXX
November22nd, 2011 Internship mentor
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ACHARYA INSTITUTE OF MANAGEMENT & SCIENCES
1st cross, 1st Stage, Peenya, Bangalore – 560 058
Certificate
Certified that this Internship project report is titled “ An Organizational Study at Havells India Pvt Ltd, Manipal trade center, Bangalore ” is based on
organizational study conducted by T Raju Ranjith of III Semester PGDM under the guidance of PROF. Shweta Shetty
This Industrial Training Report is based on the training undergone by the student and has not formed the basis for the award of any other
degree/diploma by AIMA or any other University.
Prof. Shweta Shetty Prof. Kerron.G.Reddy
Internal Guide CEO and Principal
Place: Bangalore
Date
Contents
1) Title Page 1
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2) Declaration 23) Certificate from the guide (Signature from Guide and
Dean)3
4) Certificate from the Company 45) Acknowledgement 56) List of Contents 67) List of Tables 78) List of charts 89) Chapter 1 –
a. Introductionb. Industry Profilec. Company Profiled. Product profilee. Milestonesf. Competition Analysis (Porter’s Mode l,BCG
Matrix)10) Chapter 2
a. Organizational Structureb. Functional Department details
11) Chapter 3 - SWOT Analysisa. Financial Analysis
12) Chapter 4 – Special Taska. Introductionb. Objectivec. Research designd. Limitatione. Analysis and interpretation
13) Chapter 5 – a. Findingsb. Suggestions and recommendationsc. Conclusion
14) Bibliography15) Annexure
a. Questionnaire
EMPOWERING MINDS
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Introduction
Successful turnaround of Sylvania, the international subsidiary acquired in 2007, has shown the ability of your management of getting the things in shape. The last two years bring challenging environment through global recession. We successfully implemented major restructuring plans in Europe and Latin America, rounding out our transformation into a customer focused, agile, profitable, market driven health and well being company. We have moved our European headquarter to London so as to build our business on the more global platform.
Havells has made good progress during financial year 2010-11. Our business model is based on the consumer and dealer relationship which has contributed immensely to the financial performance. A structural change is clearly visible in the Indian consumer favoring quality products with strong brand. Keeping with the times Havells has emerged as a premium quality & diversified product Portfolio Company with strong brand leadership and reliable distribution channel.
Havells Strategy
Globalization
Globalization at Havells is a term for the horizontal and vertical integration of manufacturing and trade on an international level. In addition to the expanding business in India, Havells was looking to expand the geographical footprint. To remain competitive in today's scenario of consolidation and to have sustainable development, aggressive measures should be implemented to expand business. Starting business internationally is as defensive as an offensive play. Changing slowly to economic alterations in today's world could ultimately harm the business in long run.
Through international acquisition, Havells is vying for a reasonable share in the high entry barrier markets of developed countries and is capturing buoyant growth prospects in the developing countries. The key strategy behind Sylvania acquisition was to acquire a brand with global presence over last 100 years in the electrical space and to get access to strong distribution network spread across Europe and Latin America. Also globalization is necessitated due to competition with lowest cost producers across geographies.
While modern trade is ushering in the 'global village', very significant national differences remain in culture, consumer preferences, and business practices. Havells strategy is to keep local preferences intact and to leverage on the key strength of each cluster.
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Growth in developing economies
A seismic change is visible in the world's economic geography led by the developing economies of Asia, Latin America and Africa. The economic crisis may have been debilitating for the rich world but for emerging markets it has been closer to a triumph. Emerging economies now characterize younger population, increasing number of well-qualified population, growing middle class, elevating incomes and urbanizations.
Havells is deriving 70% of its consolidated revenue from developing economies like India and Thailand in Asia and Latin America. Leading brand presence and strong distribution channel will lead to the profitable growth in these regions. In addition we would be launching new products, aggressive market strategy and developing local l leadership in order to capture robust growth available in these economies. Capitalizing brand recall of Sylvania in other geographies within the same vicinity, we would strengthen the growth momentum in developing economies.
Driving profitability is the key focus area in our operations at developed countries of Europe. Restructuring of European operations by reducing fixed cost along with operational efficiencies, re-strengthening of the brand and improved relationship with customer would contrive improved performance.
Local management
Havells has an open environment which facilitates in building trust and motivation in the employees. Employees are as enthusiastic about the business as the management. We try to create a culture of participative management and ignite the creative endeavor of employees. It involves making people an interested party to the strategic decisions, thus aligning them to the business objectives.
We cultivate entrepreneurship skills at each level. Building long lasting and customer focused strategic partnership is important for Havells as our business depends on the ultimate growth of these channel partners. Human values, culture, ethics and behavior of our employees with these partners are keys to our growth. Havells aims to be close to its customers around the world by providing them local partnership for fast and effective solution of the business needs. As a result of the 100 year presence of Sylvania and over four decades of Havells we perceived as a local in the countries we operate.
Diversity is a key feature of our Company. We promote collective decision making at local level. In order to do so 'Strategic Business Unit' for each business segments has been formed across all geographies. SBU is headed by a key strategic team which takes collective decisions. Thus SBUs act as self contained planning units for developing discrete business strategies, objectives and parameters. Because strategic business units are more agile, they respond quickly to changing economic or market situations at local level.
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Industry Overview
Indian industry overview
The acceleration in growth of Indian economy in the last decade is a well documented fact. Over last 10 years the per capita income has trebled, resulting in higher consumption levels across products and services. Increasing urbanization, higher Government spending in infrastructure and power, strong rural growth and higher power generation has led the structural changes in the Indian Electrical Industry which has been appropriately backed by the transformation in social dynamics through increasing income and change in consumer preferences.
With our understanding of new trends, people's needs and aspirations, as well as our strong brand, solid financial foundation and engaged workforce, we will continue to deliver structural growth and consistently healthy profit margins.
