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Interaction | November 2017

The biggest opportunity comes from government sector

<span style="font-weight: bold;">Anil Bhasin, Sr. Vice President, Havells India Ltd </span> <p></p> <p> <span style="font-weight: bold;">Can you throw some light on the lighting division?</span><br /> We had started lighting division in 2004. Till then Havells had presence in switches, switch gear, wires and cables. Last year, our turnover in lighting was close to Rs.1000 crore, in which LED component is now more than 75 per cent. And the group turnover last year was at Rs.6,300 crore. During 2003-04, when we started lighting business, the company's total turnover was Rs.430 crore in 2003-04. The profit was close to around Rs.20-25 crore only. After lighting we have launched fans, then appliances, water heaters, water lifting pumps etc. We have 18 product verticals and lighting is one of the product verticals which I head. </p> <p> <span style="font-weight: bold;">How is LED lighting being received by people?</span><br /> Lighting is going through a transformation phase, where CFL or Fluoroscent tube technology is giving way to LED (Light-emitting Diode). LED is the most energy efficient lighting. People are aware of this and for a consumer the LED lamp is available at the same price at which CFL is. CFL will phase out in the shortest possible time because if the consumer gets an LED lamp at the same price and gets almost similar warranty and is consuming less energy. </p> <p> <span style="font-weight: bold;">What are the areas of opportunity for LED growth?</span><br /> Business-to-business (B2B) area is where it will grow very fast because volume of business is very high. So from a consumer point of view still it will take its own time to shift to LED, but in government, business and industry the awareness is there. The Biggest consumption opportunity is basically coming from the government sector, especially street lights. Second biggest sector for us is going to be commercial spaces.</p> <p> We are increasingly well placed in infrastructure business. We are doing business with EESL also, we are working with North Delhi Municipal Corporation (NDMC) in a major tender we have won under ESCO (Energy Service Companies) mechanism. We are working very closely with a couple of agencies like DRDA, in deep down south Chennai Municipal Corporation. When it comes to commercial spaces also we have right portfolio with us and they are the second biggest so to say. The endeavour of the government is to change 3 crore street lights, 3.5 million street light points within specified time periods. So you need production houses who can give that kind of quantum like us. That is a big plus we have. We have our own in house technical team and innovation team. Our core philosophy is manufacturing and selling.</p> <p> <span style="font-weight: bold;">What is your participation under ESCO model of EESL?</span><br /> We have won a business of `130 crore for only street lighting under ESCO model of EESL. In street lighting, there are only 5-6 competitors - Philips, Crompton, Bajaj, Wipro and Havells. Small manufacturers, or those into trade can also enter the competition, but we in the EESL got a right price for supply, installation, testing and commissioning. The NDMC project under ESCO model is for Rs.250 crore in which Tata Power is the agency which is doing installation, testing and commissioning. Tata Power is a seasoned player in this shere of activity. It is we and Tata power have taken order and we are lead player in that. We have given a guarantee of 7 years to NDMC, and we are saving 79 per cent of the savings, while NDMC gets 21 per cent for free. </p> <p>(Under ESCO model, the service provider makes investment, with no investment from the customer, but the latter also shares a part of the savings that arises from the venture). In consumer segment, however, we have 40 players vying with each other for market spare.</p> <p> <span style="font-weight: bold;">What will be your place in that 40...</span><br /> The one who shall run faster he shall win. It is as simple as that. Our model in that is we are increasing our reach, we are tweaking our distribution channel so our product availability is in every nook and corner of the country, so if the consumer goes to buy the product in a garage also he should be able to get the LED lamp. In B2B we are making lot of strides in terms of innovation. Like for example using Power-over-Ethernet (PoE) technology in the power and data rams so you are able to get a lot of information in terms of data and in terms of internet integrating into lighting catering to real estate sector. For example, a builder has a centralised air conditioning system in a building which has 10 floors, and it is a power guzzler. What we usually do is office starts at 9 am, for example, you switch it on at 8 o'clock, which leads to wastage as there is no footfall. With this system you can program it that way at 7.30 am it will run at 290, so there is hardly any consumption, then by 9 am the temperature indicator comes down automatically to 240, during the lunch time it goes to 290 again, and when lunch is done it comes back to 240 and at 5 pm it shuts off. This kind of innovating energy saving technologies were also used in NDMC, where if there is a fixture problem you will come to know of it and you can fix it. They are able to see everything at one place, instead of sending people to check. Then there is a clock also which can be utilised in terms of automatically switch on and switch off. After 12 at night you do not need full light, so dim light is there even though it is on till morning.</p> <p> <span style="font-weight: bold;">How do you see the growth for this?</span><br /> It is phenomenal. I think the predictions are, by 2022 minimum 15-20 per cent of the total lighting system will be from innovative technologies.</p> <p> <span style="font-weight: bold;">What are the areas of your focus in future?</span><br /> We are talking about smart cities. We have products which can be used in different environments with different communication backgrounds and with small tweaking here and there. The government has identified some 100 smart cities out of which 40 smart cities they have already allocated some budgets. We are participating in almost 20 of them. But as of now nothing has happened. But we are ready for it. We are doing some product innovation. There is only one tube that shall give 3 lights, you have to switch on and off the light. You do not need any remote or anything. If you switch on one tube to read, one tube is to watch TV, one is to celebrate birthday or something more fancy then that. So, all these three things can be done at will. Our second product is, a tube light with a technology play, which can give 100 per cent light and then one shall give 50 per cent and one shall give 20 per cent and one shall give 5 per cent light. </p> <p>So with technology we are trying to address the customers' aspirational needs. Out of 40 players, four are capable of copying us, but the remaining 36 will not be able to copy it for the next one year and by then we will make another one. </p> <p> <span style="font-weight: bold;">What is the percentage of electronics you are importing from other countries? </span>We are making all of them here, but LED chips. The chip is 100 per cent imported, because, this technology is available only with a couple of people in Japan and Korea. The value of chip in the entire fixture is hardly anything, maybe 10-15 per cent. </p> <p> <span style="font-weight: bold;">- BS Srinivasalu Reddy</span></p>
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