LED bulb order is too big, Philips India capacity can't keep up

In September this year, Philips India successfully won the Indian government's LED bulb bidding for the UJALA program, and obtained 50 million LED bulb supply contracts. Currently, the first batch of bulbs has been provided. However, most of them are China. manufacture. According to the contract, Philips India needs to provide 50 million 9-watt LED bulbs to the EJALA-executing State Enterprise Energy Saving Services Co., Ltd. (EESL) within 150 days, each of which costs 38 rupees (equivalent to about 3.9 yuan). Saurabh Kumar, general manager of EESL, said that according to the contract, the number of LED bulbs provided by Philips should reach 50 million within five months. Philips said that the first batch of bulbs were imported from Philips Lighting's Chinese plant, but they are increasing their production capacity in India and will provide 12 million LED bulbs per month since December. Imports are only a temporary measure to ensure that delivery is on time. According to Philips, they will gradually stop importing light bulbs. In addition, Philips' Indian factory will be fully operational within one or two months. Under the UJALA program, EESL first offered private companies a procurement contract for a certain number of bulbs. Once delivered, these bulbs will be distributed to the state's power companies. When consumers go to the power company to pay their bills, they can buy LED bulbs that are priced below the market price. At present, Philips 9-watt LED bulbs are priced at 130-190 rupees (equivalent to about 13.34-19.49 yuan). Harshavardhan Chitale, vice president and marketing director of Philips Lighting India, said that as a global lighting market leader, we source LED bulbs from our manufacturing facilities around the world and through a strong network of suppliers in India. We already have large-scale manufacturing capabilities. Last year, we provided more than 15 million Indian-made LED bulbs to EESL. Due to the large number of such special orders, which will require a significant increase in production, some of the orders in this order will be sourced from factories around the world, but most will be supplied by Indian factories. In response to an inquiry about how companies can provide light bulbs at such low prices, Chitale said: Although we can't comment on specific bid prices, we can say that due to the sheer volume, we offer a more affordable end-user. The price of LED bulbs meets all bidding requirements. The sharp increase in demand for LED bulbs in India has led to an increase in sales, so that we can offer more favorable prices through economies of scale and maximize shareholder value in this way. According to the bid documents, if other companies can match the bid price of the lowest bidder, they should also get a considerable share of the supply contract. As with all EESL bids, the order will be allocated between 5-6 technically qualified bidders who can match the L1 price (the price offered for Philips in this standard). EESL follows the same principle and requires bidders to reach L5 to match the L1 price. They disagree with this, so as the RFP (Request for Proposal) shows, EESL allocates all orders to Philips, which is willing to supply 50 million in the bid, Kumar said.

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