EB: Havells have recently ventured into the LED lighting space. What potential do you see in India in the next five years?
Most companies are looking at solid state lighting very seriously. We believe that Europe would change faster than India but India would not be far behind. By 2015, at least 15-20 per cent of the lighting space will be occupied by LED in India. It could be faster than what we anticipate, provide it is proactively supported by the government.
It can be understood better by a simple example. In 2000, when CFL entered India, it was not a commercially viable lighting solution as the price Rs 400 plus apiece. But with easy availability of the technology, price dropped to Rs 100 (starting price). Today, see the way it has grown in India—almost every household and commercial unit is using it.
For CFL it took 10 years to grow to this level, but probably for LED it will take only five years. That’s how the industry is growing. Another example could be of the landline phones—even today it has not reached every village in India, while in a short span of time cellphones have reached every village. In case of LED, the same thing could happen. Moreover, people are now aware that LED is environment friendly and is the perpetual solution. They will be willing to pay extra price as there is no maintenance cost.
EB: What type of government support are you anticipating?
LED chip would not be manufactured in India in the near future. It would be imported from other countries. But the Government of India may start manufacturing LEDs and distribute them among the applicators. That’s quite possible as it already has undertakings to manufacture passive components. Other possibility could be its help in terms of making LED products commercially viable. It’s all a game of ‘chicken or the egg—which comes first?’. So if the quantity grows faster the price would imminently come down.
EB: Havells India will target a revenue of Rs 100 crore by 2012 from the domestic LED market. What strategies are you applying to achieve the target?
We entered the lighting space only five years ago. However, we closed 2009 at Rs 400 crore in lightings and project a revenue of Rs 500 crore by 2010 end. We believe that 20 per cent of our revenue can come from the LED market. Moreover, the kind of product portfolio we have created, every application has been taken care of. Our LED product range Endura comprises spotlights, downlights, commercial lights and street lights. And it is not only us, any company who has the right kind of product can capture the market fast. But we also have the advantage of a good distribution network and a trusted customer base built over the last five years.
EB: There are already some giant companies dominating the LED lighting space and you are just entering the domain. How do you plan to compete with them?
Four things are very important to be the leader in this market—brand name, right technology, right reach and distribution strength. Some of our competitors are the lighting space for many years and are considered as giants. But their revenue is much less than our’s. So just the brand name is not sufficient. Distribution strength is also very important. We are in the lighting space for only five years and are already projecting a revenue of Rs 500 crore. This clearly shows the kind of trust our brand enjoys. So, becoming the leader in five years should not be difficult for us.
There are also companies who are focused on LEDs—that’s their advantage. But their disadvantage is that they have limited reach. India is a large country and to reach its every corner is very difficult. Havells has that specific advantage as we are into 11 electrical verticals. Our reach is far higher than any other company. To set up customer base takes years, but we have our customers for other products who trust us and will also become our customers for LED products.
EB: What is the initial response to your LED products launched in India?
The initial response is quite encouraging. For new products, the acceptability takes time to come as customers take some time to accept them. Seeing is believing—so our customers need to see our products, which are now available in all showrooms across the country. But once these are accepted, they’ll start moving fast. Already, a lot of buzz about LEDs has been created by the media.
EB: What type of investments are you making into this domain?
We are, at this point of time, not getting into manufacturing LED products in India. We are talking to global LED chip manufacturers who will supply both to Havells and Sylvania—the fourth largest lighting company in the world, which Havells has acquired. LED fixtures are now manufactured in Europe. Demand in India is still not large enough that it warrants domestic production. At the moment we just distribute them in India. But if we find that manufacturing LED fixtures in India is cost effective compared to Europe, we will definitely produce them here and use the Indian supply source for global users as well. We would eventually create a manufacturing facility for LED fixtures in India.
But as of now, we are investing in LED product designs. We have set up a lighting R&D centre at our existing plant at Neemrana, Rajasthan, for this purpose.
EB: What will the Indian customers gain by Havells entering the LED space?
Whatever products would be introduced in Europe, would simultaneously be introduced in India as well. So, the Indian customers can get the latest technology of the European market. We are also planning to set up Sylvania R&D centre in India. This will be another advantage for India. But, we don’t want to do it in a haste; we are gradually shifting some units to India and will make it the back office of Sylvania.
EB: When can we expect Havells to manufacture LED chip?
It is difficult to predict. Investment is not a big issue for Havells but we are a conservative company and we don’t want to experiment. As LED technology is changing fast, we don’t want to invest in something that could be replaced by another technology within a short span of time. We don’t want to be left in the lurch. Once the quantity goes up and cost comes down, and the moment we see the LED market reaching a plateau, we may decide to manufacture LED chip as well. We would like to invest in a matured technology.
EB: Is Havells playing any social role in India?
Yes, we don’t talk about it aloud but we have the corporate social responsibility as one of our objectives. Four years ago, we signed an MoU with the Rajasthan government and took up the task of distributing midday meals in Alwar district. We feed more than 15,000 school children everyday. We run a kitchen and have a fleet of vehicles which distributes meals in 150 schools.