Industry Analysis By –Omansh Sharma80303170105 Table ?f C?ntentsC?nsumer Electrical.
3Anch?r Electricals. 3Industry and C?mpetiti?n. 41. Market Size andCharacteristics 4Ø Switches 4Ø Lighting 8Ø FAN 132.
Market Trends and Structure 14Ø Switches 14Ø Lighting 16Ø Fans 22References. 23 C?nsumer ElectricalIndian c?nsumer electrical market is expected t? have str?nggr?wth in the c?ming years with an estimate t? t?uch ?1.3 lakh cr?re mark by March 2020. The maj?r reas?nf?r this gr?wth is the rise in the number ?f nuclear, the rise in the percapita inc?me and better electricity availability in the c?untry. The tw? main challengesin the C?nsumer Electrical industry are that it has a fragmented market and alarge market share in s?me states is under un?rganized sect?r, this creates aclutter and hence high p?ssibility f?r a brand t? be ?verl??ked. The table bel?wsh?wcases the t?p five states with highest un?rganized sect?rs market shares.
States Un?rganized Sect?r Market % Punjab 34%(+5%) Uttar Pradesh 30%(-4%) Rajasthan 27%(-9%) Madhya Pradesh 23%(+3%) Gujarat 21%(+1%) The maj?r players in the industry are Havells, Philips, Anch?r,Schneider and Legrand. The industry in last few years had seen an en?rm?us gr?wthin the last few years with m?re and m?re cust?mers preferring the brands f?rtheir branded pr?duct requirements. C?mpanies like Philips has created a str?ngh?ld in the sect?r by establishing a wide distributi?n netw?rk c?upled with c?nsistentbranding. Establishing a c?nsumer centric brand in the electrical sect?r requiressales pr?m?ti?n campaigns, pr?m?ti?nal ?ffers c?mplimented by mass and s?cialmedia campaigns, all these steps will result in deep market penetrati?n andacceptance ?f the brand by the masses which in turn will result in pr?fit maximizati?n.The maj?r segments ?f c?nsumer electrical industry in India are Lighting pr?ducts,Switches and electrical c?nsumer durables. Anch?r ElectricalsAnch?r Electricals is a subsidiary ?f Panas?nic C?rp?rati?n,which acquired the 53 year ?ld d?mestic family ?wned electrical equipmentmanufacturer in 2007. The c?mpany manufactures switches, switchgears, fans andluminaries.
Anch?r Electricals enj?ys a mamm?th share ?f 30% in wiring devicessegment ?f the Indian electrical market which acc?unts f?r nearly 50% ?f the t?talsales ?f the c?mpany. The c?mpany recently has als? started t? expl?re its ?pp?rtunitiesin the s?lar p?wer segment with the aim ?f 100MW ?f installati?ns by the end ?f2018. Panas?nic India plans t? devel?p Anch?r Electicals as itsexp?rt hub. The c?mpany in its recent statement has said that it is devel?pingpr?ducts f?r Gulf and African markets with the aim t? increase its revenue fr?mexp?rts t? 10% fr?m the current 1%. Industry and C?mpetiti?n 1.
Market Size and Characteristics C?nsumer Electrical Industry have a wide range ?f electricalpr?ducts that c?mes under it, the m?st imp?rtant am?ng them is the pr?ductsunder switches, lighting and fan categ?ry. Vari?us pr?ducts under them are: Ø SwitchesSwitches c?me under the categ?ry ?f wiring devices which als?includes s?ckets, dimmers, bell push, regulat?rs and m?dule plates. The wiringdevice market t?uched the sales figure ?f ? 1250 cr. in September 2017 ?ut ?f which ?750 cr. was fr?m retailchannels.
In the retail market ?f wiring devices the rati? ?f instituti?nal t?retail sales is ab?ut 4:6 where the retail st?res is taking a lead ?f ab?ut 20%?ver the instituti?nal sales. Figure 1 Percentage Value C?ntributi?nby class ?f t?wn in retail market The ab?ve figure clearly sh?ws that smaller t?wns with p?pulati?n?f less than 0.5 milli?n needs t? be f?cused up?n as they are lagging behind inc?mparis?n t? the t?wns with p?pulati?n greater than 0.5 milli?n by alm?st ab?ut18% ?f the t?tal sales value in the retail market, s? there lies a ?pp?rtunity ?fbusiness in the smaller t?wns which are n?t pr?perly tapped by the c?nsumerelectrical industry.Talking ab?ut the t?wns with p?pulati?n ?f m?re than 0.5milli?n, which is the maj?r c?ntribut?r t? the sales value ?f the wiringdevices.
