INDUSTRY STRUCTURE AND DEVELOPMENTS
The past year has been a good year for Starlite Components Limited and the company is
growing and strengthening its position in the lighting and electronics industry.The
company has come long way since its incorporation in the year 1991. During this period the
industry, technology and market has evolved and Starlite has been evolving with it. The
last 3 years have laid a strong foundation and now the company is looking at expanding its
product range, increasing penetration in the market and strengthening the bottom line of
the company.
The lighting industry has shown a very quick shift from fluorescent lighting to LED
(Solid State) lighting. As Starlite was waiting for this opportunity, it plans to make the
most of it and capture a significant share of the market. The Indian lighting industry
continues to show strong signs of growth. It has been growing at a CAGR of 59%, growing
from Rs. 8,500 Cr in 2010 to Rs. 13,500 Cr in 2013.lt is expected to cross Rs. 21,600 Cr.
in the year 2020. The government initiatives are increasing and the opportunities are
opening for the industry faster than most projections had anticipated. However, the
percentage usage of lighting continues to be a high 18% of the total power consumption in
our country (much higher than the developed countries, which account for 12-15%) so with
the current Government the demand for LED products is expected to continue and Starlite is
gearing up to make the most of this opportunity.
The Government has also ramped up its initiatives ofchanging all streetlights and
lights in public spaces to LED lights. Starlite is successfully executing orders in Public
Private Partnership (PPP) basis for one city &further orders are expected, which will
give the Company cons istent revenue & also strength its project business.
Starlite has also added new customers to its portfolio &now has a strong and
diverse customer base, which is a very positive sign for the Company from stability &
growth point of view. The addition of new products and increase in volumes is the reason
behind the strong top line growth in the current year.
SWOT ANALYSIS Strengths:-
• Steady growth in demand for all types of lighting products, especially LED,
driven by Consumer market and Government.
• E-commerce is on the rise & Starlite is slowly developing this vertical.
• Availability of local manpower (skilled/unskilled).
• Strong manufacturing capability and capacity for electronic drivers & LED
Products.
• Diversified customer baseand a growing portfolio of products.
Weakness:-
• The support offered by banks and government for the industry is not stable and
very slow in decision-making, which causes delays in achievement of plans and projections
of the company.
• High cost of capital due to high interest rates and high requirement of
collateral security.
Opportunity:-
• With the rising demand of LED Products, strong push by the Government and the
world looking at India as an alternative to China. There is going to be tremendous
increase in opportunity both at a domestic level and international level.
• With the government putting more emphasis on standards and regulation, on the
long run this should have a positive impact in curbing sales in the unorganized sector.
• Scope for more environment friendly products and their disposal methodologies.
• The size of the market is big enough to driver steady growth for the next few
years, regardless ofthe world scenario.
• LED demand generation supported by various Government initiatives like with JNN
Solar Mission, DeitY Electronic Policy, Rural Electrification.
Threats:-
• Low quality, unreliable imports flooding the market and competing with locally
manufactured product.
• Oversupply of LED manufacturing capacity in future years, leading to risk of
dumping of products in India, threatening the local industry.
• Disruptive technological changes which could take time and money for adoption by
local manufacturing plants.
• Adoption of Global Protectionist Policy by many countries, closing out the
option of exporting locally manufactured products.
• Forex volatility, leading to volatility in cost of raw materials for LEDs, most
of which are imported today.
• Poor power quality condition, requiring products to have very strong
specification and yet the market rejections rates can hit the bottom line significantly.
One of the major concerns with the company is sufficient liquidity, which is needed for
the growth that the company is targeting. There are many concrete opportunities and using
these as a platform the Company is hopeful of getting some funding support from bankers
& private investors and regain its strength and position in the lighting industry.
INDUSTRY OUTLOOK
The Indian Lighting industry is progressing faster than expected in the adoption of
energy efficient lighting products to reduce Indias lighting power consumption &
bring it closer to that of more developed countries. There is tremendous demand of
domestic capacity for LED manufacturing &testing. The government should make the
required funding and infrastructure available so that we can capitalize on such an
opportunity. This could give a fundamentally strong and positive boost to the countrys
economy.
Starlite continues to focus on increasing its manufacturing capacities and product
base to meet the increasing demand from various sectors & customers. The Company is
targeting some large government projects, which could help the company surpass its targets
and improve its top and bottom line.
FUTURE TRENDS EXPECTED
Technology
• LED lighting is becoming increasingly popular due to decreasing price and
increasing awareness about benefits.
• The industry is seeing continuous adoption of newer technology and applications
for LEDs, which are even more energy efficient (Lumen/Watt increasing) and cost efficient
($/Lumen decreasing) which is a good sign for the industry.
• Lighting automation and remote management is seeing an increase, with >70% of
Luminaries likely to have controllers in the future.
Consumer preferences
• Luminaries preferred over basic lighting fixture.
• Smart control software becoming popular (for occupancy, dimming, security and
monitoring, etc.) to save power.
Global Competition
• China continues to stay as the major competition and threat as it not only has
much larger production capacities but also it has a strong integrated raw material supply
chain. India is still directly or indirectly heavily dependent on China.
• Many global countries want to shift manufacturing to India to diversify their
manufacturing base (e.g. Japan, Europe) but due to the lack of infrastructure and the
inability ofthe industry to grow rapidly due to scarcity of funding, most Indian companies
are growing at a faster scale.
Regulation
• Stricter regulations for quantity of mercury in CFL and FTL, as well as for
proper end of life disposal for CFLs/ FTLs.
• Mandatory standards for LED, Luminaries and controls.
• Shift to LED for most public lighting applications (e.g. national highways,
street lights, parks, etc.).
• Countries across the globe are beginning to ban inefficient incandescent lamps
in residential lighting; opportunity for India to do the same, in phased manner.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The adequacy of the internal control systems operating in Starlite is tested and
monitored from time to time. These systems are also consistently re-engineered in line
with the changing requirements.
DISCUSSION ON FINANCIAL PERFORMANCE W.R.T. OPERATIONAL PERFORMANCE
The Companys financial performance has been in line with the projections and the past
year has strengthened the foundation of the company further. This will help the company in
the coming years. The customer base of the company is now more diverse and also the
company has a strong product line up which will help it in cementing a strong position in
the market in the coming years. The Company has been quick to adapt to the changing
market. The order book is strong and the market continues to explode. The demand is
expected to grow rapidly for the next few years.
The Company has started work towards backward integrating its supply chain to lower
cost and to have greater control on quality and quantity. The company is also slowing
seeing the benefit of better pricing due to increase in its demand quantity. The order
book of Starlite continues to be very healthy. Even though the country saw major steps
from the government, which have impacted the market, the company has been able to still
achieve its targets which shows that there is a lot more potential which will be
beneficial in the coming years.
Arrangement and availability of finances for the exponential expansion continues to be
one of the core challenges for the company. With the right financial support the company
can record an even higher rate ofgrowth, which will help it in capturing a larger share of
the market. Barring unforeseen circumstances, the Directors are confident that financial
performance of Starlite will continue to be very strong and rewarding to its investors
in the coming years.
MATERIAL DEVELOPMENT IN HUMAN RESOURCES I INDUSTRIAL RELATIONS FRONT,
INCLUDING NUMBER OF PEOPLE EMPLOYED
During the year under review, the industrial relations remained cordial and stable.
Starlite has always had special concern for development of human resources. Starlite
inculcates the culture of personal growth and organizational excellence, which is based on
performance.
As on 31st March, 2017, the number of people directly employed by the
Company was 68
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