Personality of the week

The unsung billionaire: Qimat Rai Gupta

November 25, 2014 10:26 AM

Two weeks ago, Qimat Rai Gupta of Havells India passed away quietly. Born in a low-income family of Malerkotla in Punjab, he was worth almost $2 billion when he died at the age of 77 after a cardiac arrest.

Yet the businessman kept a low profile and stayed focused on his work. He created minimum fuss in life - and in death.

He always looked contended and unhurried; at times, he came across as rather taciturn. Yet he ran Havells with authority. There was never any doubt that he called the shots in the company.

He would take stock of the situation every morning in a meeting with his key executives, including his son (Anil) and nephew (Ameet). Nobody dared to skip these meetings.

His house in Civil Lines was big but not ostentatious. He travelled in simple cars, though he could easily afford the most expensive set of wheels in the world.

It’s the commonest mistake many make about the brand – that Havells is foreign in origin. They can be forgiven for thinking so. After all, the brand sounds foreign. The products look slick and finished. And the advertising is catchy and smart.

But they would be wrong. Havells is not just an Indian brand. It is purely homegrown, and arguably one of the most successful brands to have emerged from Delhi. In fact, till recently, its products were even manufactured almost entirely within Delhi city limits itself, and not in the National Capital Region, whose major manufacturing centres may lie on its borders, but actually belong to adjoining Haryana or Uttar Pradesh.

It all started in Bhagirath Place, a crowded, teeming electricals and electronics marketplace in the Chandni Chowk area of old Delhi. Qimat Rai Gupta, a schoolteacher from Malerkotla (near Jalandhar), who had moved to Delhi and set up an electricals trading business in Bhagirath Place in 1958, smelt an opportunity when a fellow trader’s business ran into some difficulties.

Despite not having enough capital to buy out his neighbour’s business entirely, he decided he had enough cash to acquire his brand, which was reasonably well known in the electricals trade circles of Delhi. That brand was Havells, probably created from the name of the brand’s first owner – Haveli Ram Gupta!

This was in 1971, and Qimat Rai Gupta had managed to acquire the ‘Havells’ brand for less than Rs. 10 lakh. It was a not inconsiderable sum back then. But the cost pales into insignificance in comparison to what it has grown into.

Today, Havells is the largest Indian manufacturer of consumer electricals, and the fourth largest electrical lightings brand in the world, with group revenues of $1.3 billion.

“He was very conscious of the value of a good brand even then,” says his son Anil Rai Gupta, who is currently the joint managing director of Havells, adding, “it was not a chance acquisition. When there was not enough money to acquire the entire business, he decided to go for the brand.”

Back then, Gupta’s own business was largely in cables. Havells provided the entry into industrial switchgear. In 1984, it acquired another local brand, Giyer, and expanded into domestic switchgear. It was to be another 20 years before it started extending its brand presence, first by distributing and then ultimately acquiring the India brand rights of Crabtree, a major UK switches brand, as well as another switches brand Standard.

“It was a tough journey,” says Anil Rai Gupta, “but our focus was always on the need for quality. Our channel linkage was also very strong. We had been traders ourselves, and we understood the trade, and what it wanted.”

But progress was slow. In 1992, Havells was still a Rs. 25-crore company. Clearly, funds were going to be needed to finance its growth ambitions. “We decided to go public and listed in 1993. The company’s stock started trading from December 31 that year.

But major changes were taking place in the economy, and the ripples were being felt even in the electricals business. The economic reform process kicked off in the previous year had led to the first taste of low-cost competition for Indian electricals manufacturers, especially from China.

Worse, the flooding of cheap Chinese imports was taking its toll elsewhere too. “We used to typically go to small or medium size firms in Germany for technology,” reveals Gupta. But by the early 1990s, many of them were struggling, or closing down in the face of Chinese competition.”

The solution was to focus on developing technology in-house. Between 1993 and 1998, Havells set up four R&D centres. A few years later, it had taken a big step into the consumer marketplace, and started manufacturing ceiling fans, compact fluorescent lights (CFLs) and other lighting gear.

By 2007, the business reached a turning point. Its technology partner for lighting, global lightings major Sylvania, was struggling, and about to be sold to finance its parent company’s expansion into mobile telephony.

At that time, the world’s lighting market was dominated by four players - Sylvania, GE, Philips and Osram, each of whom had roughly a quarter of the market. With an outright takeover by any one of the other three likely to run afoul of competition laws in different markets, the company was split into two. Havells decided to acquire the Europe, Asia and South America rights to the company for €227 million, while the North American operations were bought by German lighting major Osram.

But the acquisition was fraught with trouble, and Havells Sylvania, as the entity had been christened, began bleeding red on the balance sheet. The abrupt shift from a totally India-based operation to a global company with more than 90 offices in over 50 countries was a paradigm shift in scale.

“We were a little wary at first, and decided to go with the existing management. But they could not turn the company around, and my father decided that we should take over the management of the company,” says Gupta.

In 2008, the Gupta family took over the reins at Havells Sylvania, consolidated the manufacturing operations in India and shift the global headquarters to India – where it has stayed.

But brand Havells journey began in 2004, when the company decided to make it the brand under which it will operate in all businesses, present and future. Even here, it has stuck to in-house insights in deciding how and where the brand will be publicised.

“Our buyers are largely men. Decisions about electrical equipment, or fans or switches are not taken very often – typically when people build or renovate houses – and it’s mostly men who decide,” says Gupta, adding, “and most Indian men like to watch cricket.”

Havells has since largely stuck to airing its ads during cricket matches – and the exposure has paid off. Its quirky ads, particularly the ‘shock laga’ series, managed the difficult task of positioning something as mundane as a circuit breaker as a consumer brand. Even the first series for its fans, the “hawa chahiye, fan lagao” (need air, install fan) campaign created a buzz around the brand.

Havells pulled off a coup of sorts by getting yesteryear superstar Rajesh Khanna to endorse its fans. But the ‘fans forever’ ad, directed by R. Balki of Lowe Lintas, mystified many, and the sight of an old and obviously sick Khanna (he died a few months later) upset many fans.

But that may just be a small hiccup in Havells otherwise successful march. “We want to be a globally respected player in our business,” says Gupta, “we’re here to stay.”

That's because people from humble origins know fortune is fickle.

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