Post-Graduate Program, 2020-22

Supply Chain Management

SUBMISSION OF
Comparison between Havells India and Crompton Greaves
By
Group 12 – Section A

Soumi Dasgupta – P20011

Shreevathsa Ballakkuraya P20100
Shubhanker Goswami – P20132
Dinesh Reddy – P20216

On
03 – September- 2021
Fast Moving Electrical Goods (FMEG) industry
Industry Overview:
Fuelled by the growth of Infrastructure in Residential, Industrial and Agriculture sectors in India,
FMEG has seen significant growth over the years. Indian Electrical Industry is around $ 40 Billion
covering around 2% of India GDP in 2019. With government initiatives like smart cities and
Housing for all, FMEG industry is expected to grow. Market players in FMEG are;

• BHEL [Bharat Heavy Electricals Limited]

• Havells India Ltd
• Siemens Ltd
• ABB India Ltd
• Crompton Greaves Consumer Electrical Ltd
• Bajaj Electricals Companies
• Polycab India Ltd
• V-Guard Industries Ltd
• Finolex Cables Ltd
• Orient Electric Ltd

Havells India:
Havells India is one of the leading FMEG player in India with product offerings of Cables, Fans,
Air Conditioners, Electric Water Heaters, CFL lamps, Circuit protection devices, Modular
switches etc. Havells has a strong market presence in over 40 plus countries with more than 7500
dealer networks. They also have 12 state of art manufacturing capacities to boost their distribution
power.

Crompton Greaves Consumer Electrical Ltd:

Crompton Greaves is also one of the leading FMEG player in India with 8 manufacturing
capacities and revenue of around Rs. 4,500 crores. Their product offerings include Fans, Pumps
for Agriculture and Industrial use, lighting appliances and home appliances.
Financial measures:
Revenue:

Period Ending 2020 2019 2018 2017 2016

Total Revenue Crompton 4,570.84 4,527.17 4,135.87 4,036.16 1,815.53
Total Revenue Havells 9,541.18 10185.17 8,377.26 6,720.24 5,844.77
Net income Crompton (Excluding
494.7 402.52 323.79 283.18 105.19
Interest and taxes)
Net income Havells (Excluding
733.03 791.52 712.52 536.29 708.45
Interest and taxes)

Revenue

12,000.00

10,000.00

8,000.00

6,000.00

4,000.00

2,000.00

0.00
2020 2019 2018 2017 2016

Total Revenue Crompton Total Revenue Havells

For both companies, Revenues have increased yearly from 2016-2020, but the increase is more for
Havells (149 %). A slight decline in revenue post-2019 is due to COVID 19 effect.
Return of Equity:

Return on Equity
70.0%

60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

0.0%
2020 2019 2018 2017 2016

ROE Crompton ROE Havells

Return on Equity is decreasing significantly for Crompton between 2020 and 2016, which means
the company is not using shareholder capital efficiently to generate profits. However, total
shareholder equity is increasing for Crompton but is not efficiently utilized in Profit making.
Whereas ROE for Havells is almost constant throughout the years which signifies company is
using Shareholder’s capital efficiently in generating Profits.

Return on Assets:

Return on Assets
20.0%
18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
2020 2019 2018 2017 2016

ROA Crompton ROA Havvells

ROA for Crompton is increasing over time signifies that company is using its assets efficiently to
generate Revenue Growth or has invested in assets which are contributing to revenue growth.
Although Crompton hasn’t increased its long-term assets (Plant/equipment/ machinery),
increasing current assets is mainly due to increased inventory and other current assets.

ROA for Havells has decreased sharply from 2016-2017 but has almost remain stagnant after that
which means company is using its Assets efficiently to generate Revenues.
But both companies had increasing in Inventory Levels post 2018 which may be due to two reasons
• Increasing in sudden demand which leads to company producing more.
• Effect of COVID which lead to supply chain disruptions, less demand.

