a study of the feasibility of led lamps in india

Business Communication

Project

A study of the feasibility of LED lamps in India

Business Communication Project

Submitted to:Prof. Sajith

By Group One• Gouri Shankar

Das• Sahil Channa• Sheetal Koul• Sourav Biswal• Kandarp Varia• Rajput Bharat

Singh• Pratik Mullick

What is LED?

• LED or Light Emitting Diode is a semiconductor diode emitting light at visible, infrared and ultraviolet wavelengths with very high brightness.

Red, Green and Blue LEDs.

LED Usage in various fieldsA bus with LED display board showing destination and stoppage.

LED usage in various fieldsA traffic light in Shanghai, China with LED lamps

LED vs. Incandescent

• A 5 watt LED produces approx. 18-22 lumens/watt.

• LEDs can be very small, less than 2mm.

• LEDs waste very little energy used.

• A 60-100 watt incandescent bulb produces 17 lumens per watt.

• The smallest lightbulb is around 2 inches in length.

• Incandescent bulbs waste nearly 98% of its energy as heat.

LED vs. Incandescent (contd)

• LEDs have a long useful lifespan, estimated to be 35,000 hours of useful life.

• LEDs fail by dimming over time.

• LEDs are shock resistant, due to solid-state parts.

• Incandescent bulbs have a relative lifespan of 1,500 hours.

• Incandescent bulbs fail abruptly.

• Incandescent bulbs are extremely fragile.

Vision Statement of IllumiCorp.

• Availability of cheap and reliable light source to rural areas with electrical connection.

• Availability of light source to undeveloped urban areas, especially slums.

• Reduce unaccounted light wastage from tampering of electricity sources.

• Decrease usage of electricity through efficient use of electricity.

Competition

Rural Areas• Kerosene Wick Lamps• Kerosene Hurricane Lamps• Incandescent Torches• Home Solar Systems

Competition

Urban Areas• Incandescent Bulbs• Fluorescent Tube Lamps• Compact Fluorescent Lamps (CFL)

Consumer Needs (Rural)

• Brighter light with wider diffusion.

• Lower daily expenditure.

• Wind-proofing• Multi-user

usability

• LED lamps diffuse light evenly.

• Kerosene lamp runs for 6 hrs per Rs. 10. LED runs for 50 hours.

• LEDs are very rugged

• The same light source is bright enough for 3 people.

Consumer Needs (Urban)

• Low power consumption.

• Portability

• Longer duration of usage.

• Incandescent : LED ratio for power consumption is 1:98

• LED lamps are portable, since they are lightweight and rugged.

• 1 LED lasts for 35,000 hours.

Product

• IllumiCorp’s LED lamp is designed for multi-use.

• It is portable• It has 2 energy

sources, both solar as well as AC Mains.

• Contains a rechargeable battery.

• Priced at Rs. 199/-

Product (contd.)

• Gives 4.2 hours of light on batteries.

• Designed to be hung from a wall, a ceiling or kept on a bed.

Target Customer

• The availability of artificial light is dismal in the interior districts of quite a few states in India.

• The product is targeted at the rural poor, in the pilot phase. Ke

rose

ne Lam

p

Elec

tric Bu

lb0%

10%

20%

30%

40%

50%

60%

< 2 Hours2 to 4 Hours4 Hours +

Data from Stanford Social Studies Report, June 2003

Market Size and Trends

Region % of villages electrified

% of homes electrified

Total Population (2001 census)

West Bengal 78% 26% 80,221,171

Uttar Pradesh 79% 27% 166,052,859

Orissa 73% 25% 36,706,920

Rajasthan 92% 52% 56,473,122

Data from Stanford Social Studies Report, June 2003

Marketing Plan

• Short Term Goals– Streamline the process of

penetrating new markets.– Emphasize incentives for poor users,

both rural and urban.– After-sales customer service– Establish good reputation with

customers

Marketing Plan

• Long Term Goals– Retain market focus.– Accessible to even the poorest

consumer.– Make customers feel as consumers

and not charity recipients.

Marketing Strategy

• Stimulate demand, in form of cheap and robust technology.

• Build positive brand recognition, especially over CFL Lamps.

• Emphasize product quality rather than cheapness to overcome stereotype.

Distribution

• The supply chain should have minimum handovers.

• Use of existing distribution channels.

• IllumiCorp to act as purchasing and manufacturing channel with zero inventory costs.

Local Component Suppliers

Foreign Component Suppliers

Manufacturer

Existing Distribution Channel

Local Vendor

Organization Structure

Illumicorp CEO

Chief Technical Officer

Factory Manager

Foreman

Supply Manager

Chief Marketing Officer

Local Sales

Officer

Rural Distributo

r

Rural Distributo

r

Local Sales

Officer

Urban Distributor

Local Sales

Officer

Rural Distributo

r

Rural Distributo

r

Organization Structure

• Illumicorp HQ coordinates marketing activity at the national and regional level.

• The HQ also coordinates with the factory for manufacturing, operations and resources, especially national and imported raw materials.

Pricing

• The product sells for Rs. 199• These prices, based on the retail

price, includes a 10% margin to IllumiCorp, 10% margin to distributor and 15% margin to retailer.

Production Cost per Unit

Component

Price Description

LED Source

Rs. 15 1 Watt Luxeon LED

Circuit Rs. 10 Regulate Current to LED

Solar Panel Rs. 35 1.2 Watt panel, supplied by Jai Wei, China

Batteries Rs. 60 2 X AA NIMH Batteries, Rs. 15 per battery

PVC Casing Rs.5 Injection-molded polycarbonate casing

Lens Rs. 4 Plastic Reflector

Switch Re. 1 On/Off Switch

AC Adapter Rs. 10 Inbuilt adapter for recharging + use

Assembly Rs. 5 Cost of assembly (Variable costs only)

Packaging Rs. 3 Cardboard box with graphics

Total Rs. 148

Fixed Costs

Component Price Description

Land Rs. 1,70,000 Factory Land Cost

Factory Rs. 3,20,000 Factory building, electric connection, plumbing

Machine Rs. 3,10,000 Assembly-Line machine for casing

Labor Rs. 1,50,000 Labor costs for 1 year

Management Rs. 2,50,000 Salary to top-level management

Marketing Rs. 3,00,000 Product promotion

Misc. Rs. 50,000 Administrative expenditure and stationery

Total Rs. 15,50,000

Break Even Calculation

• Break Even Point is calculated as:

• Here, the BEP stands at:tCostPerUniPROFIT

FixedCostBreakEven

30000)148199(

1500000

BEP

Projected Cashflow

Year 0 Year 1 Year2 Year 3 Year 4 Year 5

Mar-keted by Govt.

-155000

0

-600000

200000 400000 440000 NaN

Mar-keted by Il-lumi-Corp.

-155000

0

-700000

131000 318000 419000 NaN-1750000

-1250000

-750000

-250000

250000

750000

Marketed by Govt. Marketed by IllumiCorp.

Projected Sales

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Mar-keted by Govt.

4750 4000 1000 200 NaN NaN

Mar-keted by Illumi-Corp.

4000 4065 935 505 NaN NaN

250

1750

3250

4750

Marketed by Govt. Marketed by IllumiCorp.

Thank You…