"Machher raja ilish, battir raja Philips"
(Hilsha is the king of fish, Philips is the king of bulbs)
When those famous lines were uttered nearly three decades back in a television ad, Philips was indeed the king of light bulbs in Bangladesh. Starting in the 1960s, Philips dominated the light bulb market almost single-handedly after it replaced kerosene lamps with incandescent light bulbs.
With the passage of time, however, the king began losing its kingdom and glory. Today the brand is engaged in a struggle for survival in Bangladesh.
In 2008, Philips supplied around 2.27 crore pieces of bulbs in an 8-crore market. Today, however, sales have dropped nearly 75 per cent, with only 57 lakh units sold during the last fiscal.
For Philips, the decline began in 2007, a time which marked the rise of energy-saving lamps in the country. Today, the LED market, worth Tk3,000 to Tk4,000 crore according to industry insiders, has replaced tungsten light bulbs in urban areas. Philips' share in the tungsten bulb market has also been dented by the rise of numerous competitors, including Transtec, which is owned by Bangladesh Lamps Limited, the company that also produces Philips bulbs for Bangladesh.
A brief history of Philips
The Dutch brand Philips and Bangladesh's Transcom teamed up as Bangladesh Lamps Limited (BLL) in 1960, going into a manufacture of incandescent light bulbs.
In 1993, Philips sold its shares to the BLL. However, the brand approved Bangladesh Lamps' production and marketing of Philips lamps in exchange of 3.6 percent royalty.
As Philips sales dropped, BLL's own Transtec brand gathered momentum and gradually managed to secure a prominent position in the lamp business.
BLL let Philips drift and it shifted its focus to a promotion of its own Transtec brand.
Ruhul Amin, assistant general manager (accounts and finance) of BLL, said, "We are producing filament bulbs in two brands – Philips and Transtec. Filament bulb production is facing tough times with the advances in technology."
According to insiders, however, BLL shifted the focus to Transtec as a way of avoiding paying royalty fees to Philips.
Philips market share in electric bulbs
In 2008, sales of Philips brand electric bulbs were 2.27 crore units, which is worth Tk30.81 crore.
In the same year, Transtec brand bulb sales were 1.27 crore units, worth Tk17.12 crore.
In the 2018-19 fiscal year, sales of Philips bulbs declined to 57 lakh units at Tk11.86 crore. In the meantime, Transtec bulb sales were 74 lakh units, worth Tk15.39 crore, in the 2018-19 fiscal year.
From 2007 onward BLL reduced the production of its electric bulbs as energy-saving bulbs began arriving in the local markets.
Ruhul Amin told The Business Standard that currently BLL manufactures 1.36 crore bulbs every year. Of those, Philips' share comprises 15 percent, while the rest are for the Transtec brand.
A decade ago, BLL used to produce more than three crore filament bulbs annually, added Ruhul.
He said Philips has no energy-saving light brand in Bangladesh. However, some importers bring those lights from neighbouring India and China.
As industry insiders put it, Bangladesh has an annual demand for 8 to 9 crore units of electric bulbs.
At present, the Super Star Group has about 25 percent market share in the electric bulb segment, where BLL holds the second position with about 15 percent share. The rest of the market is dominated by other local and small factories.
Energy-saving bulb market
As the first-ever local manufacturer in the country, BLL started manufacturing energy-saving lamps in 2007. It sold 8 lakh energy-saving bulbs worth Tk13.06 crore in 2008.
Twelve years on, BLL now boasts about 1,000 percent growth in energy-saving bulb sales, worth Tk143 crore. Production leapt to 727 percent and stood at 66.18 lakh units in the 2018-19 fiscal year.
Under the Transtec Brand, Bangladesh Lamps Limited manufactures filament burning bulbs, compact fluorescent lamps, tube lights and other lighting products.
The production unit is located in the capital's Mohakhali. Production meets the standards of International Organization for Standardization (ISO) certification.
The company's total sales were Tk53.79 crore in 2008 with a net profit of Tk5.53 crore. In the 2018-19 fiscal year, sales stood at Tk157 crore with a net profit of Tk2.92 crore.
Latifur Rahman, managing director and chief executive officer of BLL, said, "We are prioritising the production of energy-saving bulbs and LED tube lights, which are gaining wide acceptance owing to lower energy consumption and cost-saving potential."
"We hope that our emphasis on LED production and distribution will help us to improve our financial position in the coming years," he said at the last annual general meeting.