Given in the figure bel?w is the percentage distributi?n ?f vari?us pr?ductswhich c?mes under the wiring devices categ?ry in this market.Figure 2 % All India Sales Value C?ntributi?nt? M?dular wiring devices The figure ab?ve clearly sh?w that switches with c?ntributi?n?f 41% is the largest selling pr?duct by value in the categ?ry ?f wiringdevices, als? in the t?wns with p?pulati?n less than 0.5 milli?n the c?ntributi?n?f switches as a percentage ?f sales value is 65%. Theref?re it justifies ?urch?ices t? study switches and vari?us categ?ries under it as they are the maj?rc?ntribut?rs in the sales value.Switches c?me under three categ?ries i.e.
M?dular, Semi M?dularand N?n M?dular. The N?n M?dular switches c?me with all the p?ssible cables,visible screws and ?nly ?ne c?ver plate. This is the cheapest categ?ry ?fswitches available in the market. H?wever their safety due t? the presence ?fmany unwanted cables and l?w quality is a cause ?f c?ncern.
Semi M?dular switches have a d?uble c?ver plate with hiddenscrews and slightly better quality than n?n m?dular switches.M?dular switches are the latest type ?f switches availablein the market and it has a range ?f benefits ab?ve the c?nventi?nal switchesavailable in the market. There are many attractive features ?f m?dular switcheslike hidden screws, anti-weld designs, sm??th ?perati?n, shuttered s?ckets andall this c?mbined with the inc?mparable am?unt ?f safety. Figure 3 % Sales Value c?ntributi?n t??verall switches Figure 4 % Sales V?lume c?ntributi?n t??verall switches The ab?ve tw? figures sh?ws the percentage sales v?lume andvalue share ?f each type ?f switch t? the ?verall switches.
Due t? the highprice ?f m?dular switches its market c?ntributi?n by value in 2017 is 76%despite the v?lume c?ntributi?n ?f 54% in the same peri?d, the c?mpletely ?pp?sitescenari? can be ?bserved in the case ?f n?n m?dular switches due t? its l?wpricing. But a clear trend that can be ?bserved fr?m ab?ve data is that thereis a decrease in b?th value and v?lume c?ntributi?n ?f n?n m?dular switcheswhile there is increase in b?th v?lume and value c?ntributi?n ?f the m?dularswitches. The all India estimated market sale ?f m?dular switches is ab?ut ?410 cr. during the thirdquarter ?f 2017 with a gr?wth rate ?bserved t? be ar?und 5%. The maj?r c?ntribut?r?f m?dular switches is s?uth z?ne with 63% c?ntributi?n and the least is east z?newith ?nly 23% c?ntributi?n t? the ?verall sales ?f the m?dular switches.
Themaj?r brands ?f the industry in the switch categ?ry are Anch?r(31%),Legrand(12%), and Havells(7%). Figure 5 Percentage v?lume sales c?ntributi?n?f maj?r brands Ø LightingAn?ther maj?r segment in c?nsumer electrical industry is thelighting segment. T?day m?st ?f the sales is generated in lighting segment thr?ughLED pr?ducts, maj?r pr?ducts in the LED segment are LED Bulbs, LED Battens, LEDd?wn lighters and panel lights.LED BulbsThe bulbs in the LED segment are the maj?r s?urces ?f salesin this categ?ry. The rec?rded sale ?f Q2 2017 ?f LED bulbs was ab?ut 30 milli?nby v?lume, with c?ntributi?n fr?m N?rth India t? be at 9 milli?n, West India at9 milli?n, S?uth India at 8 milli?n and East India at 4 milli?n units. With n?rthand western parts ?f the c?untry being maj?r c?ntribut?rs ?f sale, 37% sales c?ntributi?nwas fr?m Tier 1 t?wns while ab?ut 28% ?f c?ntributi?n came fr?m Tier 4 and bel?wt?wns, thus b?th the upper and l?wer segment ?f the cities needs t? be equallyf?cused as b?th ?f these categ?ries is c?ntributing maj?r chunk in the sales v?lume. Figure 6 Percentage C?ntributi?n ?fdifferent Z?nes The range ?f LED bulbs starts fr?m 0.5W t? 15W with eachcateg?ry having its ?wn market share.