Global industry overview
GDP has increased substantially in the Latin American countries during 2010. Sustained demand for commodities and positive internal factors improves the performance of the region's economies. Brazilian economy, for instance, has grown by a blistering 7.5% in2010, a rate unmatched since 1986. Following a strong rebound in Latin American countries, Sylvania earmarked a strong year of growth, higher profitability and healthier brand recognition.
However European economy is still stagnant. Within Europe, there is a significant divergence in economic trends. Most of the countries in central and eastern Europe are slowly recovering from the economic downturn, economies in some of the southern and western European countries impacted by the sovereign debt crisis are stagnating or contracting. The Germany economy, for instance, suffered from the sharp downturn in global trade in 2009, had benefited in 2010 from strong international demand for high quality capital equipment. Sylvania earmarked a stagnant sale but a strong turnaround in its profitability in Europe. Improved relationship with wholesalers in Europe and lower fixed cost will drive significant margin improvement over next few years.
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Company profile
Havells India Ltd is a billion-dollar-plus organization, and is one of the largest & India's fastest growing electrical and power distribution equipment manufacturer with products ranging from Industrial & Domestic Circuit Protection Switchgear, Cables & Wires, Motors, Fans, Power Capacitors, CFL Lamps, Luminaries for Domestic, Commercial & Industrial applications, Modular Switches, Water Heaters and Domestic Appliances covering the entire gamut of household, commercial and industrial electrical needs.
Havells owns some of the prestigious global brands like Crabtree, Sylvania, Concord, Luminance, Linolite & Standard.
With 94 branches / representative offices and over 5000 professionals in over 50 countries across the globe, the group has achieved rapid success in the past few years. Its 12 state-of-the-art manufacturing units in India located at Haridwar, Baddi, Noida, Faridabad, Alwar, Neemrana, and 6 state-of-the-art manufacturing plants located across Europe, Latin America & Africa churn out globally acclaimed products. Havells is a name synonymous with excellence and expertise in the electrical industry. Its 20000 strong global distribution network is prompt to service customers.
The company has acquired a number of International certifications, like CSA, KEMA, CB, CE, ASTA, CPA, SEMKO, SIRIUM (Malaysia), SPRING (Singapore), TSE (Turkey), SNI (Indonesia) and EDD (Bahrain) for various products. Today, Havells and its brands have emerged as the preferred choice of electrical products for discerning individuals and industrial consumers both in India and abroad.
In an attempt to transform itself from an industrial product company to a consumer products company, Havells launched the consumer electrical products such as CFLs, Fans, Modular Switches Luminaries, Water Heaters and Domestic Appliances. The company has been consistent in its brand promotion with sponsorship of Cricket events like T20 World Cup, India-Australia Series and IPL Season first, second, third and fourth.
The company has also taken the initiative to reach directly to the consumers through "Havells Galaxy" – a one stop shop for all electrical and lighting needs. Havells has more than 100 such Galaxies across the country.
Social and environmental responsibility has been at the forefront of Havells operating philosophy and as a result the company consistently contributes to socially responsible activities. For instance, the company is providing mid-day meal in government schools in Alwar district, covering 30000 students per day. Besides this company has acquired land for constructing a larger kitchen with all the modern facilities to serve freshly cooked food to 50000 students in the area. Havells runs a mobile Medical Van, equipped with a trained doctor and necessary medicines in the rural areas of Delhi & NCR for the very poor and needy villagers. We also set up free medical check-up camps. In the past also, the company has
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generously contributed to the society during various national calamities like the Bihar Flood, Tsunami and Kargil National Relief Fund etc.
The essence of Havells success lies in the expertise of its fine team of professionals, strong relationships with associates and the ability to adapt quickly and efficiently, with the vision to always think ahead.
Chairman profile
The group's phenomenal success over the years has been due to Mr. Qimat Rai Gupta's mantra of "growth through quality, innovation and market consolidation". His focus on research and development has enabled the group to develop products for consumers that offer great value for money. His constant emphasis on promoting energy conservation and environmental preservation coupled with his philanthropic service to the economically weaker section of the society is his way of giving back in return to the society that has helped this organization realize its true potential.
Mr. Gupta has held various responsible positions in Trade and Commercial associations of the Industry from time to time. He has, in his past, served as the President of Federation of All India Electrical and Trade association. Mr. Qimat Rai Gupta has been recognized by various sections of the industry for his path breaking work in this segment. Amongst the acknowledgments bestowed upon him, Mr. Gupta received the Self-made Entrepreneur Award "Udyog Patra" in 1989, Distinguished Entrepreneurship Award 2004, from the PHD Chamber of Commerce and Industry in 2004, Udyog Vibhushan from the Institute of Trade & Industrial Development, Delhi in 2005 and Udyog Ratna from PHD Chamber of Commerce & Industry for Economic Contribution to Uttaranchal State in 2005.
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PRODUCT PORTFOLIO:
Products:
1) Domestic Appliances
2) Havells Modular Switches
3) Crabtree Modular Switches
4) Geysers
5) Building Circuit Protection
6) Industrial Circuit Protection
7) Lighting
8) Cables and Wires
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9) Fans
10) Motors
11) CFL
12) Capacitors
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Vision, Mission and Values
Vision
“ To be a globally recognized corporation that provides best electrical & lighting solutions, delivered by best-in-class people ".
Mission
To achieve our vision through fairness, business ethics, global reach, technological expertise, building long term relationships with all our associates, customers, partners, and employees
Values
Customer Delight: A commitment to surpassing our customer expectations.
Leadership by example. A commitment to set standards in our business and transactions based on mutual trust.
Integrity and Transparency: A commitment to be ethical, sincere and open in our dealings.
Pursuit of Excellence : A commitment to strive relentlessly, to constantly improve ourselves, our teams, our services and products so as to become the best in class.
