Thursday, July 31, 2014: Instapower Ltd has been a leading name in the LED lighting space. It is recognised as an R&D house by the Department of Scientific and Industrial Research, Government of India, and has 90 patents to its credit, 10 of which are in the LED lighting and energy efficiency domain.
In conversation with Srabani Sen of Electronics Bazaar, Abhijit R Vaish, executive director, Instapower Ltd, talks about the trends in the market, the challenges being faced by domestic luminaire manufacturers, and how the recent proposal to set up two semiconductor fabs in India can benefit the company.
EB: What are the major trends that are evolving in the LED industry?
The LED lighting industry is evolving fast, with a wider range of products arriving in the market every month. While the initial focus had been on replacement lamps, 2013 saw more innovative designs that had LEDs working with sensors and controls. Another major trend is the constant improvement in the performance of LED lights. And with LED luminaires becoming more competitive on price and performance, their market penetration is bound to increase.
EB: Has the Indian LED manufacturing sector derived any benefits from the recent government policy to boost domestic manufacturing?
The impact of the policies recently rolled out by the Department of Electronics and IT (DeitY) is yet to be seen. Although the policy talks about subsidies for setting up manufacturing facilities, it is too early to gauge whether these subsidies have had any impact in increasing domestic manufacture of luminaires. India still lacks skills development facilities; hence, there is a shortage of trained manpower. And the advanced machinery required for manufacturing still has to be imported. So, hopefully, the recent government policies will be able to resolve these issues.
EB: How would you rate India’s expertise in LED manufacturing?
Despite having the expertise, currently we cannot manufacture a lot of things in India. For manufacturing, we require an extremely good tool room, as well as good fabrication facilities for aluminium and die cast parts, both of which are important but are still not manufactured in India. Die-casting of certain components of very specific designs is something we have not been able to do in India, as of now. Second, due to the lack of certain types of machinery in India, many components cannot be manufactured here. Third, the lack of encouraging domestic demand means that in India, we cannot yet get into high volume manufacturing. Without the volumes, one cannot justify the cost of developing new LED products. Countries like Taiwan and China manufacture at a larger scale as they get high volume orders. These are some of the major concerns that hinder manufacturing in India, despite the expertise we have.
EB: As a luminaire manufacturer, what do you expect from the two upcoming fabs?
These will definitely make a huge difference. India is already late in setting up its own fabs, considering that China has nearly a 100.
Currently, only 5 percent of the components we use are manufactured in India; the rest we procure from China, Taiwan and S. Korea. When these fabrication facilities come up in India, we can expect the components industry that earlier existed in India to get revived. We will have a lot of opportunities to manufacture these components in India and that will reduce the cost of production. It will be an important step towards curbing our forex outflow. I was reading a report that stated that we have a major forex deficit because most of our money is going to China, South Korea or Germany to buy the raw materials needed for the electronics industry.
Second, the fabs will generate a lot of employment, and hopefully, that will lead to having some skilled hands in India. We need to empower the youth with professional skills, as we lack skilled hands in India. I have personally visited factories in China, Taiwan and Germany, and there is a huge difference in the skills those people possess compared to our workforce. We really have to bridge the skills gap; otherwise, we are heading for trouble.
EB: How is Instapower continuing to manufacture in this scenario?
It is a tough time for any manufacturer in the LED sector, as this sector is still unorganised. We, therefore, face a lot of issues in deliveries, as the supply chain is also very unorganised. Our suppliers, too, face a lot of problems and as a result, they cannot keep up to their commitments and deadlines. Sometimes they face electricity problems, at other times it is labour issues, besides the shortage of raw materials — the fluctuating prices of raw materials lead to suppliers waiting for the prices to come down. All these add up to the problems that manufacturers face.
EB: What does Instapower manufacture?
We offer complete LED lighting solutions—so we manufacture the luminaire (except the LEDs) and the drivers. We also manufacture LED displays and some solar products.
EB: Where does Instapower’s expertise lie?
Our expertise lies in manufacturing the complete luminaire with backward integration. We offer lighting solutions for both indoor and outdoor applications, but we are stronger in indoor applications. We also design our own drivers as per the Indian conditions, factoring in the problems of voltage fluctuation, surges, etc. We are strongest in the aviation lights segment.
We produce everything based on indigenous technology. In fact, we have 90 patents to our credit. Last year, we won the ‘Technology leader’ award from Frost and Sullivan. Our in-house R&D division is led by a very capable team.
EB: What does innovation mean to Instapower?
Innovation to us means indigenisation. As long as we are able to indigenise our products and customise them as per our local conditions, we will stay ahead of our competitors. For example, in the case of a solar product, to make it work in Rajasthan as well as in Jammu and Kashmir is a big challenge, with the weather conditions being so diverse. We have developed an innovative solar product that works in all kinds of climatic zones. These innovations keep us ahead of competition.
EB: Do you also customise based on the requirements of your clients?
Yes, we do a lot of customisation for our clients. But before committing to that, we consider the volume of the business and the potential of the product.
EB: Does customisation reduce or increase costs?
It works both ways. Sometimes, the customisation is done based on a larger perspective. For example, aviation lights work on AC but our R&D team designed a light that can work with solar energy as well. That customisation was done for a particular customer, but then it became a benchmark for others. It was a one-time cost, which helped to get us volumes. So that customisation was for the good. On the other hand, if the customisation is very specific, then the cost goes up, and ultimately, we need to increase the cost of the product.
EB: What business strategy do you follow to penetrate new markets?
With more awareness about the benefits of LED lights, and with the price going down significantly, penetrating new markets has become easier. We have been very strong in the B2G and B2B sectors. But now we are planning to also enter the retail space, which has opened up as the competition has increased and the acceptance levels have gone up.
EB: Did you launch any new products this year?
We have launched a couple of downlights this year, specifically for the indoor space. We have made these aesthetically pleasing to appeal to customers, and we have also improved upon their functional performance. At the same time, we have kept the price low. We have also launched a dimming solution.
EB: What are you expansion plans?
With our second facility in place, we now have the required bandwidth. So we will not expand our production facilities as of now. However, we are working on building up our market share by creating a network of dealers and distributors. We are working closely with our channel partners and are trying to push our products into the market through sustainable strategies. We are going slow, as being aggressive in a new area may backfire. All these years, we have been working in the B2G and B2B sectors.
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine
