Companies Ready Strategies To Promote CFLs

Mumbai: | Updated: Nov 17 2003, 05:30am hrs
Competition is hotting up in the compact flouroscent lamp (CFL) market. Companies are beefing up their distribution network, focusing on below-the-line activities and retailer schemes to promote the so-called energy-saving bulbs in India. However, the market itself is still at a nascent stage because it is witnessing value growth which is lesser than the volume growth due to drop in prices, says Bajaj Electricals Ltd president and COO R Ramakrishnan.

Industry analysts too believe that although consumers are demanding energy-saving bulbs due to high price points, the penetration level is very low, and retailers too have high margins. According to Market Search India Pvt Ltd senior research executive Rakesh Shah: In order to spur CFL volumes through the organised route, it becomes imperative for manufacturers to lower the prices of their CFLs to make it more affordable. Retailers should get reasonable margins and consumers the maximum benefit. At present, the Rs 425-crore CFL market comprises Rs 200 crore organised market and Rs 225 crore unorganised market.

In such a scenario, what are the new initiatives CFL manufacturers should implement to make the market more mature According to Mr Ramakrishnan: The CFL market can mature only if companies start providing superior products by enhancing the product range at various price points, enhance retail penetration continuously and ensure that at the in-shop levels, there are adequate CFL poster selling aids by which the retailer finds it easy to convert traditional generalised lamp source (GLS) to CFL. In fact, in sync with the emerging trend, we are planning to beef up its distribution network by an additional 40 per cent within a year.

According to Mr Ramakrishnan, earlier the CFLs which were being imported from China were of bad quality. But when anti-dumping duties were imposed, domestic sourcing was the only option. When we first launched CFLs in India two years ago, it was available as the other bulb.

Bajaj Ecolux CFL was available then in the form of a round high voltage CFL with 6,000 burning hours. At present, the positioning platform for Bajaj CFL is Double the Life at the same price, he said.

In a strategic move, the Rs 500-crore Anchor Electronics and Electricals Ltdwhich is into switch boards, wires, luminaries and home automation productsis planning to foray in the

CFL segment and set up a manufacturing unit for making CFL near Bhuj, Kutch, in June 2004, at an investment of Rs 70 crore, Anchor Electronics and Electricals Ltd president Shashi Nair told FE.

On the rationale behind the move, explained Mr Nair: India is an energy-deficient country and CFL saves 45 per cent energy. Besides, there is demand for CFL in India.

In a bid to gain an edge over competitors, Mr Nair added that Anchor CFL will be sold through its 8,000 distributors and two lakh retail outlets across the country. The companys Anchor switches, switchboards, wires, fans and energy meters are being currently marketed through a similar route. Prior to the move, Anchor CFL will be imported from the Middle East and Europe and test-marketed in two major cities and one metro.

According to Mr Ramakrishnan, the CFL market is growing at a rate of 25 to 30 per cent per annum and is likely to grow at the same pace even next year. With the new initiatives, Bajaj Electricals hopes 15 per cent of its lighting business to come through CFL business.