There has been a decline in the unorganised market for LEDs, says Gautam Seth, Joint MD, HPL Electric and Power Ltd, in an interview.
Opines Gautam Seth, Joint Managing Director, HPL Electric & Power Ltd., in an interaction with Monica Chaturvedi Charna, on the role of EESL in driving the LED market in India, future of unorganised players and business opportunities rendered by the Smart
Kindly shed light on the company’s scope of operations in the lighting space and have you phased-out CFLs completely?
HPL has been doing PCBs for CFLs, and drivers and PCBs for LEDs in house. This gives us an edge in the market. The CFL market is shrinking very fast so we have accordingly right-sized our factories. We will continue to market and sell the product till there is a demand. Our focus in terms of R&D, production and sales is now around the LEDs. This is because the sector is growing very fast and nearly 75 per cent of the lighting revenue is coming from LEDs. We expect that by the end of this year, our focus will completely shift to LEDs.
HPL has still not become a common brand name among households in the LED lighting solutions domain. What is the reason for this?
We have a fairly large distribution network, which we have built over the years on two factors: Pushsales basis and our relationship with dealers. Although our brand is not as visible as some of the competitors, in the last two years ending FY2016, we have spent almost Rs 21 crore on brand advertising. Going forward, we plan to build our brand in a much bigger way so that there is a better brand recall value and HPL becomes a household name.
Have you considered bidding for EESL tenders?
The first project of EESL for street-lighting in Vizag city was done by HPL along with Philips. It was a very prestigious order which was done in record time, especially because parts of the city were destroyed in the cyclone and the authorities wanted it to come up very quickly. Street lighting was an important part of reviving the city. Over the period, we have done a few orders/ projects with EESL, but in the last few months, since LED prices have come down very sharply, we no longer see it viable to get into their tenders. We are not taking their bulb orders also. In the street lighting segment, they keep coming up with projects where we feel the margins are better, and there is some clubbing of technology involved. So, we are open to bidding for such orders.
How are you engaging yourself with the government’s Smart City mission?
We have bagged an order under the Smart Cities mission from Bhopal for smart lighting. The overall value for this order is Rs 70 crore, and this is in consortium with Bharti Infratel, Ericsson and HPL wherein, we are offering smart lighting solutions. The strength of each company was considered for
the tender, and HPL’s strength lies in electronic manufacturing and R&D integration.
On the sidelines of the Smart Cities plan, street light poles in Bhopal are integrated with telecom towers, smart lighting and Wi-fi integration. There are security cameras installed and each street light will be monitored and controlled from the central server. These are smart street lights in the true sense.
Have you tied-up with any technology partners for this project?
The street lighting and communication part is done by HPL but the technology part gets integrated with the works that Ericsson and Bharti are doing. All the functions get merged into one software for smooth functioning.
How much has EESL affected the business of LED lighting companies like HPL, considering that customers are getting far cheaper products through EESL’s mass procurement scheme?
The impact has been both ways – Had EESL not come into the market, the market would never have expanded the way it has. They created the right awareness among consumers, which enabled the market to explode. The level of growth that EESL’s intervention enabled in the LED industry in a span of 1-2 years, would have been achieved in at least 4-5 years. So, there has been a price disruption which has led to a consolidation in the industry.
On hindsight, a lot of non-serious players emerged in the market who will eventually have to exit because they will not be able to adopt newer technologies and compete on the pricing aspect. Hence, only the fittest will survive. Prices are going down primarily for two reasons – The volumes are going up exponentially and secondly through adoption of new technologies.
Has this initiative been able to cut down dumping from the outside market, especially China? What is the current share of the unorganised market?
There surely has been a decline in the unorganised market. This is because unorganised players are not able to keep up with the technology upgradation, which doesn’t let them compete on the pricing aspect.
Which noteworthy change in technology has happened in recent times in the LED space?
The earlier 7W and 9W bulbs used to be very big. But now, the size has reasonably shrunk with better lumen output. This reflects on the technology strength. There are better LED chips coming in the market that are much more powerful but have the same electricity consumption rate. Even the circuit size and thermal characteristic of the LED bulb have come down. Since the heat dissipation has come down, there is no need for a bigger frame for the bulb. All this eventually cuts down the cost.
What is the investment that HPL has put in R&D for the LED segment and going forward, what are your plans?
HPL has a common R&D platform for the various verticals that we deal in. So, giving a segregated investment figure would be difficult. Having said this, we had spent Rs 8-9 crore in the last year on R&D, the expenses of which mainly go into employing the staff. We have nearly 100 people in the R&D department and they are working on product-wise R&D as well as on the technologies pertaining to communication, basic electronic circuits, etc.
Even in the switchgears segment, we have developed our own microprocessor-based MCCBs. So, there is a lot of focus on mechanical switchgears coming into electronics. LED can now be categorised as an electronic industry and eventually, all the electricals and lighting are moving towards electronics. Since electronic manufacturing and R&D are our strength, going forward, I see the company growing strong and steady.