With prices of LED or Light Emitting Diodes crashing, the pricey competitor to the conventional Compact Florescent Lamps (CFLs) may soon enter the rural market within the next three years, thereby seeing manifold jump in its sales, believes Eveready managing director Amritanshu Khaitan.
With prices of LED or Light Emitting Diodes crashing, the pricey competitor to the conventional Compact Florescent Lamps (CFLs) may soon enter the rural market within the next three years, thereby seeing manifold jump in its sales, believes Eveready managing director Amritanshu Khaitan.
"LED is still an urban phenomenon. For the next 18-24 months, it would still be. But if prices keep coming down, which we think it will, rural India wouldn't be far behind," he said.
Eveready, traditionally a dry-cell battery maker, is a recent entrant in this market where players like Philips, Havells, Bajaj and Surya Roshni dominate.
But the new entrants are playing a disruptive role, bringing down prices by cutting down the trade margins, Khaitan believes. "Players like us and also Syska are changing the game of this emerging industry," he said.
Prices have corrected by 40% since September and another 30% drop is expected this year.
"The lighting industry always believed in high MRPs and high margins for the retailers. This is changing. We brought down prices in stages. A typical LED bulb (5W) was selling at Rs 600 in September, it dropped to Rs 449 and to Rs 375 now, forcing much of our competition to follow bringing their prices to Rs 400 level. In coming days we see another 25-30% drop in prices," Khaitan said post the earnings of the company was announced.
In this, e-commerce is playing its role. Rs 375 Eveready bulb is being offered by popular e-commerce sites at Rs 273 while rival's products are selling at around Rs 310.
"We set our prices for e-commerce so that the retailers are not annoyed being forced to sell at a loss. Whether they discount over that price is their call. During the highly publicised limited day sales, discounts are high and we can't control that," he said.
"In three year's time, we see our LED business to grow to Rs 700-1,000 crores, or about 30% of turnover against just 1% in FY15."
Eveready saw 33% topline growth in FY15 in this new lighting vertical while overall sales grew by 11% primarily driven by prices hikes even as battery volumes remained largely flat.
For bigger competitor Havells, the LED segment witnessed a steep 83% growth during FY15, the company, which also reveled its earnings on Monday, said. The exponential growth in LED is happening even as there is decline in traditional products including CFL, Havells said in a release.
"We see a complete shift from CFL to LED in the next three years. The incandescent light bulbs would continue to sell though particularly in the rural areas because of the low price point of Rs 10," Khaitan said.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}