Education and healthcare are future areas of growth

Written by Saikat Neogi | Updated: Dec 13 2009, 02:34am hrs
Even at the age of 72, Qimat Rai Gupta strives to seek new challenges. After building Havells into a formidable company and acquiring and turning around Sylvania, the veteran businessman has now set his sight on healthcare and education business. In an interview to FEs Saikat Neogi, he elucidates how he turned the fortune of the company from scratch to a Rs 5,500-crore entity, lessons learnt from the slowdown and the road ahead. Excerpts:

You started as a trader. How did you build a brand like Havells

I was marketing Havells products in India and during the process bought the goodwill of the company. At that point of time I realised that if we buy the company, we will be able to make it a big brand in the domestic market. So, I bought Havells in 1971.

What was the road map you had in mind to turn around the company

At that point of time I just had a mental roadmap. But with the passage of time, things started developing. When we took over Havells, it was not a respected brand and there was no acceptability of the product amongst customers, government agencies and other bodies.

But for us, it was an opportunity to build our future business. I put up a factory in 1975 and subsequently added a few more. The main focus was on marketing and it took us almost 15 years to build the brand.

There were a plenty of roadblocks in arranging funds and in starting the manufacturing facilities. At that time our competitors were foreign companies like Larsen & Toubro, Siemens and Crompton. These were global brands and we also wanted to make Havells a global brand by first making it strong in the domestic market.

When did you start to look at going in for foreign and technical collaborations

In the 1980s we were looking for foreign collaborations and joint ventures to get technology for the latest electric products. So, from 1980s to mid- 1990s, we were setting up factories across the country and engaging in collaborations. Foreign competition increased in India 1995 onwards and we shifted our focus to get into world class R&D because by that time brand building and distribution channels were in place. Over the last 10 years, we have been investing between Rs 150 and Rs 200 crore every year in capital expenditure. As all old plants sold in the seventies were running on old technology, we had to focus on R&D. Once that was done, we started looking at the international markets to expand our business.

What is your growth target in the next couple of years and how do you plan to go about it

A far as our future growth is concerned we are aiming a total group turnover of Rs 5,500 crore now to Rs 10,000 crore in another two years. The steps to achieve this target have already been rolled out and our base in the domestic market is very strong. For example, in industrial switchgears, our market share is around 8% and in domestic switchgears our market share is around 10%. We are number one in residential switchgears and in most other categories, our market share is around 10-15%. In the last five years, we have started looking at the export markets. We started looking for acquisitions abroad as we realised that going the organic way globally was a very slow process. It is also a very tedious process to set up a distribution channel abroad and it takes years to yield results. Thats why we acquired Sylvania, a 100-year-old global company with revenues of over 400 million Euros then.

After you acquired Sylvania in 2007, how did you restructure the management

Initially, we left the management to an old team, which we now admit was a great mistake on our part.

At that point of time, we were fully caught up with Havells as we were concentrating on the domestic market. When the recession hit, we realised that it was important to integrate the company faster and we took direct control. In the last one year, we have made tremendous changes to turn around the company. Today, everything in Sylvania has been settled and we are confident that we will make it a profitable company as early as possible. Even though we have reduced our manpower in Sylvania, our sales have not been affected.

How do you plan to expand your foreign market

Now our focus is to consolidate the operations of Sylvania. Our aim is to grow organically within Sylvania in markets like China, Far East, Africa and East Europe and introduce more and more products. We are also looking at the possibility of launching Sylvania in India within a year.

What are the key lessons that you have learnt from the recession

The idea is to keep changing with the times and modernise accordingly. Before the recession, we were focusing on growth. During the recession we focused on survival. The recession has taught us a lesson to keep our eyes focused on profits.

Are you also planning to expand your business in some non -core areas

We have entered the healthcare business by acquiring Central Hospital and Research Centre, which is a 140-bed super specialty hospital in Faridabad. We are also planning to venture into the education sector. These are the two important sectors for future growth in the country.