The government’s Automotive Mission Plan 2006-2016 document has estimated that the total turnover of the automotive industry in India would be in the order of around US $ 159 billion (Rs 636,000 crore approximately) in 2016, a substantial increase from the $ 34 billion in 2006.
This is good news for the Rs 1,500 crore domestic automotive lighting industry. Major automotive lighting manufacturers in the country also see an increased role for their respective foreign collaborators in terms of technology transfer and investments within India.
The lighting industry in India comprises mainly of lamp and bulb manufacturers. The leading lampmakers include Lumax Industries, Neolite Industries, Fiem, India Japan Lighting and Minda, among a host of companies. Major automotive bulb manufacturers include Philips, Siemens, Osram and Phoenix. These players dominate the OEM segment in the lighting segment which forms the major chunk of the lighting industry. Beyond this segment is the aftermarket and the unorganised segment that comprise hundreds of business units spread across the country. The unorganised trade in the Indian lighting industry is estimated at around Rs 150 crore, though some estimates are as high as Rs 1,000 crore which includes trade in spurious lamps.
Tech taking over
According to Deepak Jain, executive director, Lumax Industries, “currently there is less unorganised trade in the industry. Besides, technology is now driving lighting products. Earlier we had a bigger share of the aftermarket segment. But over the years we are seeing the aftermarket in terms of volumes coming down, but increasing in terms of revenue. That's because the value addition in lighting is going up. In the last decade, the cost of lighting has more than doubled due to technological changes. Earlier lighting products were made of glass and sheet metal parts but now plastics and electronics play a bigger role, thereby increasing their durability.”
Also, other than technology playing a key role, lighting products have become increasingly integrated into vehicle styling. “The lamp has become a very appealing product and also helps save energy. Manufacturers want lower wattage and higher luminosity, which has made these products more technologically advanced,” says Jain.
Of a similar view is NK Minda, managing director, Minda Industries, who says the last decade has seen a massive shift in the Indian lighting industry. “Automakers have rolled out many new models every year including upgrades and face-lifts. Every new model and face-lift implies a change in lighting. Various new features have also been introduced in the last decade like centrally high-mounted stop lamps, fog lamps, multi-focal rear lamps and auto leveling headlamps,” says Minda.
He is confident that the industry is poised for another dramatic change in the next decade where lighting systems in high-end vehicles will become standard equipment on lower-end models as well. And with the introduction of laws like driving with lights on during the day, as is already the law in some parts of Europe, and which the European Union is seriously considering implementing throughout the region, the lighting sector is poised for challenging times globally, says Minda.
Minda remarks that the challenges before the lighting industry are two-pronged – the design element and rapid deployment of newer technologies. Aesthetics play an important role in the buying decision and the design of the lights is increasingly being used to enhance the appeal of a vehicle. So the role of a lighting manufacturer has progressed from being merely a component supplier to being associated with the manufactures right from the concept stage and working together as a team. For this to happen, considerable investments have to be made in R&D and constant upgradation of manufacturing capabilities is imperative.
The other challenge is that the time lag between development of new technologies and their deployment has dropped considerably. Today lighting manufacturers have to be more responsive and ready to adapt to changing technologies at a pace not seen before in the manufacturing sector. As product replacement cycles become shorter, the pace of adaptation is likely to become even more frantic. On the tech side, conventional bulbs are getting replaced by LEDs, metal with plastic parts, in addition to new features and technology like Adaptive Front Lighting and High Intensity Discharge Xenon lamps. These intelligent lighting systems entail faster learning cycles, according to Minda.
Global outlook
According to JK Jain, managing director, FIEM, lighting products play a very important role because of their aesthetic value. “There has been a rapid change in technology with LED lighting and HID lamps. India is well equipped to adopt any new tech to meet the demand of global automobile companies. There is, therefore, a great opportunity for Indian manufacturers to have a chunk of business from the global market.FIEM is already bidding on various tenders from global OEMs. We are sure India can tap the opportunities from the overseas market due to procurement problems from China. India clearly is in an advantageous position”.
With major changes on the tech front, the dependence on foreign lighting manufacturers has only increased. Players like Visteon, Stanley and ZKW are well entrenched in India now.
“Three to four years ago, every manufacturer was adding capacity which was a major challenge for the industry. Now the focus is to cater to the international players coming into India,” says Rajesh Jain, director, Neolite Industries.