Unique business model
Havells business model is unique in India. We focus on the entire customer need of low voltage electrical products by selling through same distribution channel. We have aligned ourselves horizontally by having large product basket. Thus our channel management has become important and Havells enjoys paramount relationship with its dealers for the past four decades. The strategic business model that we adopted and implemented has certain features which place our business in a unique positioning in India.
1. Brand building. Havells has created a strong brand in the electrical consumer products in India which traditionally was a low involvement product category. We started investing in brand promotional activities through large scale television advertisements in 2006 in addition to other mode of advertisement like seminars, print media and local advertisements. It was unheard at that time about any electrical company co-sponsoring cricket mega events like T-20 world cup, Indian Premier League.
2. Premium positioning. Havells brand is associated with quality at par with the products of the global leaders. As a strategy Havells entered into the premium category in each product while leaving 'bottom of the pyramid' strategy.
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3. Common distribution channel. Havells selling pattern is quite different from its peers in India. We sell our entire product categories through same distribution channel targeting same consumer. As a result we are more consumer focused-channel friendly company. We enjoy unparalleled space with both the consumer and dealers in our industry.
4. Havells Galaxies. Breaking the conventional selling methods, Havells started 'Havells Galaxies' which are one stop shops satisfying directly the entire electrical product need of the consumer. Under franchisee model Havells Galaxies provide additional premium sale channel to its existing channel partners.
Growth imperative
In financial year 2010-11 we extended our competitive advantage, while investing in growth. We fortified our leadership and culture. We are a market-driven company forming strategies based on the feedback from markets to capture growth opportunities and to accelerate change while staying fast and productive. Growth is considered as a process to achieve better returns to stakeholders. Growth imperative at Havells means:
1. Lead in growth markets. In 2010-11 we grew exponentially in the markets where we lead in the product segments and generated close to Rs. 4,000 crores revenue from Latin America, India and Thailand. With a growth of 22% in financial year 2010-11, we continue to make long term investments to drive growth across these geographies.
2. Launch new products. We are committed to grow ahead of the competition. India, which is the key market for our electrical consumer durables segment, new product range of Electrical Water Heater was launched in September 2010. To leverage brand presence and distribution strength in India the next plan is to launch small appliances. Sylvania's strong brand and distribution channel in Europe & Latin America will be further leveraged by launching low voltage switchgears.
3. Entering new countries. Sylvania is a 100 years old brand having visibility across five continents. Capitalizing on the brand recall in other geographies than Europe and Latin America, Sylvania will be re-launched in growing economies.
4. Investing in manufacturing capabilities. During the last five years Havells invested more than Rs. 650 crores in India for converting its manufacturing capabilities into world-class, state-of-the-art units. We own largest facilities in terms of some of our product segments in India and amongst top few in the world. As a manufacturing organization we manufacture 85% of our products in India and outsource only those products which are either not viable or cannot be done.
Global market driven forces necessitated us to reduce fixed cost and increase utilization levels at the international manufacturing facilities. During recession in2009, we closed down three manufacturing facilities in England, Brazil and Costa-Rica. Seven facilities at Europe and Latin America are still operational where critical products are being manufactured while conventional products are being outsourced from low cost countries like China and India.
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5. 'Information Technology - a business enabler'-
Havells innovative IT tools enabled the channel partners and business managers to work ahead of competition.
IT Applications has been deployed in India for basic business functions of sales, purchase, production, planning, accounting, research, development and designing through SAP, to implement best business practices with maximum possible automation thereby increasing employees' efficiency & productivity. As a step further we deployed IT support to the channel partners and customers by providing online sales order booking, viewing delivery, billing & order status in order to empower them by making them self sufficient, increase their awareness and level of transparency and thereby strengthening the bond.
Havells is one of the few companies in India to start 'Mobility' extending all field sales staff related applications in SAP to Blackberry to help sales staff in giving prompt response to dealers for any of the queries.
Milestones
2011 : Launch of Domestic Appliances
Set up of new Industrial Switchgear Plant in Sahibabad
Launch of new range of Control Gear Cosmic Star series
2010 : Launch of Havells brand in US & Mexico
Sets up 2nd unit for Fan manufacturing at Haridwar.
Acquired 100% interest in Standard Electricals
Sets up World's First New Generation CMH Lamp Plant at Neemrana.
Enter into Electric Water Heaters business.
2009 : Set up of fully automatic 2nd unit for switchgear manufacturing at Baddi.
Global consolidation of CFL manufacturing plant at Neemrana for domestic and export purposes.
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Launch of India's 1st HPF CFL
Launch of India's 1st BEE 5* Rated Fan
2008 : First Indian CFL manufacturers to have adopted RoHS, European norms on Restriction of Hazardous Substances in CFLs.
Set up of Global Corporate office, QRG Towers at Expressway Noida
investment of Rs.50 Crores in Global Center for Research and Innovation (CRI)
Set up of fully automatic plant for Havells Lafert Motors at Neemrana
Change in Corporate BRAND identity
2007 : Set-up of Capacitor manufacturing plant in Noida, UP with the capacity of 6, 00,000 kVAr per month.
Acquired the Lighting business of a Frankfurt based company "Sylvania", a global leader in lighting business and now the company's turnover crosses US$ 1 Billion.
Warburg Pincus, a global private equity firm and one of the largest investors in India, invested US $110 million in Havells India Ltd. Havells issued fresh shares to Warburg Pincus, representing approximately 11.2% of the fully diluted share capital of the company.
QRG Group entered healthcare business by acquiring a majority stake in Central Hospital and Research Centre, Faridabad.
2006 : Crabtree India merged with Havells India.
Added CFL production unit in Haridwar manufacturing plant.
Expansion at Alwar manufacturing plant for increase of production capacity.
Expansion at Baddi manufacturing plant and set-up of an Export Oriented Unit.
First Company to get the ISI Certification for complete range of CFLs.
Started mid-day meal program at Alwar, Rajasthan caters to 10,000 students from 77 schools.
2005 : Set up manufacturing plant in Haridwar, Uttaranchal for manufacturing Fans.
