Industry Analysis

 

 

 

 

 

 

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Table of Contents

Consumer Electrical. 3

Anchor Electricals. 3

Industry and Competition. 4

1.   Market Size and Characteristics  4

Ø   Switches  4

Ø   Lighting  8

Ø   FAN  13

2.   Market Trends and Structure  14

Ø   Switches  14

Ø   Lighting  16

Ø   Fans  22

References. 23

 

 

 

 

 

 

 

 

 

 

 

Consumer Electrical

Indian consumer electrical market is expected to have strong growth in the coming years with an estimate to touch ?1.3 lakh crore mark by March 2020. The major reason for this growth is the rise in the number of nuclear, the rise in the per capita income and better electricity availability in the country. The two main challenges in the Consumer Electrical industry are that it has a fragmented market and a large market share in some states is under unorganized sector, this creates a clutter and hence high possibility for a brand to be overlooked. The table below showcases the top five states with highest unorganized sectors market shares.

States

Unorganized Sector Market %

Punjab

34%(+5%)

Uttar Pradesh

30%(-4%)

Rajasthan

27%(-9%)

Madhya Pradesh

23%(+3%)

Gujarat

21%(+1%)

 

The major players in the industry are Havells, Philips, Anchor, Schneider and Legrand. The industry in last few years had seen an enormous growth in the last few years with more and more customers preferring the brands for their branded product requirements. Companies like Philips has created a strong hold in the sector by establishing a wide distribution network coupled with consistent branding. Establishing a consumer centric brand in the electrical sector requires sales promotion campaigns, promotional offers complimented by mass and social media campaigns, all these steps will result in deep market penetration and acceptance of the brand by the masses which in turn will result in profit maximization. The major segments of consumer electrical industry in India are Lighting products, Switches and electrical consumer durables.

 

Anchor Electricals

Anchor Electricals is a subsidiary of Panasonic Corporation, which acquired the 53 year old domestic family owned electrical equipment manufacturer in 2007. The company manufactures switches, switchgears, fans and luminaries. Anchor Electricals enjoys a mammoth share of 30% in wiring devices segment of the Indian electrical market which accounts for nearly 50% of the total sales of the company. The company recently has also started to explore its opportunities in the solar power segment with the aim of 100MW of installations by the end of 2018.

Panasonic India plans to develop Anchor Electicals as its export hub. The company in its recent statement has said that it is developing products for Gulf and African markets with the aim to increase its revenue from exports to 10% from the current 1%.

 

Industry and Competition

 

1.     Market Size and Characteristics

Consumer Electrical Industry have a wide range of electrical products that comes under it, the most important among them is the products under switches, lighting and fan category. Various products under them are:

Ø  Switches

Switches come under the category of wiring devices which also includes sockets, dimmers, bell push, regulators and module plates. The wiring device market touched the sales figure of ? 1250 cr. in September 2017 out of which ?750 cr. was from retail channels. In the retail market of wiring devices the ratio of institutional to retail sales is about 4:6 where the retail stores is taking a lead of about 20% over the institutional sales.

 

Figure 1 Percentage Value Contribution by class of town in retail market

 

The above figure clearly shows that smaller towns with population of less than 0.5 million needs to be focused upon as they are lagging behind in comparison to the towns with population greater than 0.5 million by almost about 18% of the total sales value in the retail market, so there lies a opportunity of business in the smaller towns which are not properly tapped by the consumer electrical industry.

Talking about the towns with population of more than 0.5 million, which is the major contributor to the sales value of the wiring devices. Given in the figure below is the percentage distribution of various products which comes under the wiring devices category in this market.

Figure 2 % All India Sales Value Contribution to Modular wiring devices

 

The figure above clearly show that switches with contribution of 41% is the largest selling product by value in the category of wiring devices, also in the towns with population less than 0.5 million the contribution of switches as a percentage of sales value is 65%. Therefore it justifies our choices to study switches and various categories under it as they are the major contributors in the sales value.

Switches come under three categories i.e. Modular, Semi Modular and Non Modular.

The Non Modular switches come with all the possible cables, visible screws and only one cover plate. This is the cheapest category of switches available in the market. However their safety due to the presence of many unwanted cables and low quality is a cause of concern.

Semi Modular switches have a double cover plate with hidden screws and slightly better quality than non modular switches.

Modular switches are the latest type of switches available in the market and it has a range of benefits above the conventional switches available in the market. There are many attractive features of modular switches like hidden screws, anti-weld designs, smooth operation, shuttered sockets and all this combined with the incomparable amount of safety.

 

 

Figure 3 % Sales Value contribution to overall switches

 

Figure 4 % Sales Volume contribution to overall switches

 

The above two figures shows the percentage sales volume and value share of each type of switch to the overall switches. Due to the high price of modular switches its market contribution by value in 2017 is 76% despite the volume contribution of 54% in the same period, the completely opposite scenario can be observed in the case of non modular switches due to its low pricing. But a clear trend that can be observed from above data is that there is a decrease in both value and volume contribution of non modular switches while there is increase in both volume and value contribution of the modular switches. The all India estimated market sale of modular switches is about ?410 cr. during the third quarter of 2017 with a growth rate observed to be around 5%. The major contributor of modular switches is south zone with 63% contribution and the least is east zone with only 23% contribution to the overall sales of the modular switches. The major brands of the industry in the switch category are Anchor(31%), Legrand(12%), and Havells(7%).