Second reason seems to be more probable as COVID has impacted FMCD industry.
Accounts Receivable Turnover:

Accounts Receivable Turnover

45.00
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
2020 2019 2018 2017 2016

ART Crompton ART Havells

Account Receivable Turnover has decreased for Havells from 2016 to 2019 and then increased
suddenly in 2020. Crompton has high delay in receiving money from sales.
Overall, ART for Havells is much higher than Crompton almost 3-4 times shows the ability of
Havells to receive money faster from its sales.
Industry ART for FMCD industry is greater than 50 hence both companies are performing below
industry level in ART parameter
Accounts Payable Turnover:

Accounts Payable Turnover

7.00

6.00

5.00

4.00

3.00

2.00

1.00

0.00
2020 2019 2018 2017 2016

APT Crompton APT Havells

APT for Havells is decreasing Havells till 2018 shows company is using money it owns to supplier
in operations, but post 2018 is increasing shows company is not able to hold money of suppliers
for longer duration. Increase in APT post 2018 is due to decrease in account payables hence
company is not able to hold money of suppliers for longer time. APT for Crompton is almost
stagnant.

Asset Turnover:

Asset Turnover
2.50

2.00

1.50

1.00

0.50

0.00
2020 2019 2018 2017 2016

Asset Turnover Cromton Asset Turnover Havells

Asset Turnover for Crompton is better than Havells which shows their ability to turn assets into
Sales quickly or they have invested in such assets which have generated high sales.
Although Industry asset turnover ratio is greater than 450 (in days) which is better than Crompton
and Havells.
PP&E Turnover:

PP&E Turnover
70.00

60.00

50.00

40.00

30.00

20.00

10.00

0.00
2020 2019 2018 2017 2016

PPET Crompton PPET Havells

PP&E turnover signifies the ratio of Plants, Properties and Equipment to sales revenue. Higher
value signifies that PP&E is low when compared to sales revenue. From the above graph, Havells
India has higher PP&E over Crompton Greaves. Due to the scale and consistent performance of
Havells India, it has been observed that PPET ratio is almost constant throughout the last five years
despite the fact that Havells has established new plants in Ghiloth in 2018.
SG&A to Revenue Ratio:

SG & A / Revenue
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
2020 2019 2018 2017 2016

SG&A/Revenue Crompton SG&A/Revenue Havells

SG&A to revenue determines the expenses when compared to the overall revenue of the firm. It is
visible from the graph that both Havells India and Crompton Greaves maintained a steady
percentage in past 5 years. However, Crompton greaves have a slightly higher ration when
compares to Havells India. This is due to the fact that Crompton Greaves is restructured in 2016
and is continuously pushing its products through extensive marketing campaigns.
Cash to Cash Cycle

Cash to Cash Cycle

20.00

10.00

0.00
2020 2019 2018 2017 2016
-10.00

-20.00

-30.00

-40.00

-50.00

C2C Crompton C2C Havells

Cash to Cash cycle is calculated by formula “Weeks in Inventory (1/INVT) +Weeks Receivable
(1/ART) - Weeks Payable (1/APT)”. Since Havells India have very high weeks receivable when
compared with Crompton Greaves, it is observed that they have positive Cash to Cash cycle.
Supply chain metrics:
Total Length of Supply Chain in Days (L):

Total Length of Supply Chain in Days (L)

250.00

200.00

150.00

100.00

50.00

0.00
2016 2017 2018 2019 2020

CG Havells

Lengths of supply chains of CG & Havells are very much alike with the values intersecting twice
in the 5 years. However, supply chain days increased significantly in 2020 possibly due to covid
for CG while it was not affected as much for Havells this is indicative of a more flexible supply-
chain for Havells.
Supply Chain Working Capital Productivity (SWC):

Supply Chain Working Capital Productivity (SWC)

140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
-20.00 2016 2017 2018 2019 2020

-40.00

CG Havells

Supply chain working capital productivity was comparable for both the companies in 2016 & 2017.
However, SCWCP significantly increased post 2017 for CG while it remained nearly constant for
Havells. 2020 remains an exception for CG again with productivity seeing a steep decline well
below zero.
Inefficiency of the Supply Chain (SCI):

Inefficiency of the Supply Chain (SCI)

0.18
0.17
0.17
0.16
0.16
0.15
0.15
0.14
0.14
0.13
2016 2017 2018 2019 2020

CG Havells

Inefficiencies of the Supply-chain, have been close to 0.16 for both the companies. Havells has
made slight improvement over the last 5 years bringing inefficiency down to 0.16 from 0.17. At
the same time, inefficiency increased for CG by the same amount with inefficiencies of both the
companies equalling in 2020
Inventory stages:

