In September of 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 “ Made in China".
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, said, "According to the contract, the number of LED bulbs provided by Philips should reach 50 million in five months. Philips said that the first batch of bulbs were imported from Philips China's factory, but they are increasing their production capacity in India. Since December, 12 million LED bulbs can be supplied every month. Imports are only a temporary measure to ensure timely delivery. According to Philips, they will gradually stop importing bulbs. In addition, Philips' Indian factories will be one or two. Full operation during the month."
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, “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 production. Manufacturing capacity, last year, we provided more than 15 million Indian-made LED bulbs to EESL. Due to the large number of such special orders, we need to increase production significantly, so some of the orders will be sourced from factories around the world. But most will be supplied by Indian factories.
In response to a query 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 because of the sheer volume, we offer a more affordable end-user. The price of LED bulbs meets all bidding requirements. The substantial increase in demand for LED bulbs in India has led to sales growth, which has enabled us to maximize shareholder value in this way by offering more favorable prices through economies of scale.
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 tenders, the order will be allocated between 5-6 technically qualified bidders who can match the L1 price (the price offered by Philips in this tender). EESL follows the same principle. Bidders are required to reach L5 to match the L1 price. They disagree with this, so as shown in the RFP (Request for Proposal), EESL allocates all orders to Philips who are willing to supply 50 million in the bid. Kumar said.
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