MLS ranks among the world’s top 10 LED manufacturers and has been engaged in research and development, production and sale of LED packages and other lighting application products since 1997. The company’s principal products include SMD LED, Dip/Lamp LED and LED application lighting products in the fields of consumer electronics, decorative lighting, landscape lighting, traffic signals, panel display and lighting projects.
Headquartered in Zhongshan, China, MLS has a very strong R&D team comprising more than 200 engineers and technicians out of total employee strength of 25,000 worldwide. MLS’ mainstay has always been Dip LEDs and SMD LEDs but it has recently introduced high-power LEDs and COBs as well. All these products meet the required national and international quality certifications, including UL, CUL, CE, FCC, CCC, GS, RoHS, etc. The company is also ISO9001:2008 (quality management system) and ISO14001:2004 (environmental management system) compliant.
In a recent interaction with Shobhit Bhasin, Sales Director of MLS India Pvt. Ltd., the Indian subsidiary of MLS, LED World tried to gain an understanding of how the company has established itself as one of the leading suppliers of LEDs in India and what business propositions does it foresee in a market which is bursting at its seams especially when it comes to LED lighting. Excerpts are here in the follow-up:
What is MLS India’s LED portfolio?
In India, MLS provides a wide choice of certified LEDs that are available in all standard CCTs and are used by our customers in products for trade, projects and tenders. MLS also has a wide range of colour LEDs available in its bouquet. Overall, MLS has a comprehensive product portfolio consisting of high, mid, and low-power LEDs, SMD LEDs, LED lighting modules, LED filaments, LED digital displays and many other products and components for lighting applications.
How has been your trade journey in India so far?
The business has been going well so far. In our first year, we had very few customers and had limited opportunities in the Indian LED market. We used this time to understand the customer’s needs and tailor some value added products specifically designed for this market. We understood that Indian customers are price conscious but are not willing to compromise on quality at the same time. We set up our own lab in India to support our customers here and even today we are probably the only LED manufacturer with an office in India, who have their own testing lab. This held us in good stead as in our second year of operations; we got accepted by several big lighting brands on the basis of our superior product quality and cost/performance ratio.
In the last couple of years, MLS has become the LED package supplier that most of the manufacturers in India prefer for manufacturing products to supply to EESL tenders. We have had a very busy couple of years and have supplied of over 4 billion LEDs each year to the Indian industry. Our estimates indicate that MLS had close to 50% market share in the Indian LED market in 2018.
We are hoping to double our business in the coming years and get a larger market share even though the market is passing through a tumultuous time in 2019 owing to the US – China Trade war and an increase in competition that is driving down prices.
What’s new in the portfolio for Indian customers?
We have developed 3030 series that features the best thermal specifications in the mid-power product fleet and provides light quantity of up to 100lm for an outstanding cost-effective performance. We have also recently introduced silicon-based COBs against the epoxy-based COBs that are currently in use in the market. Silicon is a better conductor of heat and helps in faster heat dissipation, which ultimately increases the life of the lighting unit as a whole. Moreover, sulphur contamination has always been an issue that can easily be lowered by these silicone-based LEDs leading to further drop in the prices.
We also offer filament LEDs, which we have been promoting for a couple of years now. For those customers who have just started dealing in the filament LED bulbs, we are supporting them initially with the end-products. Once they are able to achieve critical mass and the product gains widespread acceptance, our aim is to sell filament LED strips. We provide several options to our customers to meet their existing business models or processes. For example, we can initially support them with CKD, SKD and CGO formats till they are ready for full blown production. However, of all these, CGO is a bit more expensive, therefore, we suggest our customers to go with CKD or SKD. We have integration partners in India who can help the customers with their specific needs as well.
What is your plan for setting up a manufacturing unit?
Based on our internal assessments, setting up an LED package plant in India may not be viable at present. This is because critical mass of production volume that is required to break even on the investment of setting up such a plant in India is quite high. Once the surge in demand reaches a level which would ensure viability, we can reconsider the move of setting up an LED package plant in India.
Currently, MLS manufactures over 90 billion low/mid power SMD LED packages per month (or 3 billion per day), while the total annual consumption of LEDs in the Indian market is only 12 billion pieces. Our overall capacity (if we include DIP LEDs as well) is over 7 billion LEDs per day. Even with this much volume and the fact that MLS is the largest LED manufacturer in the world, we face tough competition on pricing from other LED package manufacturers. This indicates that in order to achieve the volume-based price points that compel you to be a serious player in the Indian LED package market, you would need to achieve similar volumes in production in India.
Moreover, the main component for LEDs is wafer (or LED chip) and there are no LED chip manufacturers in India yet. Even for someone who plans to setup an LED packaging plant in India, he needs to import basic component i.e. LED chips. I am sure that if any semiconductor major starts wafer manufacturing in India, then the logistics might change and make us seriously think of setting up a factory here.
Where does the potential come from? How has GST impacted MLS?
Our target market is the Tier 1 and Tier 2 customers. Having tapped most of the Tier 1 customers, the upcoming potential for us are the Tier-2 customers.
The implementation of GST led to the cost of LEDs to initially become slightly higher. This has specifically impacted those smaller manufacturers who were purchasing directly from China and were trying to find ways and means of evading taxes. Due to GST, this path seems to have been closed and is forcing them buy components from within. In fact, GST has come as a boon for LED manufacturers and for other electrical components manufacturers. But, the market has been severely impacted due to issues related to late payment, bad debts and extended credit periods.
The components industry in India is suffering mainly due to lack of timely payments by manufacturers. There is a rapid increase in the demand for LED lights, which in turn is driving the market for the electronic components that go into making of these LED lamps, but payment by manufacturers are delayed for various reasons which has made component manufacturers a bit cautious.
Some industry partners indicated that there is severe slowdown following liquidity crunch and feverish manufacturing activity in 2018 that the market is yet to recover from. There is also an opinion that due to the large scale supplies to EESL, which has eventually become the largest consumer of LED lighting products in India, manufacturers and brands are overextended on their credit terms with banks, etc. As a result, even a small delay in payment by EESL leads to severe cash crunch.
What new is in the pipeline in times to come?
MLS is planning to provide more value addition to its customers by supplying them with more components for their manufacturing process. We have already setup our factories back there in China for PCBs, housing and ICs to support our international customers and will be gradually introducing these products to India. We have a very strong technical team in India the members of which support our customers with design inputs, clearly understand their technical needs based on which they (our technical team members) design/develop the best possible solution for them (our customers).
How do you see Indian lighting industry shaping up?
The LED Lighting industry has grown significantly in the last few years, but the contemporary expansion is still lower than the estimates. This clearly indicates that LED Industry in India is yet to achieve the needed momentum despite so much thrust and impetus provided by the government through large scale procurement programs. As of now, only some components such as bulb housing and drivers for LED lights are manufactured locally; while the chips/wafers, which are the most important constituents when it comes to manufacturing LED lighting, are still imported. We have not observed any improvement in the scenario and it is expected that this would continue for at least a couple of more years.
How do you see the prospects of Indian lighting industry & MLS?
In the next one year, we expect to see a lot of consolidation happening in the LED industry. As always, new players will keep entering into the market, but only those that are able to deliver consistent quality along with the ability to meet and exceed customer expectations will sustain.
MLS has very strong manufacturing base in China and strong presence in most of the international markets. We have strategic investments in several chip/wafer manufacturing entities and are listed entity in the Shenzhen Stock exchange. A couple of years ago MLS took over Osram’s lighting business (now known as Ledvance), which has led our group revenue to exceed US$4 billion making us among the top three lighting companies in the world. We expect a lot of potentials for us in time to come.