SAIRAJ SHETTY

DIV. C - K029
MBA TECH. (MECHANICAL)
Havells India Limited

Company Profile:

Havells India Limited is an Indian company that manufactures electrical equipment and power
distribution equipment. Founded in 1983, Havells is one of India's largest and fastest growing electrical
equipment manufacturers. Their products include: Circuit protection switchgears, Cables, Motors,
Pumps, Solar products, Fans, Power capacitors, LED lamps.

NIC Code: The National Industrial Classification (NIC) code for Havells India Limited depends on the
specific activities and products within the company. They are:

Sr. No. Product/Service NIC Code

1. Cables 27320
2. Switchgears 27103
3. Electronic Consumer Durable 27501, 27502, 28132, 27503,
25931, 27504 & 28195
4. Lightning and Fixtures 27400 & 43213
5. Lloyd Consumer 28192, 27501 & 26401

Corporate Headquarters Location: Havells India Limited is headquartered in Noida, Uttar Pradesh,
India.

Date of Incorporation: Havells India Limited was incorporated on June 6, 1983.

Chairman and CEO: Mr. Anil Rai Gupta serves as the Chairman and Managing Director of Havells India
Limited. Gupta is the son of Qimat Rai Gupta, who started Havells India in 1958. Gupta is also the
winner in the Consumer Durables category of the BT-PwC India's Best CEOs ranking. He believes in
 SAIRAJ SHETTY
DIV. C - K029
MBA TECH. (MECHANICAL)
bringing out leaders who will serve the country through liberal arts. He started the mid-day meal
program through the QRG Foundation.

Dividends:

For the year ending March 2023 Havells India has declared an equity dividend of 750.00% amounting
to Rs 7.5 per share. At the current share price of Rs 1413.35 this results in a dividend yield of 0.53%.

The company has a good dividend track report and has consistently declared dividends for the last 5
years.

Dividend Paid
5 4.5 4.5 4.5
4.5 4 4
4
Dividend Paid (in Rs.)

3.5 3
3
2.5
2
1.5
1
0.5
0
2018 2019 2020 2021 2022 2023
Financial Year

Dividend Paid (in Rs.)

 SAIRAJ SHETTY
DIV. C - K029
MBA TECH. (MECHANICAL)
Industry Profile:

Market Sector: Electrical Equipment and Consumer Electricals

Industry Definition: The electrical equipment and consumer electricals industry encompasses
companies engaged in the manufacturing, distribution, and sale of a wide range of electrical products
and solutions. These products include but are not limited to wiring devices, lighting fixtures, fans,
switches, circuit protection devices, cables, and other electrical components used in both residential
and industrial applications. This industry is essential for providing solutions for electrical distribution,
power management, and control in various sectors.

What Makes a Company Part of this Industry:

Companies in this industry design, manufacture, and distribute electrical products and solutions for
use in homes, offices, factories, and infrastructure projects. They often engage in research and
development to create innovative and energy-efficient electrical products. These companies may have
a global presence, with operations and distribution networks in multiple countries. They cater to a
diverse customer base, including consumers, businesses, and government entities, addressing a wide
range of electrical needs.

Industry Leaders:

As of 21st September 2023

 SAIRAJ SHETTY
DIV. C - K029
MBA TECH. (MECHANICAL)

Company’s Stock Performance:

As of 21st September 2023

https://www.moneycontrol.com/mc/stock/chart?scId=HI01&exchangeId=HAVELLS&ex=NSE
 SAIRAJ SHETTY
DIV. C - K029
MBA TECH. (MECHANICAL)
RATIO ANALYSIS

Liquidity Ratios:

1. Current Ratio: It increased slightly from 1.82 in 2022 to 1.84 in 2023. This indicates a slight
improvement in short-term liquidity. The ideal current ratio is 2:1, so Havells is close to the
ideal level.
2. Quick Ratio: It decreased from 1.00 in 2022 to 0.87 in 2023. This suggests a decrease in the
ability to meet short-term obligations without relying on inventory. The ideal quick ratio is 1:1,
so Havells is slightly below the ideal level.

Effect on Short-term and Long-term Performance: While the current ratio is close to the ideal level,
the decrease in the quick ratio might indicate a potential challenge in meeting short-term obligations
without selling inventory. This could impact the company's short-term performance but may not
significantly affect its long-term performance if it can manage inventory effectively.

Solvency Ratios:

1. Debt-Equity Ratio: In 2022, the company had a very low ratio (0.02), which might be due to
data issues in 2023 (indicated as "#VALUE!"). This doesn't provide a clear trend.
2. Proprietary Ratio: It increased from 0.57 in 2022 to 0.59 in 2023. This suggests a slight
improvement in the proportion of assets financed by shareholders' funds.

Effect on Short-term and Long-term Performance: Without data for the Debt-Equity Ratio in 2023, it's
challenging to assess the impact on long-term performance. The increase in the proprietary ratio
indicates a slightly stronger financial position, which could be positive for both short and long-term
performance.