 

Figure 5 Percentage volume sales contribution of major brands

 

 

 

Ø  Lighting

Another major segment in consumer electrical industry is the lighting segment. Today most of the sales is generated in lighting segment through LED products, major products in the LED segment are LED Bulbs, LED Battens, LED down lighters and panel lights.

LED Bulbs

The bulbs in the LED segment are the major sources of sales in this category. The recorded sale of Q2 2017 of LED bulbs was about 30 million by volume, with contribution from North India to be at 9 million, West India at 9 million, South India at 8 million and East India at 4 million units. With north and western parts of the country being major contributors of sale, 37% sales contribution was from Tier 1 towns while about 28% of contribution came from Tier 4 and below towns, thus both the upper and lower segment of the cities needs to be equally focused as both of these categories is contributing major chunk in the sales volume.

 

Figure 6 Percentage Contribution of different Zones

 

The range of LED bulbs starts from 0.5W to 15W with each category having its own market share. The most heavy sold LED bulbs lies in the category of 6-7W (32%) followed by 8-10W (26%) category, this makes both of these categories a arena for a tough competition between the biggies of the industry. The following chart shows a very clear picture of how different categories of LED bulbs are contributing towards the overall sales of the bulbs.

 

Figure 7 All India Volume contribution of various categories of LED Bulbs

 

The major players in the category of bulbs are Phillips, Syska, Havells, Crompton etc. Panasonic (Anchor) has a market share of only about 2% by volume and it still have a long way to go if it wants to be a major player in this segment of consumer electrical.

Figure 8 Percentage Volume Share of major players

 

 

 

LED Battens

LED Battens with a integrated tube are the substitute of Florescent tube light, battens have one or two tubes of LEDs fixed in and with all the benefits that a LED has to offer i.e. long life, energy saving and bright light and also comes in a fixture that looks stylish  than a normal florescent tube. The Q2 2017 sales of LED batten was around 5.4 million by volume and also it has observed a humongous growth rate of 116% as compared to previous year. The major contribution in the sales of batten comes from Tier 1 towns i.e. about 52% while Tier 4 and lower towns contributed only 20% of the total sales volume. Thus this product in the LED category till now only has the market in the major cities of the country.  

 

Figure 9 Percentage contribution by volume of Different Zones

 

The graph above shows the percentage contribution by volume of different regions of the country, in this it can clearly seen that west with 29% has highest contribution and a there is a lot of growth opportunity which can be tapped in the eastern region of the country as its contribution lies only at 19%.

The LED battens come in various variants depending upon their power consumption starting from 10W to 25W. Where the market share of each category varies from 13% (for less than 15W) to 65% (for 15-19W), this demand for higher power LED battens clearly shows that the consumer is accepting as a alternative for florescent Tube lights.

The major players in this segment are again Phillips, Syska, Crompton and Havells, Panasonic (Anchor) in this category also have a marginal share of only about 2% of the market volume and it needs to think and apply marketing strategy if it wants to compete with other big players of the segment.

 

Figure 10 Percentage Volume Market share of various companies

 

 

LED Down Lighters and Panel Lights        

Led down lighters uses a back lit technology with LED mounted at the back side of the down light housing, it has a inbuilt or a separate driver with heat sink visible. While the panel lights uses an edge lit technology with a separate driver. The all India volume sale of LED down lighters and Panel Lights combined is about 7.7 million with Tier 1 cities contributing about 50% of the total sales volume, in this case also there lies a huge market which is untapped as the Tier 4 and below towns only contribute about 19% of the total sales volume which has a huge possibility of improvement. The major contribution in this case comes from Northern and southern part of the country with percentage contributions of about 30% and 29% respectively whereas the eastern part with market contribution of only 14% of the total volume sale is an area where the companies still needs to focus

 

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Figure 11 Percentage sales contribution by volume of various regions

 

The sales contribution ratio of panel lights to down lighters  is 7:3, with panel lights sales being highest in South India at 80% and down lighters sales being highest in North India at 42%. The major players in this segment as others are also Phillips, Crompton, Syska and Havells, Panasonic (Anchor) in this category also lags far behind in comparison to others at just 2% of the market volume share.

 

Figure 12 Percentage volume market share of various companies

Ø  FAN

The estimated sales value of fans all over India is ?11226 million with the volume sale of around 7.1 million. Due to the changing priorities of customer due to air conditioning and central air cooling the sales of fans faces a stiff challenge and thus requiring more innovative product and marketing ideas. South India with 30% of sales volume of the entire country is the highest contributor in the category of fans.

 

Figure 13 Percentage volume sales contribution of various regions

 

 

The market of fans can be divided into various categories like Ceiling fans, Table fans, Pedestal fans, Wall Mounted fans and Ventilator Exhaust fans. Among all these categories ceiling fans have the highest percentage sales volume contribution of 66%, the most preferred among ceiling fans are also those with the MRP between ?1300-?1500 making the percentage volume sales contribution of 23%.

