Business Standard

Low LED bulb prices likely to distort market


A tender issued by Energy Efficiency Services Limited (EESL) for procuring 50 million LED bulbs has found no takers for a part of the supply by other bidders because they could not match the lowest bid from Philips Lighting India of ~38 a bulb.

According to EESL’s tender guidelines, once the lowest bid is accepted, the next six bidders are asked to match the price for some of the offered quantity. For the first time, no bidder agreed. So a tender of 50 million LED bulbs went to Philips.

The most convincing theory is that the bulbs are coming from China. But even the cheapest Chinese LEDs were priced around ~46, officials said. The other bidders were Surya, NTL, Crompton Greaves and Osram.

“There is a clause requiring us to distribute the order among five or six bidders who are technicall­y qualified and are able to match the lowest bid. None agreed to do so this time, therefore the entire quantity went to Philips,” said Saurav Kumar, managing director, EESL.

Most LED companies in India source the central chip component from China and assemble bulbs in the country. There was no restrictio­n on importing LEDs, according to the tender document, Kumar said. In an e-mailed response to Business Standard, Philips Lighting India said the price was due to the large order. “We have offered a price that makes LED bulbs even more affordable while meeting all the tender requiremen­ts,” said Harshavard­han Chitale, vice- chairman and managing director, Philips Lighting India. Domestic manufactur­ers expressed concern over Philips’ low bid. “Across the industry, ~50-55 is a comfortabl­e price. Even in the tender, the other bidders quoted around ~55. As supply has not started we cannot comment on the quality,” said an executive with a leading electronic­s manufactur­ing company.

The companies are of the view that even imports from China are not possible at such low rates.

“Philips will import the initial lot from its facilities in China and ramp up domestic capacity to supply 12 million LED bulbs a month from December. Imports are an interim measure and will be phased out in a month or two when Philips’ domestic facility is fully operationa­l,” Kumar said.

On importing from China, Chitale said the company procured LED bulbs from its manufactur­ing network across the globe. “Last year, we supplied over 15 million LED bulbs to EESL that were manufactur­ed in India. Owing to the size of this order, a large ramp-up was needed and some quantity will be sourced from our factories around the world,” Chitale said.

“Outlier bids are usually made in desperatio­n or in order to grab a major market share,” said another electronic­s industry executive requesting anonymity.

 ??  ??

Newspapers in English

Newspapers from India