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Awarded the KEMA certification by The Dutch Council for Accreditation, making QRG the only group to attain this certification.
Set up of R&D Center in Noida H.O.
2004 : Set up manufacturing plant at Baddi , HP for manufacturing of Domestic Switchgear.
Set up a manufacturing plant for manufacturing of CFL at existing manufacturing plant in Faridabad, Haryan.
Set up a manufacturing plant for manufacturing of Ceiling Fans at Noida, UP.
Set-up our own marketing office in London through our wholly owned subsidiary company Havells U.K. Ltd.
In December, 2004 placed 235 fully convertible debentures of Rs. 10 Lacs on M/s. Shine Ltd., Mauritius and the debenture will be converted in June, 2006.
Attained the CE certificate for CFL.
2003 : Launch of Fans, CFL and Lighting
2002 : Standard Electrical Company becomes a 100% Subsidiary of the company.
Attained the IEC certification for Industrial switchgear and CSA certification for all manufacturing plants.
2001 : Acquired business of Havells Industries Ltd, MCCB of Crabtree India Limited and merged ECS Limited in the company to consolidate its area of core competence.
2000 : Acquired controlling stake in Duke Arnics Electronics (P) Limited engaged in manufacturing of Electronic Meters-Single Phase, Three Phase, Multi Function, Tri Vectors.
Acquired controlling interest in an industry major-Standard Electricals Ltd.
1998 : Introduced high-end Ferraris Meters in Joint Venture with DZG, Germany.
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1997 : Acquired Electric Control & Switchboards at NOIDA, UP for manufacturing customized packaged solutions.
1993 : Set up another manufacturing plant at Faridabad, Haryana for Control Gear Products.
1990 : Set up a manufacturing plant at Sahibabad, UP for Changeover Switches.
1987 : Started manufacturing MCBs at Badli, Delhi in Joint Venture with Geyer, Germany.
1983 : Acquired Towers and Transformers Ltd. and turned it into a profitably manufacturing Energy Meters Company in 1 year.
1980 : Started manufacturing high quality Energy Meters at Tilak Nagar, Delhi.
1979 : Set up a manufacturing plant for HBC Fuses at Badli, Delhi.
1976 : Set up the first manufacturing plant for Re -wireable Switches and Changeover Switches at Kirti Nagar, Delhi.
1971 : Bought HAVELLS brand
1958 : Commenced trading operations in Delhi.
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Corporate GovernanceThe QRG Group defines corporate governance strategically, which encompasses not only what we do as a company with our profits, but also how we make them. It goes beyond philanthropy and compliance and addresses how our company manages its economic, social, and environmental impacts, as well as its relationships in all key spheres of influence: the workplace, the marketplace, the supply chain, the community, and the public policy realm.
We as a company have been in lead in offering a portfolio of eco responsible products and services that deliver powerful, sustainable, energy-efficient solutions that don't compromise on capacity and security. Our eco responsibility initiative also focuses on how we run our business, and includes efforts to develop an alternative-energy strategy, and thus reduce the environmental impact of our operations. We strive to bring corporate responsibility to every aspect of our business. We're committed to managing a
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responsible and diverse supply chain that's consistent with our high standards for environmental and business practices.
Breaking down the barriers that constrain innovation is a challenge; we have readily embraced right from the start. Our ability to build communities and promote the exchange of ideas through assistive technologies, participation programs, and standardization is transforming the way people experience our products. We offer our customers holistic energy-efficient solutions, enabling them to not only save money and protect their capital investment, but also lower their energy usage and protect the environment, thus fulfilling our CSR responsibility of sustenance of depleting environmental resources.
Corporate Governance and EthicsAn implicit sense of ethical business conduct has been the cornerstone of the QRG way on corporate governance. On issues ranging from customer care and business excellence to financial propriety and more, explicit rules and regulations supplement the traditional values on which our group companies have been shaped. This is what we have endeavored to do in the 50 years of our existence. Our values of understanding, trust, integrity and ethics have served us in good stead.
Corporate governance as practiced by our Group translates into being fair and civic-minded, fulfilling our duties to the entire spectrum of stakeholders, and, most importantly, making integrity an article of faith across all our operations. The group's adherence to ethical business conduct is rooted in the vision of its Founder Mr Qimat Rai Gupta. We started on sound and straightforward business principles, considering the interests of our shareholders and welfare of our employees as foundation of our long term success.
The 'leadership with trust' philosophy that has come to play such a vital role in how our customers perceive us is all the more remarkable given the climate of unparalleled public distrust of people in positions of authority today both in business and politics
Employee RelationsOur people are the key to our success. Their skills, knowledge, ideas and enthusiasm drive our business. We have high-quality, diverse workforce and employees who fulfill their potential. We have achieved
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this by giving them development and advancement opportunities along with competitive compensation and benefits that appropriately reward performance
We communicate widely with employees to demonstrate how their efforts contribute to our success and to listen to their concerns. We also encourage them to align with our vision. We are committed to open communications and a workplace where everyone's voice is heard.
We use several channels to communicate with employees, including an internal web portal and company website along with communication sessions with the top management of the company. These sessions provide assessment of employee satisfaction and are inputs for business planning, management decision-making and company strategy development. They also help employees implement company policies, meet high standards of conduct and ensure their behavior reflects company values and policies.
We seek to meet leading health, safety and wellness standards to enhance our business performance while optimizing employee health. Our facility policies are designed to continually reduce the risk of occupational injury and illness while promoting employee health and well-being. We wish to be a company that is known for its leadership in corporate ethics and responsibility. A company where employees are proud to work, and customers, partners and suppliers want to do business with.
Financial performance
In the financial year 2010-11, Havells emerged from the economic downturn as a more focused and agile company. The profit margins climbed above the prior-year levels and strong increase in cash flow generation.