The m?st heavy s?ld LED bulbs lies in thecateg?ry ?f 6-7W (32%) f?ll?wed by 8-10W (26%) categ?ry, this makes b?th ?fthese categ?ries a arena f?r a t?ugh c?mpetiti?n between the biggies ?f theindustry. The f?ll?wing chart sh?ws a very clear picture ?f h?w different categ?ries?f LED bulbs are c?ntributing t?wards the ?verall sales ?f the bulbs. Figure 7 All India V?lume c?ntributi?n?f vari?us categ?ries ?f LED Bulbs The maj?r players in the categ?ry ?f bulbs are Phillips,Syska, Havells, Cr?mpt?n etc. Panas?nic (Anch?r) has a market share ?f ?nly ab?ut2% by v?lume and it still have a l?ng way t? g? if it wants t? be a maj?rplayer in this segment ?f c?nsumer electrical. Figure 8 Percentage V?lume Share ?fmaj?r players LED BattensLED Battens with a integrated tube are the substitute ?f Fl?rescenttube light, battens have ?ne ?r tw? tubes ?f LEDs fixed in and with all thebenefits that a LED has t? ?ffer i.
e. l?ng life, energy saving and bright lightand als? c?mes in a fixture that l??ks stylish than a n?rmal fl?rescent tube. The Q2 2017 sales ?f LED batten was ar?und5.
4 milli?n by v?lume and als? it has ?bserved a hum?ng?us gr?wth rate ?f 116%as c?mpared t? previ?us year. The maj?r c?ntributi?n in the sales ?f batten c?mesfr?m Tier 1 t?wns i.e. ab?ut 52% while Tier 4 and l?wer t?wns c?ntributed ?nly20% ?f the t?tal sales v?lume. Thus this pr?duct in the LED categ?ry till n?w ?nlyhas the market in the maj?r cities ?f the c?untry. Figure 9 Percentage c?ntributi?n by v?lume?f Different Z?nes The graph ab?ve sh?ws the percentage c?ntributi?n by v?lume ?fdifferent regi?ns ?f the c?untry, in this it can clearly seen that west with29% has highest c?ntributi?n and a there is a l?t ?f gr?wth ?pp?rtunity whichcan be tapped in the eastern regi?n ?f the c?untry as its c?ntributi?n lies ?nlyat 19%.The LED battens c?me in vari?us variants depending up?ntheir p?wer c?nsumpti?n starting fr?m 10W t? 25W. Where the market share ?feach categ?ry varies fr?m 13% (f?r less than 15W) t? 65% (f?r 15-19W), thisdemand f?r higher p?wer LED battens clearly sh?ws that the c?nsumer isaccepting as a alternative f?r fl?rescent Tube lights.
The maj?r players in this segment are again Phillips, Syska,Cr?mpt?n and Havells, Panas?nic (Anch?r) in this categ?ry als? have a marginalshare ?f ?nly ab?ut 2% ?f the market v?lume and it needs t? think and applymarketing strategy if it wants t? c?mpete with ?ther big players ?f thesegment. Figure 10 Percentage V?lume Marketshare ?f vari?us c?mpanies LED D?wn Lighters andPanel Lights Led d?wn lighters uses a back lit techn?l?gy with LED m?untedat the back side ?f the d?wn light h?using, it has a inbuilt ?r a separatedriver with heat sink visible. While the panel lights uses an edge lit techn?l?gywith a separate driver. The all India v?lume sale ?f LED d?wn lighters andPanel Lights c?mbined is ab?ut 7.7 milli?n with Tier 1 cities c?ntributing ab?ut50% ?f the t?tal sales v?lume, in this case als? there lies a huge market whichis untapped as the Tier 4 and bel?w t?wns ?nly c?ntribute ab?ut 19% ?f the t?talsales v?lume which has a huge p?ssibility ?f impr?vement.
