“This segment is bound to grow”
In this interaction with Niranjan Mudholkar, PK Ranade, joint managing director of Indo Asian Fusegear Ltd, talks about how his firm is now looking beyond the slowdown
What has been the impact of the recession on Indo Asian Fusegear Ltd in general and particularly the segments catering to the construction & building industry like building electricals, lighting, etc.?
Our products are installed in every building segment be residential, commercial or industrial to distribute power in the entire establishment.
In case of slowdown in any of the building segments, part of our business does get affected. It is a public fact that many large construction companies and infrastructure development companies had to slow down their projects because of inadequacy of funds which results into slowing down of the project completion. This has obviously had a direct impact on the usage of Indo Asian brand of products.
The slow down affects both the electrical distribution equipment as well as the lighting equipment because light sources are the last installation items at any construction site.
Now, as the construction sector is coming back into its normal course of business with a price correction which was essential, our products have again started moving and we are confident that in the coming weeks the construction work will be progressing at expected rate. At this point of time Indo Asian can again keep on expanding as per the original plan.
Yours was the first company to introduce compact fluorescent lamps (CFLs) in India about twelve years back. How has this market shaped up since then with many other companies foraying into this segment? Does the influx of cheaper Chinese products still affect this segment?
Indo Asian was one of the pioneers in CFLs and since its inception produced high quality lamps both for the domestic as well as the international market. A good quality product is necessarily produced with the best quality of raw materials and process control. Indo Asian has always tried to produce its products at almost optimum prices.
However, with the influx of Chinese products at one point of time where the finished product was selling at a price lower than our raw material prices it was almost impossible to keep pace or have a counter strategy to face such unnatural product pricing.
It is also a known fact that the product which was imported was inferior in all respects and was not adjudged to meet with any expectations of longer life or performance. But because of its extremely low prices these products were able to infiltrate the market and the business prospects for good manufacturers were negatively impacted.
The Government of India was in the knowledge of this and subsequently anti-dumping duty was imposed. Despite the government’s ordinance for the import of inferior products alternate routes were formed and product still kept on infiltrating into the market in a big way and good manufacturers continued to suffer over the years.
Now the anti-dumping duty has been re-imposed where Government has provisions to curtail the use of any alternate routes and we are sure that from now Indian manufacturers of good products will continue to grow and thrive. Indo Asian being one of the pioneers of good high quality product can now look at the future with great comfort and successful business future.
Your manufacturing capabilities have certainly helped your firm’s foray into the distribution business. How do you see this segment evolving in the next five years?
Indo Asian’s foray into the distribution business was a small entry and is very comforting to note that all the plans which were originally envisaged to achieve higher success are very much in place and have become reality. With our knowledge and experience in the electrical sector, we have been able to curtail the loss of this circle.
At the same time because of our professional approach our contact with the customers has been enhanced and we are able to collect the revenue more regularly from the consumers who are enjoying better services.
By achieving this success we are proud that we are serving the nation by eliminating the losses, improving the customer services and improving the profitability and revenues of our company as well as the electricity boards.
We will be expanding this business segment substantially in the near future after having gained very positive results from our first project and look forward to large contribution from this new division in the years to come.
Going ahead, which will be the other thrust areas for Indo Asian? Any reasons for this?
We have decided to improve our share in the electrical and lighting business because this segment is destined to grow for high quality products for many years to come. The Government of India recognises the importance of availability of power as an instrument for growth and the plans to expand this sector.
The Government has committed a very large budgetary allocation to ensure the successful implementation of the plan. We will continue to improvise our product range and adding newer products which will serve the growing quantitative and qualitative needs of the buyers.
We will also keep on adding new products which will enhance our base and enable us to provide better service to the end users. Our new range of energy meters is one such example which has started producing very improving results and enables us to complete the product offering in this segment.
How has been 2008-9 as a financial year in terms of bottom line growth?
The financial results this year have been stable although 100% growth targets could not be achieved because of the economic situation in the country. But the results have definitely improved compared to the previous years and now that the environment is again coming back to normal we are confident that we will more than make up for the lost opportunity.