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1. Havells India Performance - stand alone
The Indian business represented through Havells India demonstrated strong growth momentum in revenue and particularly strong traction in the domestic segment. Despite the increased cost, we have been able to maintain the margins at desired level. The profit margins corrected in comparison to last year due to base effect of low raw material cost.
During financial year 2010-11 net revenue grew by 22% to Rs. 2,882 crores from Rs. 2,371 crores in financial year 2009-10. The earnings before interest, depreciation and tax were up by 10% from Rs.305 crores in financial year 2009-10 to Rs. 337 crores in financial year 2010-11. Profit after tax was up by 6% from Rs. 228 crores in financial year 2009-10 to Rs. 242 crores in financial year 2010-11.
1.1 Revenue analysis - segment performance; The results achieved by major business segments of the Company are as given below:
Segment wise Revenue analysis
Year 2009-10 Year 2010-11
In crores of rupees Net Revenue % to total Net Revenue % to total Growth %
Switchgears 673 28% 734 26% 9%
Cable & Wires 984 41% 1,232 43% 25%
Lighting & Fixtures 349 15% 445 15% 27%
Electrical Consumer Durables 334 15% 469 16% 40%
Others 31 1% 2
Total 2,371 100% 2,882 100% 22%
• Switchgears division registered net revenue of Rs. 628 crores in domestic market during financial year 2010-11 as compared to Rs. 522 crores registered in the last financial year 2009-10, registering a growth of 20%. The export revenue in Switchgears division has dropped to Rs. 106 crores during financial year 2010-11 as compared to Rs. 151crores in last financial year 2009-10. The drop in export is mainly due to closure of OEM contract with UK based company. Havells is now planning to launch switchgears in the international market.
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• Strong growth momentum has been build up in Lighting and Electrical Consumer Durables segments. The divisions have highest direct consumer interaction as compared to other segments. With the structural shift in the consumer preference, the division's performance continues to be robust. We had launched Electrical Water Heater under Electrical Consumer Durables segment in September 2010 which registered net revenue of Rs22 crores in the financial year 2010-11.
2. Sylvania performance - stand alone
The International business represented through Sylvania has been successful turned around during financial year 2010-11. The net revenue grew by 9% from Euro 413 million in financial year 2009-10 to Euro 450 million during financial year 2010-11.
2.1 Operating performance highlights in Euro currency
In millions of Euro Year Year
2009-10 2010-11
Net Revenue 412.8 449.4
Earnings before depreciation, interest, tax and amortization 7.1 26.0
Pension (liabilities)/ benefits (7.7) 5.4
Less: Depreciation 8.8 8.3
Less: Interest 12.1 11.0
Add: Other income 1.0 1.1
Less: Exceptional cost 43.6* 0.6
Profit before tax (64.1) 12.6
Less: Tax 4.9 5.6
Profit after tax (69.0) 7.0
*Exceptional cost during financial year 2009-10 has been adjusted with business reconstruction reserve in the audited consolidated balance sheet of the Company
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The EBIDTA during financial year 2010-11 would have been Euro 31.4 million including pension benefits of Euro 5.4 million and Euro (0.6) million for the financial year 2009-10including pension liabilities of Euro 7.7 million
2.2 Geographical revenue mix
Within the constraint of still weaker economy of Europe, Sylvania earmarked a strong turnaround in its profitability at Europe. Following a strong rebound in Latin American countries, Sylvania earmarked a strong year of growth, higher profitability and healthier brand recognition. During the financial year 2010-11, Europe contribution to the net revenue was 63% as compared to 71% in 2009-10 due to stable revenue in Europe and increased revenue in other part of the world. In Americas region which primarily includes Latin American countries, the net revenue registered a growth of 35%.
Net revenue breakup on regional basis
In millions of Euro Net Revenue EBIDTA EBIDTA %
2009-10 2010-11 2009-10 2010-11 2009-10 2010-11
Europe 286.2 280.6 (4.0) 13.9 — 4.9%
Americas 107.7 145.0 9.5 13.2 8.8% 9.1%
Asia 13.5 19.4 1.0 1.3 7.4% 6.7%
Others 5.4 4.4 0.6 (2.4) — —
Total 412.8 449.4 7.1 26.0 1.7% 5.8%
The improvement in operating margin in Europe is largely attributable to completion of restructuring plans and benefits accruing thereon during financial year 2010-11 along with benefits of other operating efficiencies. The margin improvement in Americas was led by revenue growth and operational efficiencies.
Opportunities & Threats
Opportunities in the Indian market: In India we have been focusing on the increasing distribution network and product basket. With large population, increasing urbanization and disposable income, the industry in which we operate provide sustainable growth on a longer term basis.
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Opportunities in the international market: Robust growth of emerging economies provides large opportunities to Havells. We are a well established Company in these economies and will continue to focus on the growth, new product launches and increasing distribution strength. In other mature economies, the market trend is changing favorably. Havells strategy is to get higher profitability and stable cash flow generations in these markets.
Threats
Slow down: A slowdown of the World Economy mainly European economy is quite possible for the short term due to current global developments. Due to the strong linkage of the manufacturing industry to the economy, such an event would adversely impact growth in the short term for the Company.
Competition: Competition whether domestic or international has always been taken as a challenge. Transforming challenges into opportunities has been a practice at Havells.
Cost of Raw material: Metal being a major raw material and its volatility may affect our profit margins. Havells had adopted various measures to minimize the effect of escalating prices of raw material.
Foreign Exchange: The business includes foreign currency risk due to outsourcing from low cost countries and selling in other geographies. As it has been the market practice followed by other major competitors and all companies working on a global platform, the market absorption of the change is natural.
Entering into new markets or new products:
As discussed we have been planning to enter into new geographies which will have its own challenges. We are also planning to launch new products which may need new policies. The new initiatives will bring new challenges in near future. We believe that we have sufficient management bandwidth to pass through these cycles with past experiences.
