LED bulb orders are too large, Philips India capacity can not keep up

In September this year, Philips India (Philips India) Successfully took the LED bulb bidding case conducted by the Indian government for UJALA plan and obtained 50 million LED bulbs supply contracts. At present, the first few batches of bulbs have been provided, however, most of them are made in China. According to contract display Philips India needs to in 150 days implementation UJALA plan of state-owned enterprise energy-saving service limited the company (EESL) 50 million 9-watt LED bulbs are available at Rs 38 per bulb (Equivalent to RMB 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 bulbs were imported from Philips Lighting's Chinese factory, but they are upgrading India's production capacity and can provide 12 million LED bulbs per month from December. Import is only a temporary measure to ensure timely delivery. According to Philips, they will gradually stop importing light bulbs. In addition, Philips's Indian factory will be fully operational within a month or two. According to the UJALA plan, EESL first provides a purchase contract for a certain number of bulbs to private companies. Once delivered, these bulbs will be distributed to state power companies. When consumers go to the power company to pay their bills, they can buy these LED bulbs that are priced below the market price. At present, Philips 9-watt LED bulbs are priced at 130-190 rupees (Equivalent to RMB about 13. 34-19. 49 yuan). Harshavardhan Chitale, vice president and marketing director of Philips Lighting India, said that as a lighting market, we purchase LED bulbs from our manufacturing plants located in various places and through a strong network of suppliers in India. We already have large-scale production and manufacturing capabilities. Last year, we provided EESL with more than 15 million LED bulbs made in India. Due to the huge quantity of this special order, the output needs to be greatly increased. Therefore, some bulbs in this order will be purchased from factories all over the world, but most of them will be supplied by Indian factories. In response to an inquiry about how the company can provide light bulbs at such a low price, Chitale said: Although we cannot comment on the specific bid price, we can say that due to the large number, we offer a price that makes it easier for end users to afford LED bulbs while meeting all bidding requirements. The sharp increase in demand for LED bulbs in India has LED to an increase in sales, so that we can maximize shareholder value through economies of scale and more favorable prices. According to the bidding documents, if other companies can match the bidding price of low bidders, they should also obtain a considerable share of the supply contract. As with all EESL bidding cases, it is stipulated that the order will be placed at 5- 6 technically qualified and able to match L1 price (The price for Philips in this bid)Distribution among bidders. EESL follows the same principle and requires bidders to reach L5 to match L1 price. They do not agree to do so, such as RFP (Request for proposal) As shown, EESL allocated all order quantities to Philips, which expressed its willingness to supply 50 million units in the bid, Kumar said.