The maj?r c?ntributi?nin this case c?mes fr?m N?rthern and s?uthern part ?f the c?untry withpercentage c?ntributi?ns ?f ab?ut 30% and 29% respectively whereas the easternpart with market c?ntributi?n ?f ?nly 14% ?f the t?tal v?lume sale is an areawhere the c?mpanies still needs t? f?cus . Figure 11 Percentage sales c?ntributi?nby v?lume ?f vari?us regi?ns The sales c?ntributi?n rati? ?f panel lights t? d?wnlighters is 7:3, with panel lights salesbeing highest in S?uth India at 80% and d?wn lighters sales being highest in N?rthIndia at 42%. The maj?r players in this segment as ?thers are als? Phillips, Cr?mpt?n,Syska and Havells, Panas?nic (Anch?r) in this categ?ry als? lags far behind inc?mparis?n t? ?thers at just 2% ?f the market v?lume share. Figure 12 Percentage v?lume marketshare ?f vari?us c?mpaniesØ FANThe estimated sales value ?f fans all ?ver India is ?11226 milli?n with the v?lumesale ?f ar?und 7.1 milli?n. Due t? the changing pri?rities ?f cust?mer due t?air c?nditi?ning and central air c??ling the sales ?f fans faces a stiffchallenge and thus requiring m?re inn?vative pr?duct and marketing ideas.
S?uthIndia with 30% ?f sales v?lume ?f the entire c?untry is the highest c?ntribut?rin the categ?ry ?f fans. Figure 13 Percentage v?lume sales c?ntributi?n?f vari?us regi?ns The market ?f fans can be divided int? vari?us categ?rieslike Ceiling fans, Table fans, Pedestal fans, Wall M?unted fans and Ventilat?rExhaust fans. Am?ng all these categ?ries ceiling fans have the highestpercentage sales v?lume c?ntributi?n ?f 66%, the m?st preferred am?ng ceilingfans are als? th?se with the MRP between ?1300-?1500making the percentage v?lume sales c?ntributi?n ?f 23%. The maj?r players in the categ?ry ?f fans are Havells,Bajaj, Cr?mpt?n, ?rient and Usha,with Anch?r c?ntributing ?nly 1% ?f thepercentage v?lume market share.
Figure 14 Percentage Sales V?lume C?ntributi?n?f vari?us c?mpanies 2. Market Trends and StructureLet us n?w see in this secti?n the current market trends andthe market structure ?f switches, lighting and fansØ SwitchesThe market f?r switches in India is gr?wing at a rate ?f 5%,with s?uth Indian market achieving the highest gr?wth rate ?f 10%. The figurebel?w sh?ws the gr?wth rate achieved by the vari?us regi?ns ?f the c?untry f?rthe switch market.Figure 15 Percentage gr?wth rate ?fvari?us regi?ns Figure 16 Brand strength acr?ss vari?usstates The figure ab?ve sh?ws the brand strength ?f all the maj?rbrands in the switches categ?ry acr?ss vari?us states, in which Anch?rElectricals being a leader in states like Delhi, Madhya Pradesh, Uttar Pradesh,Maharashtra, Karnataka and Andhra Pradesh.
Alth?ugh in f?ur regi?ns i.e. east,west, n?rth and s?uth there is a d?minance ?f vari?us nati?nal and l?calbrands, als? ?ne ?f the maj?r challenges f?r the t?p brands is t? c?ver the un?rganizedsegment ?f the market. The figure bel?w sh?ws the percentage ?f ?rganized andun?rganized segment ?f the market with the maj?r l?cal and nati?nal brands inall the f?ur regi?ns. Figure 17 Percentage market share ?fall f?ur regi?ns Ø LightingLED BulbsLED lighting as we saw is that segment ?f the electrical industrywhich is gr?wing at a very rapid gr?wth rate ?f ab?ut 127%, the highest gr?wingregi?ns ?f the LED light segment are western and eastern part ?f the c?untry b?thgr?wing at the rate ?f 216%. The f?ll?wing figure sh?ws the gr?wth rate c?mparis?n?f all the f?ur regi?ns f?r LED lighting segment.
Figure 18 Percentage gr?wth rate ?fdifferent regi?nsThe percentage v?lume gr?wth rate ?f bulbs bel?nging t?different categ?ries depending up?n their p?wer c?nsumpti?n is being substantialin past ?ne year with percentage gr?wth in v?lume c?ntributi?n ?f 8-10W bulbs t?uchingthe mark ?f 403% in the past ?ne year. Alth?ugh even in such a high gr?wingmarket there is ?ne categ?ry 0.5W bulbs which has seen a negative gr?wth rate ?f -12%.
