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LED rise dims Havells profit, lights up Eveready

Q: How many people will it take to change a CFL bulb?

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Q: How many people will it take to change a CFL bulb?
A: None. Pretty soon, there would only be LED bulbs to change, or so goes a new version of an old joke.

Fast replacement of CFL, or compact florescent light, by LED, or light emitting diodes, would weigh on volumes of lighting players like Havells whose revenues from such conventional bulbs are high even as players like Eveready continue to benefit from growth in LED lights.

Electrical goods maker Havells India has reported a 4% decline in standalone net profit at Rs 116.21 crore for the third quarter while sales rose just 5% to Rs 1,236 crore.

Much of the pressure on the financials was contributed by de-growth in the conventional and CFL lightings even as its LED lighting sales grew handsomely at 63%.

''Havells has been very aggressive in launching new products in LED and thereby improving its positioning in the premium lighting segment. However, traditional lighting continues to be substantial part of lighting division and its de growth impacted overall growth of the segment," the company said in a release on Wednesday.

The growth of LED is explained by sharp drop in its prices in recent times and also marketing push at the retailers' end encouraging consumers to replace their CFLs with LEDs, Amritanshu Khaitan, managing director, Eveready Industries, told dna.

The drop is prices has been more than 30% over a period of 12 months, said Sandeep Singh, chief marketing manager of NTL Lemnis, which manufactures and sells LED lighting systems to projects and retail consumers as well.

"Price of a 7 watt LED bulb has dropped from about Rs 450 a year ago to about Rs 300 now. This price is still high compared with, say, 15 watt CFL, giving same quality of illumination, priced at about Rs 120," Singh said.
With drop in prices, payback for investments in LED, particularly in lighting commercial spaces like shops and factories, has also come down from a period of three years to about a year, thereby encouraging a large segment of commercial consumers to try out LED lights.

Singh sees demand for LEDs to continue growing at above 60%.

For Eveready, however, CFL segment grew as much as 20% during the December quarter, which Khaitan attributed to small base effect.

"In this category we have a market share of just 2%, so we will continue to enjoy growth for sometime to come," he said.

Like Havells. Eveready too is betting big on LED enhancing its lighting offering significantly this month.

Its bottomline has zoomed 238% to Rs 15.33 crore during the quarter, while sales had improved by 10% to Rs 325.23 crore.

Eveready continues to drive a major share of its revenues from dry-cell batteries, LED lighting being its latest diversification, a segment whose share would grow in coming days, Khaitan said.

With LED lights becoming affordable and the government deciding to subsidise and popularise its use, this new form of lighting would continue to replace the conventional tungsten as well CFLs as more acceptable and economical source of light.

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