In an era where technology and smart solutions often take centre stage in Tier 1 cities and premium locations, there’s a notable shift as Honeywell pioneers initiatives exclusively tailored for Tier 2 regions. ET Edge Insights recently had the opportunity to engage in a conversation with Jasmeet Bhatia, General Manager of Impact by Honeywell. The discussion delved into the unique challenges faced by Tier 2 regions and how Honeywell is strategically positioning itself to address these specific needs.
1) How does IMPACT make “an IMPACT” in the MSME ecosystem?
Since 2020, IMPACT by Honeywell (NASDAQ: HON) has been a driving force for innovation, actively empowering the Indian MSME community. We recognize the unique challenges faced by these businesses and, as a result, tailor comprehensive solutions that can enable us to add value to their performance, cost-effectiveness, and compliance.
The range of solutions encompasses crucial aspects of MSME operations, including building technologies, safety, and productivity. From electrical safety and building security to fire safety, energy management, PPE, and beyond, our solutions are designed to enhance productivity, control costs, minimize revenue leakage and improve quality. These include encompassing surveillance, access control, and energy management systems, which play a vital role in optimizing business operations and enhancing efficiency. Going beyond conventional offerings, it actively addresses the rising concerns about cybersecurity, extending support to MSMEs in critical areas such as data protection and analytics.
2) What have been the opportunities and challenges since the launch?
MSMEs play an important role in India’s growth and local players dominate the segment. As per Ministry of Statistics & Programme Implementation, the share of MSMEs Gross Value Added (GVA) in all India’s Gross Domestic Product (GDP) is 29% and MSMEs contribution to Indian Manufacturing is 36% during 2021-22. This provides a significant growth opportunity for Honeywell in buildings, manufacturing, retail, hospitality, logistics, warehousing verticals. MSMEs in India are always on the lookout for quality/brand at affordable price points.
Our aim is to offer quality products that are curated, designed, and launched in India after in-depth research and that solves the customer problem. Since its launch in 2022, we have significantly enhanced our offerings. As a young business, the Honeywell India portfolio clearly reflects our deep understanding of superior technologies, the MSME ecosystem and our ability to tailor solutions for them. The main challenges are driving awareness and adoption of cutting-edge products in MSMEs to look beyond basic compliance related purchase to invest in products that drive efficiency, productivity and cost saving in the mid to long term.
3) How has the business grown? Can you share some insights about future growth plans?
We have experienced substantial growth, marked by a robust network of 80 to 100 distributors, achieving an annual growth rate of 50-60% since launch in 2020. We continue to expand our footprint, establishing a presence in 50+ cities, with Delhi NCR, Mumbai, Pune, Bangalore, and Chennai being top revenue-generating markets. We are further planning to expand our reach to 80+ locations by entering Tier 2 markets by 2026.
Currently, with a dedicated professional team of 100+, we are also actively creating opportunities for engineering talent in India. Approximately 35-40% of our workforce consists of engineers spearheading innovation, research and development, and quality solutions.
Our future vision is to emerge as the go-to brand for mid-segment customers, with the goal of capturing 20-25% of the market share by 2030. Anticipating robust growth, we project our revenues to double by 2026. Currently, the focus of business has been commercial buildings and manufacturing. However, as we move ahead, we plan to foray into the Retail, Hospitality, Logistics and Warehousing segments.
4) As you plan to foray into Tier 2 markets, what is your strategy?
Our overarching strategy will continue to revolve around curating sustainable solutions across industries and sectors. We aim to enhance our presence in emerging markets by not only expanding our customer base but also diversifying our product portfolio and entering new segments. Ahmedabad, Kochi, Chandigarh, Baddi, Kolkata, Guwahati are some of the key markets where we plan to establish our footprint first, before penetrating deeper into the tier 2 market landscape. Our presence in these markets will play an important role in doubling our revenue by 2026 as we intend to leverage our robust position in building technologies with a particular emphasis on the point-of-sale product range via e-commerce route.
Our expansion plan also involves a significant investment in product development, particularly in environmentally friendly and energy-efficient solutions. Simultaneously, we are also intensifying our digitisation efforts, delivering tools and IoT solutions to streamline business processes and enable MSMEs to make informed, data-driven decisions.
5) How do automated solutions work in the Tier 2 regions?
The adoption of automation technology offers significant advantages for MSMEs in India’s tier 2 markets. In these markets, business operations function in distinctive ways, given the unique characteristics of the overall business and buyer ecosystem, which is significantly different from that of a developed market. In such a scenario, automation and digitization can help boost efficiency by streamlining processes and cutting manual intervention, resulting in heightened productivity and faster production cycles. Notably, it opens up avenues for substantial cost savings, scalability, data-driven decision-making and improves product or service quality, thereby elevating the overall customer satisfaction and business performance.
Lastly, it also enables compliance with regulatory standards and improved reporting accuracy, contributing to overall stability and growth. In this journey, as employees focus on complex tasks, skill enhancement drives innovation, providing a competitive edge.
6) What solutions are working well and why?
Key solutions driving our success include smart surveillance, point-of-sale products, and Personal Protective Equipment (PPE), collectively contributing nearly 60% to our overall revenue. Our Smart AI Camera, with exceptional features such as cloud storage, built-in edge analytics, crystal-clear night vision, and a user-friendly mobile app, has proven to be a game-changer. In the realm of retail and distribution operations, our point-of-sale products, featuring innovative barcode scanners and mobile computers, have significantly enhanced efficiency, speed, and accuracy. Moreover, our high-quality PPE under the ‘Make in India Initiative’ is designed to protect workers in all types of industries.
As we move ahead in our quest to become the preferred partner in the MSMEs ecosystem for automation and digitization, we are committed to bringing the best quality American products, truly made in India, to Indian customers.
