High raw material prices hurt Havells in Sept quarter as company looks at rural market gains | Earnings Interview

Havells India has been unable to pass on full raw material price rise to its consumers, Anil Rai Gupta, CMD of the company told CNBC-TV18, after the company posted a weak set for its second-quarter (Q2FY23) earnings.

Havells reported a sharp decline in the margin with revenue growth at 14 percent against a 3-year average of 18 percent. The margins have been impacted due to the absorption of high-cost inventory costs.

 

“In Q2, it was almost like a perfect storm where we had high raw material contain products. The prices are now softening, which actually means the ability to pass on to the market. It was high-cost inventory at low sale prices.”

While talking about other verticals, Rai said that electrical consumer durables revenue growth is likely to be slow in the current quarter (Q3FY23).

The company is focusing on tier-2 and tier-3 cities. “We are quite hopeful about the growth in the tier two-tier three towns as well as rural India and we will continue to see this growth in the coming times,” said Rai Gupta.

Rural markets contribute only 5-6 percent to Havell's consumer business but if tier-two and tier-three towns are included, more than 50 percent of the business comes from the non-metros and non-tier-one cities.

"Rural India continues to give very good opportunities. We continue to expand our footprint in these areas,” he added.