Risk Management
Our risk management policy is based on a philosophy of pursuing sustainable growth and creating economic value while avoiding and managing inappropriate risks. We view' Enterprise Risk Management' as a process, which helps in managing the business risks in more proactive & systematic way and helps in identification of risks by managing the same to achieve the business goal. Risk management is an integral part of how we plan and execute our business strategies.
The Company has established an Enterprise Risk Management (ERM) framework to optimally identify and manages risks as well as to address Strategic, Operational, and Financial and Compliance risks. This is in line with the company's commitment to deliver sustainable value to all its stakeholders. This framework aims to provide an integrated and organized approach for evaluating and managing the risks.
Our ERM approach is based on the worldwide accepted "Enterprise Risk Management -Integrated Framework" developed by the "Committee of Sponsoring Organizations of the Tread way Commission"
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(COSO). Risk management at Havells is based on a comprehensive, interactive and management-oriented Enterprise Risk Management (ERM) approach that is integrated into the organization which addresses both risks and opportunities. ERM process is connected with company's financial reporting process and is closely integrated into the internal control system. We consider company's strategy, effective & efficient utilization of its resources and reliability of financial reporting as well as statutory compliance to be equally important.
The output of the periodical Risk Assessment is also used as an input to company's Annual Internal Audit Program, which is approved by Audit Committee &Board. Business risk evaluation and management is an on-going process within the Company.
Risk Management & Internal Control system
The Company's Internal Control Process has been designed to achieve its objectives to permissible limits through the effective function and combination of its basic elements.
The Audit Committee adopted an objective driven process designed to extract strategic, operational, process and compliance risks. The process will give assurance to all stakeholders that all aspects of risk, within the context of the Company, are covered and managed in a substantive, controlled and methodical manner. It concerns itself with the Company's risk monitoring system and oversees the effectiveness of the internal control system, in particular as it relates to financial reporting, the risk management and control system.
Audit Committee meet quarterly in line with clause 49 of listing agreement of SEBI& in accordance with section 292A of the Companies Act, 1956 to review the Business Performance and to address weakness in the business control infrastructure as reported by internal and statutory auditors or revealed by self-assessment of management, and to take corrective action where necessary.
Risk Categorization & Mitigation Program
A structured risk management process encourages management to take risks in controlled manner. In order to provide a comprehensive view of Havells business activities, risk are identified in a structured way by combining elements of a top-down and bottom-up approach. Risks are reported on a regular basis as part of the "Business Performance Management" process. The bottom -up approach is supported by workshop conducted by the respective management at Branch, Factory and Corporate function level, whereas the top-down approach ensure that potential risks and opportunities are discussed on management level and are included in the subsequent reporting process.
This is supported by monthly "Strategic Business Unit" review meeting attended by cross functional team members. In these meetings business performance is reviewed & key issues are discussed for improvements/ preventive measures and necessary guidelines are provided by the Top Management to the respective SBU Team. Having assessed relevant risks, management determines how it will respond,
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after reviewing the likelihood and impact, evaluating costs and benefits, and selecting options that bring residual (remaining risk) within the entity's risk tolerances.
Three years ago, the Company management initiated activities for "Identification of Key Business Risks & preparation of their mitigation plan" for managing the risks in consultation with Ernst & Young (E &Y). Out of thirteen KEY risks identified in consultation with (E & Y), Company prepared mitigation plan for nine risks and balance four are expected to be completed before financial year 2011-12.
The Company has a structured risk management process to address different risk categories: Strategic, Operational, Financial and Regulatory risks. The Company has reviewed the existing policies & procedures across all business verticals and developed "Standard Operating Procedures (SOPs)" including best business practices in the industries. To ensure its effective implementation Risk Management &Governance Team has been
– Conducting a Workshop with each department
– Developed a Control register mentioning the key activities with defined responsibilities & periodicity for its review, which will facilitate the process owner& their functional Head for their self-monitoring and effective implementation of SOPs.
The management has introduced a specific risk based internal audit program in line with International Best Practices for the financial year 2011-12. These steps will facilitate to have enhanced control & uniformity across the organization.
Material Developments in Human Resources / Industrial relations
The concept of industrial relations has a very wide meaning and connotation in Havells India. It means that the employer, employee relationship confines itself to the relationship that emerges out of the day to day association of the management and the employee. Industrial relations include the relationship between an employee and an employer in the course of running of an industry and may project it to spheres, which may transgress to the areas of quality control, marketing, price fixation and disposition of profits among others.
At Havells the team shares a common vision of achieving excellence in every sphere of business. Our 'Code of Conduct' clearly defines our ethics for performance, behavior at work and our relationships. To promote competent and conducive working environment Company follows following set of practices:
– A flat organization;
– Competency mapping at the time of joining to ensure that the right person does the right job thus enhancing the productivity:
– Open to ideas, suggestions and communications for accelerated decision making;
– Recognition and rewards for performers.
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Company Snap Shot
Key Executives:
Qimat Rai Gupta, Chairman & Managing Director
Anil Gupta, Joint Managing Director
Surjit Gupta, Director
Rajesh Gupta, Director (Finance)
Company Head Office / Quarters:
1/7 Ram Kishore Road,Civil Lines,
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Delhi,Delhi-110054Phone : 91-11-23935237/23944469-72Fax : 91-11-23921500E-mail : [email protected] : http://www.havells.com
Registrars:
MCS LtdF-65 1st FloorOkhla Industrial ArePhase-INew Delhi-110020
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RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research problem. The research methodology included various methods and techniques for conducting a research.
“Marketing Research is a systematic design, collection, analysis, and reporting of data and finding relevant solution to a specific marketing situation or problem.”
Sciences define research as “the manipulation of things, concepts or symbols for the purpose of generalizing to extend, correct or verify knowledge, whether that knowledge aids in construction of theory or in practice of an art.”
Research is thus, an original contribution to the existing stock of knowledge marketing for its advancement, the purpose of research is to discover answers to the questions through the application of scientific procedure. My research project has a specified framework for collecting the data in an effective manner. Such framework is called “Research Design”. The research process which was followed by me consisted following steps.