CG
500
450
400
350
300
250
200
150
100
50
0
2016 2017 2018 2019 2020
Total Inventories Raw materials Inventory
Semi-Finished Goods/WIP Finished Goods

Havells
2500

2000

1500

1000

500

0
2016 2017 2018 2019 2020

Total Inventories Raw materials Inventory

Semi-Finished Goods/WIP Finished Goods

Havells has maintained a more disciplined approach to maintaining inventories at different levels
as compared to CG which has seen multiple changes in proportions of inventories in these levels.
We can also observe that total inventory for CG is in a constant rise & that of Havells has flattened
post 2019.
Both Havells India and Crompton Greaves have taken up various initiatives to improve their
market share and boost their distribution network.
Havells India:
a. Manufacturing:
Havells India aims for One Plant - One product focus to improve the efficiency and to
generate 90% Revenue from Inhouse manufacturing. Havells India is also focussing on
quality manufacturing.

b. Channel:
360 Connect, Retailers and Electricians – Havells India is connected through almost 7500
direct, 1 lakh retailers and 2.2 lakh electricians. Large network of Retailers and Electricians
helps them to maintain focus on last mile distribution.

Havells India is also focussing for an expansion to Tier 3 and 4 cities with their distribution
capabilities.

Channel expansion:

Havells also taken an initiative in channel expansions with Galaxy and Gallery. All the
Havells products are placed under one roof in these stores to improve customer experience
and drive sales. This initiative has proven successful and driven 22% of overall revenue
for them

c. Emerging channels like E commerce:

Havells India has implemented omni channel distribution system to cater the younger
customer segment. They have launched their own E store and partnered with major E
commerce players to sell their premium products including AC, Smart TV, Refrigerators.
Acquisitions fuelling the growth for Havells India:

Llyod: Llyod is a Fast-moving Electronics goods with product portfolio of Smar Tv, AC,
Refrigerators, Washing Machines etc. Havells acquired majority stake of Llyod in May’2017 at
Rs.1600 Crores. Through Llyod, Havells aimed to cater its esteemed customer segment.

Revenue Growth YoY

30%

20%

10%

0%
2017 2018 2019 2020

-10%

Revenue
12000

10000

8000

6000

4000

2000

0
2015 2016 2017 2018 2019 2020 2021

Acquisition of Llyod helped Havells India to improve their revenues form Rs. 6000 Cr to Rs. 8000
Cr. Along with double digit organic growth, Havells India have achieved highest YoY Revenue
growth of 25% after the acquisition of Llyod in 2018. With this acquisition Havells Idia gained
strong foot hold in consumer durables market.

OEM supply contract with Hyundai Electric & Energy Systems:

Havells India signed an agreement contract with Hyundai Electric & Energy Systems to supply of
Magnetic contractors to Hyundai. To meet the demand of Hyundai, Havells India has expanded its
Sahibabad Plant. With this agreement Havells India is expected to gain additional 8% of market
share of Magnetic contractors.
Crompton Greaves:

Crompton Go to market Excellence strategy during Covid-19 was one of its kind in the industry.
Most of the FMCD industry was troubled during COVID-19. Crompton shifted its focus to cities
apart from Tier1,2 and increased market presence in untapped markets. They posted more
substantial Annual growth, even more than the industry in 2020-2021.

Crompton invested in creating a data infrastructure to improve the flow of data from top to
bottom. For example, implementing the Tally patch has benefited suppliers to track the live data
and adjust the sales and procurement to drive up sales.

With the improvement in the flow of data Crompton can now track 80% of its secondary sales.
By using WhatsApp bots and apps, retailers can directly communicate with the Crompton sales
team, enhancing the consumer experience.

With Go to market excellence approach during COVID, Crompton has targeted 359 towns with a
population of less than 1 lakh to increase its Footsteps in the untapped market. Crompton has tied
up with Microfinance institutions to help poor people in getting loans to buy their products.
Overall, we can say that Crompton does go to Market excellence approach along with the
integration of data analytics to
• Curb the COVID 19 effect.
• Find new untapped markets.
• Making the supply chain more responsive with less increment in operational costs.