Profitability Ratios:

1. Gross Profit Ratio: It increased from 44.25% in 2022 to 44.90% in 2023, indicating a slight
improvement in gross profitability.
2. Operating Ratio: It increased from 89.62% in 2022 to 92.49% in 2023, suggesting an increase
in operating costs relative to sales.
3. Operating Profit Ratio: It decreased from 10.38% in 2022 to 7.51% in 2023, indicating a
decrease in the company's ability to generate profit from its operations.
4. Net Profit Ratio: It decreased from 8.58% in 2022 to 6.34% in 2023, showing a decrease in net
profitability.

Effect on Short-term and Long-term Performance: The decrease in operating and net profit ratios
indicates a decline in profitability, which can negatively affect both short-term and long-term
performance. This may be a concern for stakeholders.
 SAIRAJ SHETTY
DIV. C - K029
MBA TECH. (MECHANICAL)
1. Return on Assets (ROA): ROA measures how efficiently the company is utilizing its assets to
generate profits. In 2022, ROA was 11.37%, and in 2023, it decreased to 9.61%. This indicates
a decline in the company's ability to generate profits from its total assets.
2. Return on Equity (ROE): ROE measures the profitability of shareholders' equity. In 2022, ROE
was 19.93%, and in 2023, it decreased to 16.18%. This suggests a decrease in the company's
ability to generate returns for its shareholders.
3. Return on Capital Employed (ROCE): ROCE measures the profitability of the capital invested
in the business. In 2022, ROCE was 17.37%, and in 2023, it decreased to 14.64%. This indicates
a decrease in the efficiency of capital utilization.

Effect on Short-term and Long-term Performance:

The decrease in all three profitability ratios (ROA, ROE, and ROCE) over the two-year period suggests
a decline in the company's overall profitability and efficiency in utilizing its assets and capital. This can
have a significant impact on both short-term and long-term performance.

Short-term: Reduced profitability can affect the company's ability to cover its immediate expenses,
invest in growth, or pay dividends to shareholders.

Long-term: A sustained decrease in profitability may deter investors and lenders, making it more
challenging to raise capital for expansion or long-term investments. It can also impact the company's
stock price and overall financial health.

Valuation Ratios:

1. Earnings Per Share (EPS): EPS reflects the company's profitability per share. In 2022, EPS was
19.1, and in 2023, it decreased to 17.11. This indicates a decrease in earnings per share.
2. Dividend Payout Ratio (DPS): The dividend payout ratio indicates the proportion of earnings
distributed as dividends. In 2022, the ratio was 39%, and in 2023, it increased to 44%. This
suggests a higher percentage of earnings being paid out as dividends.
3. Dividend Yield Ratio: The dividend yield ratio compares the dividend per share to the market
value per share. In 2022, the ratio was 0.60%, and in 2023, it decreased to 0.53%. This indicates
a decrease in the dividend yield.
4. Price Earnings Ratio (P/E Ratio): The P/E ratio compares the market price per share to earnings
per share. In 2022, the P/E ratio was 65.71, and in 2023, it increased to 83.28. This suggests an
increase in the market's valuation of the company relative to its earnings.

Effect on Short-term and Long-term Performance:

The decrease in EPS and the increase in the dividend payout ratio may indicate that the company is
returning more of its profits to shareholders as dividends, which can be beneficial for shareholders in
the short term but may limit the company's ability to reinvest in growth.

The decrease in the dividend yield suggests that investors might be willing to accept a lower dividend
relative to the market price of the company's shares, possibly indicating positive sentiment in the
market.

The increase in the P/E ratio indicates that the market is valuing the company's shares more highly
relative to its earnings, which can have implications for both short-term and long-term performance.
It may suggest higher investor expectations for future growth.
 SAIRAJ SHETTY
DIV. C - K029
MBA TECH. (MECHANICAL)

Coverage Ratios:

1. Interest Coverage Ratio: The interest coverage ratio measures the company's ability to cover
its interest expenses with its earnings. In 2022, the ratio was 65.68, and in 2023, it increased
significantly to 207.32. This suggests a substantial improvement in the company's ability to
cover its interest expenses.

Effect on Short-term and Long-term Performance:

The significant increase in the interest coverage ratio indicates that the company is better positioned
to meet its interest obligations, which is positive for both short-term financial stability and long-term
performance. It suggests reduced financial risk.

Activity Ratios:

1. Inventory Ratio: This ratio measures how efficiently the company manages its inventory.
The inventory ratio decreased from 5.76 in 2022 to 5.03 in 2023, suggesting improved
inventory management.
2. Debtors Turnover Ratio: This ratio measures the efficiency of the company in collecting
receivables. The debtor’s turnover ratio decreased from 25.64 in 2022 to 20.85 in 2023,
indicating a longer time to collect receivables.
3. Creditors Turnover Ratio: This ratio measures how quickly the company pays its creditors. The
creditors turnover ratio increased from 4.82 in 2022 to 4.92 in 2023, indicating a slightly faster
payment to creditors.
4. Fixed Assets Turnover Ratio: This ratio measures how efficiently the company uses its fixed
assets to generate sales. The fixed assets turnover ratio increased from 3.84 in 2022 to 4.18 in
2023, indicating improved efficiency in utilizing fixed assets.