4.1) Defining the problem & Research Objectives
It is said, “A problem well defined is half solved”. The step is to define the project under study and deciding the research objective. The definition of problem includes Brand
Awareness & Preference Regarding Havells GREEN CFL
4.2) Developing the Research Plan:
The second stage of research calls for developing the efficient plan for gathering the needed information. Designing a research plan calls for decision on the data sources, research approach, research instruments, sampling plan and contacts methods. The research is descriptive in nature and is aimed at analyzing the brand awareness & preference regarding Havells GREEN CFL
The development of Research plan has the following Steps:
a.) Data Sources
Two types of data were taken into consideration i.e. Primary data and Secondary data. My major emphasis was on gathering the primary data. The secondary data has been used to make things more clear.
i. Primary Data: Direct collection of data from the source of information, including personal interviewing, survey etc.
ii. Secondary Data: Indirect collection of data from sources containing past or recent information like, Annual Publications, Books, Newspaper and Magazines etc.
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4.3.) Research Approach
Surveys are best suited for Descriptive Research. Surveys are undertaken to learn about people’s knowledge, beliefs, preferences, satisfactions and so on and to measure these magnitudes in the general public. Therefore I have done this Survey for the Descriptive Research Process.
4.4.) Research instrument
A close friend questionnaire was constructed for my survey. A Questionnaire consisting of a set of questions was presented to respondents for their answers.
a.) Sampling Plan
The sampling plan calls for three decisions.
i. Sampling unit: Who is to be surveyed?
The target population must be defined that has to be sampled. It is necessary so as to develop a sampling frame so that everyone in the target population has an equal chance of being sampled. The sampling unit of this project was Bangalore.
ii. Sample Size:
How many people have to be surveyed?
Generally large sample gives more reliable results than small samples. The sample consisted of 100 respondents. The sample was drawn from 50 retailers and 50 end user’s customers’ people having different educational qualifications, occupations and age group. The selection of the respondents was done on the basis of simple random sampling. The sample was drawn from people having different educational qualifications, occupation and age groups.
iii. Contact Methods
Once the sampling plan has been determined, the question is how the subject shouldbe contracted i.e. by telephone, mail or personal interview. Here in this survey, I have contacted the respondents through personal interviews.
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Collecting the information
The collection of data is a tedious task. For conducting any sort of research data was needed. So for my research, there was plenty of primary data and for increasing the validity of information collected, some books, journals, pamphlets, information about the company were studied and taken into considerations. After this, I have collected the information from the respondents with the help of questionnaire.
a.) Collection of Primary Data:
Primary Data is the data collected from the original source. In my survey and study, there was optimum availability of primary data because every aspect was witnesses carefully at each point. Questionnaire and personal interviews were the main instruments, which were used for collecting primary data.
b.) Collection of Secondary Data:
Secondary Data is the one which has already been collected by someone else and some other person is using that information. The source of secondary data was, some related books and websites related to the company. The competent staff of the company helped me a lot in providing information about the company.
Analyze the Information
The next step is to extract the pertinent findings from the collected data. I have tabulated the collected data and developed frequency distributions. Thus the whole data was grouped aspect wise and was presented in tabular form. Thus, frequencies and percentages were prepared to render impact of the study.
4.7.) Presentation of findings:
This is the last and important step in the research process. The findings are presented in the form of graphs, pie charts, conclusions, suggestions and recommendations after data analysis.
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35
CHAPTER- 5
DATA ANALYSIS
AND
INTERPRETATION
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1. Do you sell CFL?
Response No of respondentYes 87No 13
Table No.1
yes
no
0 10 20 30 40 50 60 70 80 90 100
No of respondents
No of respondents
2. How many brand of CFL you sell?
Table No.2
one two three four more than four
0
5
10
15
20
25
no of respondent
Response No of respondentOne 1Two 7
Three -22 22Four -20 20
More Than Four 4 4
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Inference The above chart shows that 22 retailer sell three type of brand of CFL 20
retailers sell four type brand,7 retailers sell only two type, 4 retailers sell more than
four brands of CFL only one retailer sell one brand of CFL.
3. Which brand of CFL frequently sells at your counter?
Response No of respondentHavells 5Philips 29
Crompton 13Any Other 7
Table No.3
Havells Philips Crompton Any other0
5
10
15
20
25
30
No. of respondents
Inference According to this chart 54% retailer sell Philips, 24% sell Crompton, 13%
sell other brand of CFL. Only 9% retailer sells Havells at their counter. Thus we
conclude that few retailer sell Havells CFL at their counter.
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4. What do you feel about service of the Havells Company?
Table No.4
very good
good
average
poor
verybad
0 2 4 6 8 10 12 14 16 18 20
Column2Column1Series 1
Inference 13% retailers of my survey feel service of Havells company if very good,
37% feel service is good, 24% feel average about the service of the company, 20%
feel service is bad and 6% retailers feel service of company is very bad. So majority
of retailers are happy with the service of the company.
Response No of respondentVery Good 7
Good 20Average 13
Poor 11Very Bad 3
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5. Do you agree with the price of Havells GREEN CFL is competitive?
Response No of respondentStrongly Agree 10 10
Agree 28 28Disagree 14 14
Strongly Disagree 2 2Can’t Say 00 0
Table No.5
strongly agree
agree
disagree
strongly disagree
can’t say
0 5 10 15 20 25 30
Series 1
Series 1
6. How effective the promotional activities of Havells Company?
Table No.6
Response No of respondentVery Good 15
Good 19Average 11
Poor 7Very Bad 2
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no of respondents
very goodgoodaveragepoorverybad
7. In your opinion the new adjustment policy of GREEN CFL in the form
of 7% less in bill is…………..