Supply chain efficiency of Crompton:

• Crompton has created a vendor onboarding system. They are scoring their vendors,
transporters based on KPIs to evaluate their performance.
• They have used GST for the consolidation of warehouses, resulting in lower inventory
levels.
• To reduce the supply chain cost, they implemented ‘Project Unnati’ to reduce
operational expenditure and enhance the quality of product architecture.
• Crompton has done Backward integration in the fans department.
• ‘Project Urja’ was created to enhance the digital footprint of Crompton. In this
initiative, Crompton aims to collaborate with business partners to improve the ease of
doing business.
• In 2020-21 Crompton used the 5S Japanese technique to reduce cluttering and
hindrance in work. Crompton has implemented two steps Japanese technique in
production lines.
• Glass Wall – this dashboard is installed at Crompton production plants which shows
KPIs for production. Any inefficient process can be rectified on time. Any person can
see these KPIs in the plant.
• Quality Circles - the initiative was implemented by Crompton in 2020-21, which gives
the power to plant employees to deal with the problems/ hindrances arising at the plant
by themselves.
 Revenue
Gross profit

2020 2019 2018 2017

Looking at above graph it can be inferred that the impact of Covid 19 was countered by
Crompton by moving their business to Tier 3, 4 cities. Crompton also created the database
of areas according to Covid hot spots. Red area was most affected, amber color area was
moderately affected and green area minimally affected. Crompton targeted areas with
amber or green color to keep up its business even during covid.
Environment sustainability at Havells India:
The motto of triple bottom line performance of Havells India are:

• Living Green Ethos

• Innovating New Efficiencies
• Driving Consumer Satisfaction
Havells India adhere to the strictest ethical guidelines. Havells believe that they enhance
performance by engaging with stakeholders, evaluating progress against aspects of sustainable
growth, and honestly reporting triple bottom line performance. Havells India engage on the
road of continual self-evaluation and improvement. Sustainability vision of Havells India is:

• Reduce CO2 Emissions

• Improve Environmental Protection
• Improve Quality of Life
• Offer Profitable Solutions to Market
With the sustainability vision, Havells India is focused on delivery energy efficient solutions
which emit less CO2 emissions and are environment friendly. In order to make their product
range environment friendly, Havells India eliminated radioactive isotope Kr 85 from their
entire CMI lighting product range.
Havells India has made considerable progress in their sustainable goals. Some of the results
obtained in their journey are,

• Manufacturing 4 zero water discharge facilities

• Eliminating hazardous elements in 4 of products: CMI Lamps, Cables, Wires, LEDs
• Renewable energy initiatives like Biomass, Solar lamps
• 4 resource conservation initiatives across plants
Havells India is constantly working towards their sustainability goals and they are now offering
energy efficient solutions in 70% of their product range.
Sustainability Model:
Sustainability model of Havells India is derived to create value at each stage while achieving
sustainability goals. Sustainability model involves,
a. Strategy
b. Material Topics
c. Stakeholder value creation
d. Social Impact
e. Long Term performance
Havells India cultivates long-term connections with both internal and external stakeholders,
communicating with them on a regular basis to gain a better understanding of their
perspectives. The inclusion, materiality, and responsiveness tenets guide Havells India's
stakeholder identification and prioritization approach.
Havells India engages with its stakeholders on a regular basis through surveys, conferences,
face-to-face meetings, email/telephonic contacts, and other methods. Simultaneously, they
make certain that their ideas and criticisms are taken into account.
Pictorial representation of sustainability model of Havells India

All the efforts from Havells India have resulted in reduction of GHG emissions by 47%,
increase of recycled water to 56%, re usage of 12000 MT waste and around 6000 MWH power
consumption from renewable energy.
5R policy at Havells India:

Reduce, reuse, recycle, recover, and residual management are all part of Havells' 5Rs concept.
They were able to recycle 95% of non-hazardous trash using this method. As part of Havells
social responsibility efforts, they repurpose scrap wood from cable drums to create school
furniture and never use paper cups or throwaway water bottles, laying the path for a circular
economy to thrive.

