 "Historic low LED bulb prices may distort market")
A tender issued by Energy Efficiency Services Limited (EESL) for procuring 50 million LED bulbs has found no takers for a part of the supply by other bidders because they could not match the lowest bid from Philips Lighting India of Rs 38 a bulb.
According to EESL’s tender guidelines, once the lowest bid is accepted, the next six bidders are asked to match the price for some of the offered quantity. For the first time, no bidder agreed. So a tender of 50 million LED bulbs went to Philips.
The most convincing theory is that the bulbs are coming from China. But even the cheapest Chinese LEDs were priced around Rs 46, officials said. The other bidders were Surya, NTL, Crompton Greaves and Osram.
“There is a clause requiring us to distribute the order among five or six bidders who are technically qualified and are able to match the lowest bid. None agreed to do so this time, therefore the entire quantity went to Philips,” said Saurav Kumar, managing director, EESL.
Most LED companies in India source the central chip component from China and assemble bulbs in the country. There was no restriction on importing LEDs, according to the tender document, Kumar said. In an e-mailed response to Business Standard, Philips Lighting India said the price was due to the large order. “We have offered a price that makes LED bulbs even more affordable while meeting all the tender requirements,” said Harshavardhan Chitale, vice- chairman and managing director, Philips Lighting India. Domestic manufacturers expressed concern over Philips’ low bid. “Across the industry,
The companies are of the view that even imports from China are not possible at such low rates.
“Philips will import the initial lot from its facilities in China and ramp up domestic capacity to supply 12 million LED bulbs a month from December. Imports are an interim measure and will be phased out in a month or two when Philips’ domestic facility is fully operational,” Kumar said.
On importing from China, Chitale said the company procured LED bulbs from its manufacturing network across the globe. “Last year, we supplied over 15 million LED bulbs to EESL that were manufactured in India. Owing to the size of this order, a large ramp-up was needed and some quantity will be sourced from our factories around the world,” Chitale said.
“Outlier bids are usually made in desperation or in order to grab a major market share,” said another electronics industry executive requesting anonymity.
According to EESL’s tender guidelines, once the lowest bid is accepted, the next six bidders are asked to match the price for some of the offered quantity. For the first time, no bidder agreed. So a tender of 50 million LED bulbs went to Philips.
The most convincing theory is that the bulbs are coming from China. But even the cheapest Chinese LEDs were priced around Rs 46, officials said. The other bidders were Surya, NTL, Crompton Greaves and Osram.
“There is a clause requiring us to distribute the order among five or six bidders who are technically qualified and are able to match the lowest bid. None agreed to do so this time, therefore the entire quantity went to Philips,” said Saurav Kumar, managing director, EESL.
Most LED companies in India source the central chip component from China and assemble bulbs in the country. There was no restriction on importing LEDs, according to the tender document, Kumar said. In an e-mailed response to Business Standard, Philips Lighting India said the price was due to the large order. “We have offered a price that makes LED bulbs even more affordable while meeting all the tender requirements,” said Harshavardhan Chitale, vice- chairman and managing director, Philips Lighting India. Domestic manufacturers expressed concern over Philips’ low bid. “Across the industry,
The companies are of the view that even imports from China are not possible at such low rates.
“Philips will import the initial lot from its facilities in China and ramp up domestic capacity to supply 12 million LED bulbs a month from December. Imports are an interim measure and will be phased out in a month or two when Philips’ domestic facility is fully operational,” Kumar said.
On importing from China, Chitale said the company procured LED bulbs from its manufacturing network across the globe. “Last year, we supplied over 15 million LED bulbs to EESL that were manufactured in India. Owing to the size of this order, a large ramp-up was needed and some quantity will be sourced from our factories around the world,” Chitale said.
“Outlier bids are usually made in desperation or in order to grab a major market share,” said another electronics industry executive requesting anonymity.