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Executive Summary
Market
Drivers & Challenges
Government
Competitive Landscape
Indian lighting industry was worth INR 135.04 bn in 2013, growing at a CAGR of 19.1%
A formidable feature of this sector is the vast distribution network of players
LED lighting, a sub-set of the lighting industry, has been growing at a CAGR of 46.0%
Published LED Standards
Regulatory Stakeholders – LED Initiatives
Government Support for LED Industry in India
Drivers Increase in Disposable Income
Growth in Rural Segment
Rise in Organized Retail
Boom in Real Estate Sector
Changing Lifestyle of Consumers
Increasing Availability of Credit
Improvement in Rural Electrification
Growing Population
Major Players
Bajaj Electricals Ltd. Crompton Greaves Ltd. GE India Industrial Pvt. Ltd.
Orient Paper & Industries Ltd. Osram India Pvt. Ltd. Philips India Ltd.
Trends LED Technology Development
Digital Signage
Solar LED Lights
LIGHTING INDUSTRY IN INDIA 2015.PPT
Challenges Tough Competition from Unorganized
Players
Depreciation of Rupee and Rise in Energy Costs
Lack of Consumer Awareness About Energy-Efficient Lighting
High Import Dependency
3 LIGHTING INDUSTRY IN INDIA 2015.PPT
•Macroeconomic Indicators
•Introduction
•Market Overview
•EXIM Data
•Drivers & Challenges
•Government Initiatives
•Trends
•Competitive Landscape
•Strategic Recommendations
•Appendix
4
The fragmented and complex lighting market can be categorized into four broad dimensions
End-market Structure
Technologies
Geographies
Applications
LIGHTING INDUSTRY IN INDIA 2015.PPT
5
Lighting market in India is showing an upward trend with a rise in consumer base
• The Indian lighting industry reached INR ‘m1’ in 2013, growing at a CAGR of ‘r1’% over 2010-13
• Lighting industry in India is divided into different types of lighting systems
• Lighting energy consumption in commercial buildings is around ‘r2’-’r3’%
• Energy consumption from lighting in industrial plants is around ‘r4’-’r5’%
Market Overview Lighting Market Size and Growth
Lamps Market – Segmentation (2013) Lighting Market – Domestic Production
y5
y4
y3
y2
y1
INR bn
r6%
x6
u
x5
t
x4
s
x3
r
x2
q
x1
p
LIGHTING INDUSTRY IN INDIA 2015.PPT
r7%
r9%
r8%
Segment 1
Segment 3
Segment 2
0%
20%
40%
60%
80%
100%
2013
d3%
d2%
d2%
2012
c3%
c2%
c2%
2011
a3%
a2%
b3%
b2%
b2%
2010
a1%
Category 2 Category 1 Category 3
Note: Lamps includes incandescent, fluorescent, halogen and other lamps
6
Rise in lighting equipment production in India…
• Export of lighting products from India witnessed a CAGR of ‘r1’% between FY 2012 and FY 2014
• Although cheaper products from ‘c1’ have a bigger market share in global lighting exports, declining cost competitiveness of ‘c1’ holds strong growth prospects for India in the near future
• Primary export destinations include ‘c2’, ‘c3’ and ‘c4’
Non-LED Lights – Exports Non-LED Lights – Total Exports (Value)
LIGHTING INDUSTRY IN INDIA 2015.PPT
r7%
r6% r5%
r4%
r3%
r2%
y3
y2
y1
INR mn
2015 (Apr-Aug 2014)
s
2014
r
2013
q
2012
p
Non-LED Exports – Country-Wise Segmentation (2014)
Non-LED Exports – Country-Wise Segmentation (2015)
Note: Figures are for the respective financial years
r12% r11%
r10%
r9%
r8%
r13%
Others
Country 5
Country 4
Country 3
Country 2
Country 1
Others
Country 5
Country 4
Country 3
Country 2
Country 1
Note: Data pertain to HS Code 8539: Electric filament or discharge lamps (including sealed beam lamp units and ultra-violet or infra-red lamps), arc-lamps
7
…has resulted in eventual rise in exports
LIGHTING INDUSTRY IN INDIA 2015.PPT
r3%
r2%
r7% r6%
r5% r4%
r9% r8%
r13%
r12% r11%
r10%
Country 2
Country 1
Others
Country 5
Country 4
Country 3 Country 3
Country 2
Country 1
Others
Country 5
Country 4
y3
y2
y1
INR mn
2015 (Apr-Aug 2014)
s
2014
r
2013
q
2012
p
Note: Data pertain to HS Code 85414020: Light emitting diodes (electro-luminescent)
• Export of lighting-emitting diodes (LEDs) from India has been growing rapidly, witnessing a CAGR of ‘r1’% between FY 2012 and FY 2014
• Although ‘c1’ has the largest market share in global LED exports, declining cost competitiveness of ‘c1’ holds strong growth prospects for India in the near future
• ‘c2’, ‘c3’ and ‘c4’ are traditionally the largest markets for Indian LEDs