Environment sustainability at Crompton –

Crompton launched the project Kavach to minimize the impact of its manufacturing process
on environment. It also ensured safety and well of all its employees. Even during COVID
crisis company ensured its work safety by continuous monitoring of Oxygen level,
sanitization, body temperature measurement. Crompton even went ahead to upgrade
employee’s health insurance and included COVID coverage. Few of the initiatives taken by
CG during COVID 19 are –
• Free Vaccination
• Travel policies easier so that an employee can avoid travelling in public transport.
• Top to bottom communication of CEO/employees with “Chai pe Charcha initiative”
• Use of AI for social distancing
Even company has regularly innovated its products which not only meet consumer
requirements but also are energy efficient, for which Crompton has also received National
energy consumer award NECA for the most energy efficient products.
Crompton is active believe of following triple bottom lime approach in which Environment
is also a crucial factor. Company has worked to use natural resources efficiently and
minimize its carbon footprint.
ESG committee – company has worked formulated Environment, Social, Governance
committee with a mission to promote environment sustainability, health, social
responsibility and governance. ESG supports top level management in following ways –

• Developing strategy pertaining to ESG

• Keep a cross check on the development of such strategies.
• Improving company’s understanding on ESG matters and its policies.
• Facilitating communication of EHS policies with both internal and external
stakeholders.

Environment a green pursuit – CG is moving ahead to achieve its target of zero liquid
waste discharge and reduction in harmful gas emissions.
In 2020-21 CG has been able to save 11 Lakh MWH energy by manufacturing energy
efficient products. Also, following e waste reduction of fluorescent and other mercury
containing lamps under EPR of CGCEL.

Reduction of energy consumption – Heat Loss was cured by operating plants on alternate
days and saving about 210 MWH energy.
Replacing all plants/office lightning by LED and saving 103 MWH energy in 2020-2021.
Reduction in water usage – Auto operating Taps installed in Goa plant which saved about
more than 29% water as compared to 2019-20. Also, Crompton focused on recycling water
at Goa units by installing STP which resulted in 15% more water conservation as compared
to 2019-20.
Auto Water Dispensed in Ahmednagar plant saved about 8KL per year. Minimizing the water
consumption by solving water leakage, flushing and washing problems by 10% as compared
to 2019-20.

Green Environment was promoted by planting 200+ trees in different parts of India as a
part of creating awareness and tree plantation drive.

Waste Reduction - Company followed the laws of State pollution control board by all the
hazardous waste was sent for treatment or recycle. Bethora fan manufacturing plant reduced
waste generation by 6100Kg - 5800 kg in 2020-2021.

Recommendation from presentation:

Explore why the length of supply chain is increasing for both companies? Is this industry
phenomenon?

Supply chain Length

250

200

150

100

50

0
2020 2019 2018 2017 2016

CG Havells

Competition in FMEG is increasing in each coming year not only from multi-national
companies like Siemens Ltd, ABB India Ltd but also from domestic companies like V guard
and Polycab. To penetrate and capture the FMEG market, companies are increasingly focusing
on tier 3 and tier 4 cities. Some of the companies have also exclusively opened stores trying to
capture consumers directly instead of distributors and retailers. This has led for companies to
increase not only SKU’s but also inventory levels. Hence, total length of supply chain is
increasing across the industry
Excel sheet:
https://drive.google.com/drive/folders/1jJGiJznONAKvuELmCNeCvWr4KKohrE58?usp=sh
aring

References:

1. https://iopscience.iop.org/article/10.1088/1757-
899X/691/1/012058/pdf#:~:text=1.,present%20market%20scenario%20in%20Indi
a.&
text=This%20growth%20has%20fuelled%20the,involved%20to%20grab%20mar
ket
%20shares.
2. https://www.crompton.co.in/about-us/
3. https://havells.com/en/aboutus/#gref
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20.pdf
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21.pdf
7. https://www.crompton.co.in/user-agreement/
8. https://www.indiainfoline.com/company/crompton-greaves-consumer-
electrical- ltd/management-discussions/65733
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greaves-consumer-electricals-ltd-recognized-as-one-of-indias-best-leaders-
in-times-of-crisis-202120210819182713/
10. https://www.crompton.co.in/csr/

11. https://www.havells.com/HavellsProductImages/HavellsIndia/Content/pdf/About-
Havells/Investor-
Relations/Sustanability/Reports/Havells_SustainabilityReport_2020-21.pdf
12. https://www.havells.com/en/sustainability.html