The major players in the category of fans are Havells, Bajaj, Crompton, Orient and Usha,with Anchor contributing only 1% of the percentage volume market share.

Figure 14 Percentage Sales Volume Contribution of various companies

 

 2.     Market Trends and Structure

Let us now see in this section the current market trends and the market structure of switches, lighting and fans

Ø  Switches

The market for switches in India is growing at a rate of 5%, with south Indian market achieving the highest growth rate of 10%. The figure below shows the growth rate achieved by the various regions of the country for the switch market.

Figure 15 Percentage growth rate of various regions

 

Figure 16 Brand strength across various states

 

The figure above shows the brand strength of all the major brands in the switches category across various states, in which Anchor Electricals being a leader in states like Delhi, Madhya Pradesh, Uttar Pradesh, Maharashtra, Karnataka and Andhra Pradesh. Although in four regions i.e. east, west, north and south there is a dominance of various national and local brands, also one of the major challenges for the top brands is to cover the unorganized segment of the market. The figure below shows the percentage of organized and unorganized segment of the market with the major local and national brands in all the four regions.

 

 

Figure 17 Percentage market share of all four regions

 Ø  Lighting

LED Bulbs

LED lighting as we saw is that segment of the electrical industry which is growing at a very rapid growth rate of about 127%, the highest growing regions of the LED light segment are western and eastern part of the country both growing at the rate of 216%. The following figure shows the growth rate comparison of all the four regions for LED lighting segment.

Figure 18 Percentage growth rate of different regions

The percentage volume growth rate of bulbs belonging to different categories depending upon their power consumption is being substantial in past one year with percentage growth in volume contribution of 8-10W bulbs touching the mark of 403% in the past one year. Although even in such a high growing market there is one category 0.5W bulbs which has seen a negative growth rate of  -12%.

 

Figure 19 Percentage growth rate of various categories

 

 

The growth rate of the LED bulbs can also be seen through a perspective of the growth rates in the various states of the country on observing the data given in the figure below we can clearly see that the states which has achieved the growth rate of over 200% are Gujarat, Maharashtra, Bihar, Orissa, Kerala and Jharkhand, while states like Andhra Pradesh, Goa, Punjab, Uttarakhand and Chhattisgarh have achieved the percentage volume growth rate of below 75%.  

Figure 20 Percentage growth rate of LED bulbs in various states of the country

 

 

LED Battens

The percentage volume growth rate for LED battens observed in Q2 2017 is 121%, with eastern region achieving the growth rate of 142% but the southern region lagging behind at a growth rate of 91%.

Figure 21 Percentage Volume Growth rates of all four regions

The battens are categorized into various categories according to their power consumption which ranges from 10W to 25W, with the highest percentage volume growth rate of 282% that was observed in the category of above 20W of LED battens.

 

Figure 22 Percentage growth rate of LED battens in various states of the country

 

 

 

We can clearly observe from the above figure that the highest growth rate of above 250% was observed in states of Uttar Pradesh, Bihar, Orissa and  Assam, while the lowest growth rate of below 50% was observed in case of Andhra Pradesh, Chhattisgarh and Goa.

 

 

 

 

 

 

 

LED Down lighters & Panel Lights

The growth rate of LED Down Lighters and Panel Lights category have slowed down from 172% in FY’016-17 to 39% in the Q2′ 17 as compared with Q2′ 16, this decline was lead by southern zone with registering a growth rate of mere 7%.

Figure 23 Percentage Volume Growth rates of all four regions

 

Major challenge in front of the big national brands in this segment is that the large chunk of market share by volume still lies with the small and local players of the industry, with local players occupying more than 50% of the market share in the LED panel lights and around 45% of the market share in LED down lighters. The demand of LED down lighters and panels have increased dramatically as it they illuminate the ambience in a more homogeneous way and with the development in both private and public infrastructure projects which are looking for solutions that are more efficient than the conventional light fittings.

 

 

 

 

 

 

 

 

 

Figure 24 Percentage growth rate of LED DL and Panels in various states of the country

 

As it can be observed from the image above states of Gujarat, Maharashtra, Goa, Uttar Pradesh and Bihar have achieved the growth rate of greater than 150%, while states of Punjab, Haryana, Uttarakhand and Assam have achieved the growth rate of less than 50%. This shows a clear picture of the regions where there is a scope of development and other regions where a excellent growth is achieved.

 

 

 

 

 

 

Ø  Fans

The category of fans have seen a decline of 9% where if we see the region wise distributions east India the growth rate has declined rapidly with -25% and only northern region have registered a market volume growth over the previous year that too of merely 2%.

Figure 25 Percentage growth rate of different regions

 

Figure 26 Effect of Demonetisation and GST on Average volume sales

References

http://journals.sagepub.com/doi/full/10.1177/0256090915600296

http://www.mynewsdesk.com/in/pressreleases/features-and-benefits-of-modular-switches-935307

http://ledtubelighting.com.au/products/led-light-batten/led-battens-integrated-tubes

 

 

 

 

 

 

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