In a whole new light
BY Indrajeet Saoji & Jayashree Kini – Mendes
Tell us little about your role in Anchor Electricals, your background, work experience, etc.
I have been with Anchor Electricals since 2008. In 2007, Panasonic acquired 80% in Anchor which was earlier a family-owned business. In 2009, this became a wholly-owned subsidiary. We started expanding our manufacturing facility for switches and there was little focus on other businesses. Anchor had other businesses like switchgear and lighting, fans, and wires but the focus was on switches. So we started expanding capacities across all product lines, established the basic quality processes, supply chain, etc. We have been growing since then in each of the businesses and continue to remain the market leader in switches.
In other businesses we have a market share of around 10%. We have two manufacturing plants, one in Daman and set up a new one in Haridwar recently. We also have plants in Valsad and Haridwar and in Kutch Bhuj, a total of nine operating units.
What are the capacities are these plants?
At Daman, we have two units manufacturing switches, and in Haridwar we have two large manufacturing units which make switches and switchgears. The Kutch plant manufactures lighting products and accessories. In Daman apart from switches, we have units for switches and cables, fans and a unit for insulation tapes.
Any new products from Anchor in the last couple of years?
If you consider switches, in terms of technology, it is an electro-mechanical device, and we are trying to improve the technology with regards to mechanism. Few know that power loss happens when you switch on switch off, so we try to make that mechanism more energy efficient so that consumers can use less power. Aesthetically, we have done much in terms of switches for the existing series and have also launched new series over the years which are contemporary in design and material. One innovation we have done is that we have launched Panasonic wiring devices, which traditionally, if you see the fixing of the wires is between the two terminals. We have hence unveiled switches featuring Screwless terminals under Panasonic brand. We are not sure if the electricians will accept it, but we have done an extensive study. I think people will accept it.
Going further, we see a lot of electronics coming into devices and we are working on that. Today we are working on products, which we have already launched, like touch switches and also devices which can be connected through a mobile phone or a mobile device. We will get deeper into these technologies because if we look at the future, perhaps you can ask a question about the necessity of a wired switch. If consumers can control the light through a device, then do they need a switch? So we recognise that and realise that the market requires its own time to evolve.
Panasonic is also involved in the solar business. Is Anchor a part of it?
We got into the solar business roughly 2½ years ago. Panasonic has this high efficiency panel called HIT. In fact, we took a long time to decide if we should enter the market and this sector is attractive and evolving, and there are major announcements from the government in terms of incentives. But it is a price-sensitive market. For that reason, we decided to focus on captive rooftop locations. In the last two years, we have established an in-house EPC team which is based out of Bengaluru and also have a sales team in place.
This team has generated 8MW across IT companies, IT services and also a few manufacturing units. The quality of panels and engineering is what differentiates us. Simultaneously, the company is trying to expand its base across the country. Going forward, since it would be difficult for us to justify the returns on our panel. It would be competitive for an EPC model, but our panels are expensive compared to the ones imported from China. How do you convince them about degeneration? But people are becoming conscious and we are trying to balance the equation of price v/s benefit.
Do solar paneIs require any after-sales support?
We have taken up maintenance contracts in some of these projects so maintenance is only about keeping the panels clean. Our channel partners and systems integrators do individual projects with residential or commercial and especially in states that are proactive.
How is the LED lighting business going?
Few anticipated the shift that happened from fluorescent to LED. The whole shift from CFLs to LED bulbs began to happen early last year and is gathering momentum. We knew it was no longer viable for us to manufacture them in-house. Our focus on LED has increased, and we have our standard products like bulbs, the base lights, down lights and panels. While volumes are increasing, margins are decreasing. Since this movement has been driven by the government, more manufacturers have sprung up and there are ready and cheap imports available, which they try to match with pricing.
Here, quality is a question mark and perhaps we might have to go through the learning phase as we did with CFLs 15 years ago. So although we are in the fray, we are not playing aggressively, specially when it comes to lamps. We retail the lamps, but are not into government distribution schemes. Our focus is on fixtures because we believe the market needs quality fixtures. Currently, there are plenty of imports from China, but quality is a question mark.
On one hand we will focus on residential fixtures. We aren’t doing decoratives. But, on the other hand, the commercial fixtures for the offices and industries is where we are concentrating. Not only selling the products but also trying to provide design solutions.
How does one deal with the unorganised market?
India imports from China and sometimes also branded Indian. We are fighting and competing with them. Right now we are hoping that consumers can see the difference for themselves.
What is your USP as compared to the Indian LED products as compared to your competitors?
Compared with other manufacturers, it is difficult to offer a strong differentiation. But, yes, what we are really doing is providing high luminous efficiency. Apart from that, we try to educate them on a new concept which is basically a new index which we call ‘FEU’. If you light up a room, you will look at the reflected light as well. By using the FEU index we are trying to minimise the amount of voltage required.
Is FEU an acronym?
FEU is an index of light. It is a Panasonic unique index which is developed in association with Ritsumeikan University. I think the differentiation for LED will come in the optimisation of voltage used to light up certain units.
We are approaching consultants because you cannot reach out to all end users. We are getting the consultants to rate our products. Besides that, word of mouth and local advertising helps. We have a strong connect with architects and interior designers. When it comes to a serious plan for commercial spaces, we work with electrical and lighting consultants.
How do you do your R&D? Does Anchor do it or Panasonic help you with R&D?
We do not indulge in the basic research on materials or technology. Our strength lies in design and development. I gave you an example of Screwless terminal range. We did not have the know-how for Screwless termination. So we took that mechanism from Panasonic and the Anchor team worked with them to develop the entire series. So Anchor develops the new product series, but technology inputs come from Panasonic. Although Anchor’s strength lies in design and manufacturing, I’m not ruling out the fact that there could come a time wherein we not only design or do basic research, but also look at countries such as the West and the African or Middle East continent.
How do you source components for manufacturing?
We import materials, components electronics, and metal components are local. Anchor has always manufactured in- house and sources only a few turn parts from outside. We are trying to move from turn parts to press parts because we realise we have to automate many of our operations and for that accuracy of components is very important.
As an export unit for Panasonic, which are countries you export and what products?
Right now, export is not a large business for us. We export switchgear, wiring devices and lighting exports as well. Going further, this is going to be a major activity.
Any particular verticals you are concerntrating on now?
Anchor’s strength has been the residential segment and commercial. We are trying to get our product range complete so that we can target the hospitality and healthcare infrastructure segments as well.