Effect on Short-term and Long-term Performance:

The decrease in the inventory ratio suggests better inventory management, which can free up working
capital and improve short-term liquidity.

The decrease in debtor’s turnover and increase in creditors turnover might affect short-term cash flow,
potentially impacting liquidity. Slower receivables collection and faster creditor payment can be a
double-edged sword.

The increase in the fixed assets turnover ratio indicates improved efficiency in using fixed assets to
generate sales, which can positively impact both short-term and long-term performance by maximizing
asset utilization.
 SAIRAJ SHETTY
DIV. C - K029
MBA TECH. (MECHANICAL)
1. Did the company experience an increase or decrease in liquidity over the two-year period
evaluated? What effect do the liquidity figures have on the company’s long term and/or short-term
performance?

1. Current Ratio: The company's current ratio increased from 1.82 in 2022 to 1.84 in 2023,
indicating a slight improvement in liquidity. The ideal current ratio is 2:1, and while the
company is close to this ideal, it suggests that it has enough current assets to cover its current
liabilities.
2. Quick Ratio: Conversely, the quick ratio decreased from 1.00 in 2022 to 0.87 in 2023. This
suggests a decrease in the company's ability to meet short-term obligations without relying
on inventory.

Effect on Performance:

The increase in the current ratio is generally positive for both short-term and long-term performance.
It indicates improved short-term liquidity, which means the company can more comfortably cover its
immediate liabilities and short-term obligations. However, the decrease in the quick ratio may be a
concern for short-term performance, as it suggests a potential challenge in meeting short-term
obligations without selling inventory. This could lead to higher carrying costs for inventory and
potential cash flow challenges.

2. Did the company experience an increase or decrease in profit margin over the two-year period
evaluated? What effect do the Profit Margin figures have on the company’s long term and/or short-
term performance?

1. Gross Profit Ratio: The gross profit ratio increased from 44.25% in 2022 to 44.90% in 2023,
indicating a slight improvement in the company's ability to generate profit after deducting the
cost of goods sold.
2. Operating Ratio: The operating ratio increased from 89.62% in 2022 to 92.49% in 2023,
suggesting an increase in operating costs relative to sales.
3. Operating Profit Ratio: The operating profit ratio decreased from 10.38% in 2022 to 7.51% in
2023.
4. Net Profit Ratio: The net profit ratio decreased from 8.58% in 2022 to 6.34% in 2023.

Effect on Performance:

The increase in the gross profit ratio suggests an improvement in the company's short-term
profitability. However, the subsequent decrease in operating and net profit ratios is concerning for
both short-term and long-term performance. It indicates a decline in the company's ability to generate
profit from operations and overall profitability.

These declining profit margins can impact short-term performance by reducing the company's ability
to cover immediate expenses. In the long term, sustained decreases in profit margins may deter
investors and lenders, making it more challenging to raise capital for expansion or long-term
investments.
 SAIRAJ SHETTY
DIV. C - K029
MBA TECH. (MECHANICAL)
3. Did the company experience a change in its leverage over the two-year period evaluated? What
impact do these Debt-to-Equity figures have on the company’s overall long term and short term
performance?

1. Debt-Equity Ratio: While there is a data issue in 2023 ("#VALUE!"), in 2022, the company had
a very low debt-equity ratio (0.02), indicating a low level of debt relative to equity.
2. Proprietary Ratio: The proprietary ratio increased from 0.57 in 2022 to 0.59 in 2023,
suggesting a slight improvement in the proportion of assets financed by shareholders' funds.

Effect on Performance:

Without data for the Debt-Equity Ratio in 2023, it's challenging to assess the impact on long-term
performance accurately. However, the low debt-equity ratio in 2022 indicates a conservative approach
to leverage, which can be favorable for long-term stability and risk management.

The increase in the proprietary ratio suggests a slightly stronger financial position, which could
positively impact both short-term and long-term performance by improving the company's ability to
withstand financial challenges and pursue growth opportunities.

4. How does inventory and inventory turnover affect liquidity? Did the company experience an
increase or decrease in inventory turnover?

Inventory Ratio: The inventory ratio decreased from 5.76 in 2022 to 5.03 in 2023, indicating an
improvement in inventory management.

Effect on Performance:

Improved inventory turnover can positively impact liquidity in both the short term and long term. It
suggests that the company is managing its inventory more efficiently, potentially freeing up working
capital that can be used for other purposes or to cover short-term liabilities.

In summary, Havells India Limited experienced a mixed performance over the two-year period. While
liquidity improved slightly, profitability declined, and there were changes in leverage and inventory
turnover. These factors can have both short-term and long-term implications for the company's
financial health and performance.