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Feature | November 2016

Govt schemes have led to demand in the residential segment

Arun Gupta | Managing Director, NTL Group

What opportunities are expected in India in the next two years?
Supported by ongoing government initiatives to promote LED lighting as well as changing consumer preferences, the LED market will grow to Rs.21,600 crore by 2020, an exponential growth of 41 per cent CAGR from Rs.1,925 crore in 2013, making the LED market ~60 per cent of the total lighting industry (Rs.37.600 crore) in 2020. These schemes have led to demand in the residential segment with focus on providing sustainable solutions especially in the lamp category are further expected to fuel the adoption of LED at the grass root level. The demand is also likely to increase majorly in outdoor lighting. Consumer segment is also starting to gain momentum and consumer in general is getting aware of benefits that can accrue through adoption of this technology. The industry is witnessing renewed demand in commercial projects and offices and which is expected to grow, as the real estate industry comes out of the throes of a slump. In the immediate future, outdoor lighting will provide impetus to demand for LED lighting and solutions, again backed by GoI´s focus on it. The indoor lighting segment will also expected to show significant growth in the long run.

What potential drivers will boost adoption of LED?
Key drivers pushing demand are energy efficiency, RoI, low maintenance cost and environment friendliness that the government is promoting. EESL´s remarkable initiatives to provide free LED lamps in rural areas and subsidised lamps in urban areas are ensuring large scale adoption of this technology across the country. LEDs have the fastest ROI and help reduce consumption and wastage. There is also a big awareness campaign in the media involving celebrities along with the government initiatives that will propel the use of the this technology. This has also changed the perspective of common customers and the benefits are visible across the retail category. New projects/renovations in both commercial and residential segment are witnessing also enhanced use of LED lighting.

What are the challenges you face while doing business in India?
Every organisation faces challenges related to industrial policy, industry specific issues, demographic issues, labour issues etc.; but these are not insurmountable. While there are several challenges that are facing the industry, we as an organisation have not had problems doing business in the country. Today, across the globe, India is one of the preferred destinations to do business in and with. So the opportunities are immense. Since we are a very ethical organisation and follow every rule of the land, we have not really had any major issues. As far as the industry is concerned, the biggest challenge facing the LED industry is mushrooming of low quality production units. Here, Chinese imports are another issue ++ more from the perspective of sub-standard quality and costing.

What opportunities do you sense through shift in the industry towards LED?
Awareness in both commercial and residential segment has increased exponentially and inclinations amongst consumers is to choose LEDs as a preferred mode of lighting. Today, the preference of general consumer is moving towards replacing conventional lighting with LEDs, presents a huge opportunity for organisations like us in terms of volume and maximising our assembly lines. NTL, as an organisation is known for its quality and diverse product portfolio for both residential and commercial lighting. We have already started setting up our distribution network and are now present in all the major markets. Our focus currently is on tier 2 and tier 3 cities. With our quality and commitment, we are sure that our product ´Pharox´ will be a brand disruptor and will be a preferred choice for both the categories.

Retrofitting for street lights is gaining momentum. What is your take on this?
EESL in its tool kit for street light energy efficiency has projected that retrofitting conventional street lights with LED could result in potential savings of 4,300 million kWh of energy. Operating and maintaining the street lights comes under the jurisdiction of Urban Local Bodies (ULB) and keeping in mind the huge numbers (35 million) street lights in India and cash crunch situation of ULBs, it is an uphill task. Most of these are not in a position to consume huge initial costs (for cables, poles, LEDs, etc.) required in replacing the conventional lights with the more efficient LEDs, unless and until the government or local administration subsidises these hugely for new fixtures. Retrofitting has given the implementing agencies the leeway not only in cost saving but also huge energy savings. Retrofitting is the only option that will work at a lower cost, will improve lighting quality and reduce energy use and greenhouse gas emissions at a much faster pace.

How much has the demand for LED lights increased in the last two years?
Last year we had about 20 per cent business coming from LED lighting and are now aiming for approx. 60-65 per cent of the total group turnover to come from LED lighting business. Our capacity was at a level of 1 million pieces per month in 2015-16 and we have now reached a level of 5 million pieces per month. Major expansion has taken place in the last six months wherein we have created the capacity of almost 3 million pieces per month.

What business and marketing strategies do you follow to keep ahead of the competition?
We have focused on creating a brand which is seen as a ´bankable/dependable´. Quality and premium are a given for Pharox and we have been able to develop these into tangible value proposition for our customers. Our target audience is different and so are the market dynamics. We focus on marketing strategies that include participation in relevant forums and exhibition, online and social media marketing; retail and distribution meets strategic PR and advertising activities. We are planning to adopt more aggressive stance on all these fronts so as to popularise the Pharox brand across all channels. In addition, direct contact programs for these channels, regular meet-ups and events, media proliferation focused on channels through tactical advertising and editorial content are being extensively leveraged.

Provide details about participating in govt bidding for LED lighting?
NTL Lemnis is a major partner to government initiatives to make mass adoption of LED bulbs possible. NTL has distributed more than 15 million lamps through government initiatives till date and continues this partnership.

What focus does the company put on R&D for LEDs?
Our strategy revolves around technology and therefore R&D is the most important function. We have invested in R&D in all our geographies and this also helps us keep ourselves abreast of change in market and technologies.

What is your current manufacturing capacity and its usage?
Our current production capacity is 5 million and we utilise approx 80 per cent of this. Our capacity was at a level of 1 million pieces per month in 2015-16 and we have now reached a level of 5 million pieces per month. Major expansion has taken place in the last six months wherein we have created the capacity of almost 3 million pieces per month. This is the capacity which was created by us to cope with the very aggressive procurement by EESL under UJALA scheme. In December 2014, we launched our complete range of over 250 LED products for the retail market. We are increasing our footprint on a daily basis and the response to our offerings has been very heartening.

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