“Growth will be driven by global OEMs in India. US-based companies have gone to South America, the Japanese have gone to Thailand and Vietnam and the Europeans have come to India where they have good vendor support. The Europeans and Americans relate to us better,” says Rajesh Jain. All this may translate into better business for the Indian lighting industry.
Bulb makers
Like the lamp manufacturers, bulb-makers too are divided into two broad categories: OE and aftermarket. The OE segment in India is dominated by Philips, Phoenix and Osram while Indore-based Design Auto primarily caters to the two-wheeler market and companies like Autopal are present in the small segment. Philips is the prominent player in the signaling segment. “In this segment there are a large range of products which we need to make with a high level of reliability. Value-wise, this industry would be worth around Rs 300 crore. We have a 25 to 30 per cent market share in the OEM segment,” says
R Nandkishore, head of Philips' Automotive Business Unit in India.
According to Nandkishore, Philips focuses on the OE segment though it has a presence in the aftermarket. “Those in greymarket operations directly bring in the products from outside the country and thereby save on the duties which is almost 38 per cent.
The brave new world of small players
On the one hand while lamp manufacturers are pumping in money in procuring the latest technology and augmenting plant capacities, the unorganised players are increasingly relying on cheap imports from countries like China and Taiwan. But there are companies in the small scale sector trying to be a part of the supply chain for Tier I and Tier II players. A case in point is Jamuna Udyog, a part of the Rs 10 crore Bajato Industries Group based in north India, a company with ambitious growth plans.
“We are planning to build up capacities and are hopeful of setting up a new plant in Manesar. We are targeting the aftermarket as well as the OEM segment once we have capacities in place,” reveals Rajat Bajaj, managing partner, Jamuna Udyog. At present, Bajaj’s company has a modest Rs 1 crore turnover and exports plastic parts, entire tail-lamps and side indicators for commercial vehicles. Almost 40 per cent of his company’s produce goes directly to the international aftermarket while the remaining constitutes merchant exports. The products are exported to the Middle East and Africa.
With the setting up of a new plant, Jamuna Udyog’s capacity would be ramped up from an initial capacity of 100,000 units per month to 10 lakh units per month. Situated on the GT Karnal Road, the company’s existing plant makes around 12,000 units per month.
“We want to supply to only commercial Tier I and II players and, if synergies match, we can supply to Tier I lampmakers too. We are in touch with players like Lumax, Fiem and Minda. The major challenge is getting into the OEM supply chain,” he says. Bajaj claims that there are thousands of very small companies making a variety of parts for the lamp industry. These include wires, bulb holders, glass, clamps, and sheet metal parts. Bajaj sells his products under the Bajato brandname and makes lamps for Mercedes-Benz, Land Rover, Bedford, Daf, Man, Scania, Volvo and a host of other commercial vehicle manufacturers globally.
However, unlike tough players like Jamuna Udyog, there are players in the unorganised sector known for their spurious parts. “Organisations like ACMA are conducting the Asli Naqli shows that help create awareness about the menace of spurious parts. There are also players who are into trading and gets lamps from China and sell them here,” says Deepak Jain.
But most Tier I suppliers are of the opinion that the unorganised sector may not be able to keep pace with the fast-changing technology in the industry. Also, most vehicle manufacturers are keen to make minor changes in their vehicles, which calls for a change in the shape and design of the lamps. This has resulted in shortening of lead time. “Lighting will change very rapidly in the future and if you fast-forward another 10 years you will see a lot more technologically advanced products. So these will not be easy to copy nor will it make sense for the unorganised players to produce them,” he adds.
Another deterrent is that being very capital- intensive, small players find making big moves extremely difficult. “In Taiwan there are a couple of large companies that make all kinds of lamps and yet they are in the unorganised sector. A decade ago there were hundreds of such companies but now there are only two left,” says Jain.
Rajesh Jain of Neolite Industries seconds this view. “Players in Taiwan in the unorganised market are as big as Rs 1,500 crore and are capturing the Indian market. You have international models in India like the Honda Civic or the Toyota Corolla whose lamps are available in India through imports. The Chinese focus a lot on aesthetics but the quality may not be the best. Ultimately, we will follow global trends where the market will see a lot of consolidation. A number of players in the unorganised sector will disappear,” says Rajesh Jain. His contention is that the unorganised sector sees a lot of tax evasion. “Now with VAT being imposed, unorganised players will need to fall in line. The more organised they get, the better it is for them. Else, they will have to shut shop.”
All in all, it's an optimistic lighting industry that is game to take on the best in the world.