LED Lights – Exports LED Lights – Total Exports (Value)
LED Exports – Country-Wise Segmentation (2014) LED Exports – Country-Wise Segmentation (2015)
Note: Figures are for the respective financial years
8
Drivers & Challenges – Summary
Drivers
Increase in Disposable Income
Growth in Rural Segment
Rise in Organized Retail
Boom in Real Estate Sector
Changing Lifestyle of Consumers
Increasing Availability of Credit
Improvement in Rural Electrification
Growing Population
Challenges
Tough Competition from Unorganized Players
Depreciation of Rupee and Rise in Energy Costs
Lack of Consumer Awareness About Energy-efficient Lighting
High Import Dependency
LIGHTING INDUSTRY IN INDIA 2015.PPT
9
Publication of LED standards is expected to transform the lighting industry in India
Published LED Standards
Sl No IS No Title 1
2
3
4
5
6
7
8
9
• Recently announced standards on LED lighting are expected to bring about large scale lighting revolution in India Standards have been brought out by ‘n1’ and ‘n2’ to help phase out inefficient lighting
• Global standards have been considered while formulating the Indian standards which are expected to ensure that the Indian LED manufacturers meet the minimum manufacturing criterions
• Standards based on international trends are also expected to help the Indian LED products to compete with the international counterparts
LIGHTING INDUSTRY IN INDIA 2015.PPT
10
Trends – Summary
LIGHTING INDUSTRY IN INDIA 2015.PPT
Key Trends
LED Technology Development
Solar LED Lights Digital Signage
11 LIGHTING INDUSTRY IN INDIA 2015.PPT
Porter’s Five Forces Analysis
Competitive Rivalry
Bargaining Power of Suppliers
Bargaining Power of Buyers
Threat of New Entrants
Impact i4
Impact i2
Impact i1
Impact i5
Threat of Substitutes
Impact i3
12
Competitive Benchmarking (1/5)
Public Trading Comparable (FY 2014)
Company 1 Company 2 Company 3 Company 4 Company 5
Market Capitalization (INR mn)
Share Price (INR)
EV/EBITDA (x)
EV/Revenue (x)
PE Ratio
LIGHTING INDUSTRY IN INDIA 2015.PPT
Note: Top 5 Public companies based on the Market Capitalization; Market Capitalization, Share Price and PE ratio is as of 18/11/2014
13
• Company 3 recorded gross margin of a3%, higher than both Company 1 and Company 2 which recorded gross margin of a1% and a2% respectively
• Company 3 recorded operating margin of b3%, higher than both Company 1 and Company 2 which recorded operating margin of b1% and b2% respectively
• Company 2 recorded net margin of c2%, higher than that of Company 1 which recorded net margin of c1% but lower than that of Company 3 which recorded net margin of c3%
Key Ratios of Top 3 Companies – Operational Basis (FY 2014) (1/3)
Competitive Benchmarking (2/5)
-10
0
10
20
30
40
%
Company 3
c3 b3
a3
Company 2
c2 b2
a2
Company 1
c1
b1
a1
LIGHTING INDUSTRY IN INDIA 2015.PPT
Net Margin Operating Margin Gross Margin
14 LIGHTING INDUSTRY IN INDIA 2015.PPT
Key People
Products and Services
Company Information Offices and Centres – India
Corporate Address
Tel No.
Fax No.
Website
Year of Incorporation
Ticker Symbol
Stock Exchange
Category Products/Services
Name Designation
Chairman, MD and CEO
Joint MD
President
CFO and EVP
Head Office
H1
Public: Company 1 (1/4)
15 LIGHTING INDUSTRY IN INDIA 2015.PPT
Financial Snapshot Key Ratios
Financial Summary
• The company earned a net loss of INR ‘d’ in FY 2014, as compared to net profit of INR ‘c’ in FY 2013
• It reported total income of INR ‘s’ in FY 2014, registering an increase of ‘r1’% over FY 2013
• It earned an operating margin of ‘r2’% in FY 2014, a decrease of ‘r3’ percentage points over FY 2013
• It reported debt to equity ratio of ‘n1’ in FY 2014, an increase of ‘r4’% over FY 2013
Particulars y-o-y change
(2014-13) 2014 2013 2012 2011
Profitability Ratios Operating Margin
Net Margin
Profit Before Tax Margin
Return on Equity
Return on Capital Employed
Return on Working Capital
Return on Assets
Return on Fixed Assets
Cost Ratios Operating costs (% of Sales)
Administration costs (% of Sales)
Interest costs (% of Sales)
Liquidity Ratios Current Ratio
Cash Ratio
Leverage Ratios Debt to Equity Ratio
Debt to Capital Ratio
Interest Coverage Ratio
Efficiency Ratios Fixed Asset Turnover
Asset Turnover
Current Asset Turnover
Working Capital Turnover
