NTL Lemnis, part of the NTL Electronics group, markets LED lighting products under the Pharox brand. Tushar Gupta, Director, believes the market which was previously due to institutional demand, is ready for strong growth in the retail segment now. Excerpts of a discussion with Pankaj Joshi are reproduced.
What is your understanding of the overall market size of lighting?
Today the market estimate for lighting products is around Rs 15,000 crore. In that, we estimate LED lighting to be around Rs 10,000 crore. Till date, LED lighting has been driven majorly through Government initiatives— the EESL and street lighting and so on. Our total supply to EESL is around 15 million LED light bulbs. The retail market had to be cultivated. Today, as things stand, our estimate is that the retail segment is only marginally behind the institutional segment in terms of overall share. We have had a 40 per cent CAGR for the past few years and all of that cannot be credited to Government’s initiatives. Our understanding is that market unacceptance phase is over.
Prior to LED, the CFL products had carved out a significant market share in the lighting market. The two major resistance factors for LED are human psychology and price factor.
It is estimated that the LED lighting market will reach Rs 17,400 crore by 2019-2020 and around Rs 23,000 crore by 2021-22. The total lighting industry is expected to be around Rs 37,500 crore in 2020. There would always be applications which would favour conventional solutions. For instance till high wattage solutions cannot emerge from the LED segment, the conventional solutions are the favourites. Technology is evolving and so at a future date the applicability of LED solutions is bound to increase.The overall industry’s installed capacity today should be around 30 million units monthly. Our own capacity has expanded from 1 million units in 2014 to 5 million currently, which is around one-sixth of the total domestic capacity. Our production is spread across four facilities in Noida, Roorkee and Dehradun. Apart from the Pharox brand, our facilities also supply to other OEM brands.
How much has your product range been enhanced over the past two years?
Today our product portfolio, built under the brand Pharox, is around 250. We have invested around Rs 10 crore in design and research. Our aggregate investment in the manufacturing set-up is Rs 15 crore out that Rs 3 crore is invested overseas. We have modified our manufacturing assets and now the bulk of the capacity is oriented towards LED products.
We look at customisation not in terms of technical modification but more to suit specific markets. The Indian market has erratic voltage fluctuations and seasonal climate variations which put different levels of strain on the product. In that context, we have to manage strength requirements and build for scalability. To succeed in the Indian market, a product must be functional in temperatures of up to 50 degrees and withstand high winds in coastal areas, and that is where our customisation comes in. Our product testing is from 70 degrees to minus 20 degrees. Our pricing is at par with other leading brands.
Currently, we have around 30 active distributors and dealers across India touching around 1,400 retail points. For this financial year, we aim to reach 100 dealers and distributors across selective urbanised pockets in 12-15 states. Such a network would enable us to reach around 7,000-8,000 retail shops. The focus is not entirely urban. For instance, Uttar Pradesh has a big, rural, lucrative market which is our target too.
What is your growth and what are your overall targets for the next 3-4 years?
Last year’s group revenue was around Rs 470 crore wherein LED contributed Rs 100 crore. The shift from CFL and other products to LED is gaining momentum. We expect close to Rs 500 crore in the end of the current financial year, wherein LED would contribute 90 per cent. For FY2020, our target is to get close to Rs 1,000 crore and for FY2022, the group aims to be around out Rs 1,500 crore. By that time our network should be able to touch 50,000 retail outlets. Within the Rs 1,500 crore revenue, the Pharox brand itself should be giving a contribution of Rs 500 crore.