A study of the feasibility of LED Lamps in India
Transcript of A study of the feasibility of LED Lamps in India
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Business Communication
Project
A study of the feasibility of LED lamps in India
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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
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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.
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LED Usage in various fieldsA bus with LED display board showing destination and stoppage.
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LED usage in various fieldsA traffic light in Shanghai, China with LED lamps
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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.
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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.
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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.
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Competition
Rural Areas• Kerosene Wick Lamps• Kerosene Hurricane Lamps• Incandescent Torches• Home Solar Systems
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Competition
Urban Areas• Incandescent Bulbs• Fluorescent Tube Lamps• Compact Fluorescent Lamps (CFL)
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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.
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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.
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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/-
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Product (contd.)
• Gives 4.2 hours of light on batteries.
• Designed to be hung from a wall, a ceiling or kept on a bed.
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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
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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
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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
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Marketing Plan
• Long Term Goals– Retain market focus.– Accessible to even the poorest
consumer.– Make customers feel as consumers
and not charity recipients.
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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.
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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
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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
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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.
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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.
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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
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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
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Break Even Calculation
• Break Even Point is calculated as:
• Here, the BEP stands at:tCostPerUniPROFIT
FixedCostBreakEven
30000)148199(
1500000
BEP
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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.
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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.
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Thank You…