Capital Employed Turnover
Improved Decline
Key Financial Performance Indicators
Indicators Value (18/11/2014) Market Capitalization (INR mn)
Total Enterprise Value (INR mn)
EPS (INR)
PE Ratio (Absolute)
Profit / Loss Total Income
z3
z2
z1
y3
y2
y1 p
INR mn INR mn
2014
d
s
2013
c
r
2012
b
q
2011
a
Public: Company 1 (2/4)
16 LIGHTING INDUSTRY IN INDIA 2015.PPT
Key Business Segments Key Geographic Segments
Business Highlights
Description News
Overview
• Company 1 is part of the ‘n1’ which consists of other companies such as ‘n2’, ‘n3’ and ‘n4’
• It was incorporated in ‘y1’ as ‘n5’ and was renamed to Company 1 in ‘y2’
• The company has a portfolio of over ‘a1’ different products under the segments ‘s1’, ‘s2’, ‘s3’, ‘s4’ and ‘s5’
• It also holds exclusive distribution license for ‘n6’ appliances in India
Business Operations
• The company has a strong distribution network of over ‘a2’ distributors and ‘a3’ dealers Its ‘s1’ has a retail network of over ‘a4’ outlets, while the brand ‘n6’ would have a retail network of ‘a5’ outlets by the end
of ‘y3’
• It also has a franchised customer care network of ‘a6’ centers
Note: Business Segments and Geographic Segments are based on total revenues
y6
y5
y4
y3
y2
y1
p2%
2011
s1% r1%
q1%
p1%
2014
s4% r4%
q4%
p4%
2013
s3% r3%
q3%
p3%
2012
s2% r2%
q2%
y6
y5
y4
y3
y2
y1
2014
u2%
t4%
2013
u1%
t3%
2012
t2%
2011
t1%
Segment 2 Segment 1
Segment 4
Segment 3
Segment 2
Segment 1
Public: Company 1 (3/4)
18 LIGHTING INDUSTRY IN INDIA 2015.PPT
Key People
Products and Services
Company Information Offices and Centres – India
Category Products
Name Designation
Director
Director
Director
Director
Corporate Address
Tel No.
Fax No.
Website
Year of Incorporation
Head Office
H1
Private: Company 2 (1/5)
19
Shareholders of the Company Ownership Structure
Name No. of Shares held
r4% r3%
r2%
r1%
Note: AGM as of 29th Sep 2012
LIGHTING INDUSTRY IN INDIA 2015.PPT
Private: Company 2 (2/5)
Category 1
Category 3
Category 2
Category 4
20 LIGHTING INDUSTRY IN INDIA 2015.PPT
Financial Snapshot Key Ratios
Financial Summary
Particulars y-o-y
change (2013-12)
2013 2012 2011 2010
Profitability Ratios Operating Margin
Net Margin Profit Before Tax Margin
Return on Equity
Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets
Cost Ratios Operating costs (% of Sales) Administration costs (% of
Sales) Interest costs (% of Sales)
Liquidity Ratios Current Ratio Cash Ratio
Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio
Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover
Improved Decline
Net Profit/Loss Total Income
z5 y6
z1
y2
z3
y5 z4
y3
y1
y4
z2
INR mn
d
2013
INR mn
s
2012
c
r
2011
b
q
2010
a
p
• The company earned a net profit of INR ‘d’ in FY 2013, as
compared to net profit of INR ‘c’ in FY 2012
• It reported total income of INR ‘s’ in FY 2013, registering an
increase of ‘r1’% over FY 2012
• It earned an operating margin of ‘r2’% in FY 2013, an increase
of ‘r3’ percentage points over FY 2012
• It reported debt to equity ratio of ‘n1’ in FY 2013, a decrease
of ‘r4’% over FY 2012
Private: Company 2 (3/5)
21 LIGHTING INDUSTRY IN INDIA 2015.PPT
Business Highlights
Description News
Overview
• Company 2 is part of the Indian multinational ‘n1’
• The group has a workforce of over ‘a1’ employees and operates in over ‘a2’ countries in ‘r1’, ‘r2’, ‘r3’ and
‘r4’
• Company 2 is among the largest players in the Indian ‘n2’ industry
• It is among the largest manufacturers of ‘p1’ in the world, producing over ‘a3’ units annually
Business Operations
• The company operates an extensive distribution network of ‘a4’ authorized dealers and ‘a5’ retailers
across the country
• It also has ‘a6’ marketing offices and a government-approved research and development (R&D) center
that employs over ‘a7’ engineers
• The company operates ‘a8’ manufacturing facilities spread across India
The manufacturing facilities are ‘c1’ certified for ‘s1’, ‘c2’ certified for ‘s2’, ‘c3’ certified for ‘s3’ and ‘c4’ certified for ‘s4’
Moreover, all the products manufactured by the company are ‘c5’ certified by ‘n3’
Private: Company 2 (4/5)
23
Thank you for the attention
Phone: +91 22 4098 7600 E-Mail: [email protected]
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LIGHTING INDUSTRY IN INDIA 2015.PPT