Figure 19 Percentage gr?wth rate ?fvari?us categ?ries The gr?wth rate ?f the LED bulbs can als? be seen thr?ugh aperspective ?f the gr?wth rates in the vari?us states ?f the c?untry ?n ?bservingthe data given in the figure bel?w we can clearly see that the states which hasachieved the gr?wth rate ?f ?ver 200% are Gujarat, Maharashtra, Bihar, ?rissa,Kerala and Jharkhand, while states like Andhra Pradesh, G?a, Punjab,Uttarakhand and Chhattisgarh have achieved the percentage v?lume gr?wth rate ?fbel?w 75%. Figure 20 Percentage gr?wth rate ?f LEDbulbs in vari?us states ?f the c?untry LED BattensThe percentage v?lume gr?wth rate f?r LED battens ?bservedin Q2 2017 is 121%, with eastern regi?n achieving the gr?wth rate ?f 142% butthe s?uthern regi?n lagging behind at a gr?wth rate ?f 91%.Figure 21 Percentage V?lume Gr?wthrates ?f all f?ur regi?nsThe battens are categ?rized int? vari?us categ?ries acc?rdingt? their p?wer c?nsumpti?n which ranges fr?m 10W t? 25W, with the highestpercentage v?lume gr?wth rate ?f 282% that was ?bserved in the categ?ry ?f ab?ve20W ?f LED battens. Figure 22 Percentage gr?wth rate ?f LEDbattens in vari?us states ?f the c?untry We can clearly ?bserve fr?m the ab?ve figure that thehighest gr?wth rate ?f ab?ve 250% was ?bserved in states ?f Uttar Pradesh,Bihar, ?rissa and Assam, while the l?westgr?wth rate ?f bel?w 50% was ?bserved in case ?f Andhra Pradesh, Chhattisgarhand G?a. LED D?wn lighters & Panel Lights The gr?wth rate ?f LED D?wn Lighters and Panel Lights categ?ryhave sl?wed d?wn fr?m 172% in FY’016-17 t? 39% in the Q2′ 17 as c?mpared withQ2′ 16, this decline was lead by s?uthern z?ne with registering a gr?wth rate ?fmere 7%.Figure 23 Percentage V?lume Gr?wthrates ?f all f?ur regi?ns Maj?r challenge in fr?nt ?f the big nati?nal brands in this segmentis that the large chunk ?f market share by v?lume still lies with the small andl?cal players ?f the industry, with l?cal players ?ccupying m?re than 50% ?fthe market share in the LED panel lights and ar?und 45% ?f the market share inLED d?wn lighters. The demand ?f LED d?wn lighters and panels have increaseddramatically as it they illuminate the ambience in a m?re h?m?gene?us way andwith the devel?pment in b?th private and public infrastructure pr?jects whichare l??king f?r s?luti?ns that are m?re efficient than the c?nventi?nal lightfittings. Figure 24 Percentage gr?wth rate ?f LEDDL and Panels in vari?us states ?f the c?untry As it can be ?bserved fr?m the image ab?ve states ?fGujarat, Maharashtra, G?a, Uttar Pradesh and Bihar have achieved the gr?wthrate ?f greater than 150%, while states ?f Punjab, Haryana, Uttarakhand andAssam have achieved the gr?wth rate ?f less than 50%.
This sh?ws a clearpicture ?f the regi?ns where there is a sc?pe ?f devel?pment and ?ther regi?nswhere a excellent gr?wth is achieved. Ø FansThe categ?ry ?f fans have seen a decline ?f 9% where if wesee the regi?n wise distributi?ns east India the gr?wth rate has declinedrapidly with -25% and ?nly n?rthern regi?n have registered a market v?lume gr?wth?ver the previ?us year that t?? ?f merely 2%. Figure 25 Percentage gr?wth rate ?fdifferent regi?ns Figure 26 Effect ?f Dem?netisati?n andGST ?n Average v?lume salesReferenceshttp://j?urnals.sagepub.c?m/d?i/full/10.1177/0256090915600296http://www.mynewsdesk.c?m/in/pressreleases/features-and-benefits-?f-m?dular-switches-935307http://ledtubelighting.c?m.au/pr?ducts/led-light-batten/led-battens-integrated-tubes