Response No of respondentUseful 0
Useful to some extent 5Wasteful Efforts 48
Can’t Say 1Table No.7
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Useful
Useful to some extent
wasteful efforts
can't say
0 5 10 15 20 25 30 35 40 45 50
No. of respondent
No. of respondent
Inference: The new policy related to GREEN CFL is a wasteful effort of the Company according to the 48 retailers out of 54. Because retailer want guaranteed product for selling.
8. What type of products do you want to sell?
Response No of respondentsQuality Products 15
Guarantee Products 35Any Other 0
Table No.8
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Quality Products
Guarantee products
Any Other
0 5 10 15 20 25 30 35
No. of respondent
No. of respondent
Inference From the above chart we conclude that most of the retailer wants to sell
guarantee product. Only 28% retailer prefer to sell Quality product because of they
avoid the risk as far as possible.
9. Availability of Havells GREEN CFL in the market………….
Table No.9
Response No of respondentAlways Available 48
Occasionally Available 6Always Unavailable 0
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Alway
s Ava
ilable
Occasio
nally A
vaila
ble
Alway
s Unav
ailab
le0
5
10
15
20
25
30
35
40
45
50
No. of respondents
Inference:- 89% retailer assume that the GREEN CFL easily available when they need.
Customer Profile
1. How did you get to know about Havells GREEN CFL?
Response No of respondentPeer Groups 15
Family Member 10Media 23
Any Other 2Table No.11
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Peer Groups
Family Member
Media
Any other
0 5 10 15 20 25
No. of respondents
Inference:- 23 consumer out of 50 get to know about Havells GREEN CFL by media.
Than 16 consumer get to know by peer group and 10 consumers know GREEN CFL by
family member. In this way media is best way to aware the people regarding GREEN
CFL.
2. In your opinion the most influential media to advertise is…………..
Table No.11
Response No of respondentNewspaper 12Television 26
Radio 8Any Other 4
45
very good
good
average
poor
verybad
0 2 4 6 8 10 12 14 16 18 20
Series 1
Inference:- 26 respondents think that television is most influential media for
Advertisement. Newspaper is influential according to the 12 consumer. Than radio is
influence the people.
3. The quality of Havells GREEN CFL is……………
Table No.12
Response No of respondentVery Good 8
Good 25Average 15
Poor 2Very Bad 1
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very good
good
average
poor
verybad
0 5 10 15 20 25
Series 1
Inference:- The quality of GREEN CFL is good and consumer also assume that
quality of Havells CFL is very good (8 consumer). 25 consumers said that quality is
good. 15 consumer think quality is average. Only 3 consumers said quality is bad or
very bad.
4. The price of Havells GREEN CFL……………………
Response No of respondentVery High 15
High 28Normal 7
Low 0Very Low 0
Table No.13
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very high
high
normal
low
verylow
0 5 10 15 20 25 30
no. of respondent
Inference:- From the above table 30% think price of GREEN CFL is very high and 56%
said price is high. Only 14% said price is normal.
5. In your opinion the brand image of Havells GREEN CFL is………
Table No.14
Response No of respondentVery Good 14
Good 22Average 11
Bad 3
48
very good
good
average
bad
0 5 10 15 20 25
no. of respondents
Inference:- From the above table we conclude that 44% of the customers are rating
good and 28% are rating very good so that Havells have good brand image in the market.
6. Reasons for your preference for Havells GREEN CFL………….
Response No of respondentPrice 4
Quality 15Safety 9
Brand Image 22Any Other 0
Table No.15
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price
quality
safety
Brand Image
verybad
0 5 10 15 20 25
no. of respondent
Inference:- From the above table we conclude that 44% respondent prefer Havells CFL
for its brand image and 30% are for its good quality.
7. with the increase in the price of GREEN CFL (For meeting increased
Cost of production) your purchase behavior will………….
Table No.16
Response No of respondentNever Change 7
Change to Some Extent 12Totally Change 28
Can’t Say 3
50
never change
change to some extent
Totally change
can't say
0 5 10 15 20 25 30
No of the respondent
Inference:- From the above table we conclude that 56% of the respondent change there
decision dew to change in the price so consumer behavior is highly influenced by change
in price.
8. Factors for purchasing Havells GREEN CFL on higher price:
Table No.17
Response No of respondentSave Electricity 2
Durability 0Brand Image 4Eco Friendly 1Any Other 0
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save electricity Durability Brand Image Eco Friendly any other0
1
2
3
4
5
6
No. of respondents
Inference:- From the above table we conclude that most of the consumer purchase
Havells CFL on higher price because of its brand image.
9. In your opinion what is more important ………………
Table No.18
Response No of respondentQuality 11
Price 10Guarantee 26Any Other 3
52
quality
price
guarentee
Any Other
0 5 10 15 20 25 30
Series 1
Inference:- From the above table we conclude that guarantee and quality are main factor
while purchasing.
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CHAPTER 6
RECOMMENDATIONS
&
SUGGESTIONS
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Recommendations and Suggestions
1) More local/ regional advertisements should be there to make people aware about Havells and its products
2) There should be more advertisement on the World Wide Web also.
3) Campaigning should be done at all level.
4) Business Development Officers should contact Architects and Customers on regular basis.
5) More flexible discount schemes should be provided
6) Product catalogues and price lists should be provided to the customers on regular basis.
7) Increase the percentage rate of ADJUSTMENT POLICY. Or start guarantee.
8) Improve the behavior of sales person of the company as well as distributor. (6% of respondent).
9) Company should further reduce its price.
10) Fulfill all the commitments which are made by company or distributor.
11) There is more need in improvement of quality of Green CFL so that it decreases the rate of replacement.
12) The adjustment policy’s rate is not enough because replacement rate is 15% to
20%.
13) If company backs out any scheme, then it should give some time to the retailer.
14) Provide updated information and knowledge to the retailers about the product.
15) Provide equal Price to all the retailers.
16) Company should compromise with dealer according to the circumstances.
17) Company should improve its grievance handling system
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