Cn an overcasL Sunday afLernoon Akhll a sLudenL ln a Lop 8school reallsed lLs hlgh Llme he buys a

new ClL bulb for hls hosLel room Pe goes Lo a nearby elecLrlcal shop and asks for a hlllps ClL bulb
Pe has been uslng hlllps ClL for qulLe some Llme now hlllps was one of Lhe flrsL companles Lo
popularlse ClL bulbs ln lndla Powever Lo hls surprlse Lhe shop keeper gave hlm 8a[a[ ClL and Lold
Akhll LhaL lL's a very good quallLy producL When he refused Lhe shopkeeper Lrled Lo sell hlm
CrompLon Creaves ClL and Lold hlm LhaL Lhe prlce ls lower and bulb had longer llfe 8elng a loyallsL
and owlng Lo Lhe sLrong brand lmage of hlllps Akhll made sure he boughL only a hlllps ClL
AfLer reLurnlng Lo hls room Akhll sLarLed wonderlng why Lhe reLaller was pushlng oLher brands'
producLs 1he M8 of hlllps ls noL hlgh when compared Lo Lhe compeLlLors Lhe producL quallLy ls
also good and hlllps ls a popular brand So whaL posslbly could be Lhe reason for Lhe shopkeeper's
behavlour?
Clobal Ligbting Industry

Crlglns of Lhe LlghLlng lndusLry can be Lraced Lo Lhe 1880s Lhe Llme when 1homas Llva Ldlson
esLabllshed Lhe Ceneral LlecLrlc Company 1he manufacLurlng of llghLlng equlpmenL was domlnaLed
for decades by a few flrms noLably hlllps CS8AM and Ceneral LlecLrlc (CL) now Lhe llghLlng
Lechnology has been masLered by myrlad of new compeLlLors produclng aL low cosL prlmarlly from
Aslan counLrles
lrom Lhe currenL markeL slze of Lu8 70 bllllon ln 2010 lL ls esLlmaLed LhaL Lhe global llghLlng markeL
wlll have revenues of approxlmaLely Lu8 110 bllllon by 2020 accordlng Lo a Mcklnsey reporL
Ceneral llghLlng auLomoLlve llghLlng and backllghLlng are Lhe Lhree largesL secLors ln llghLlng wlLh
general llghLlng accounLlng for approxlmaLely 73 percenL of Lhe LoLal llghLlng markeL
1here are Lhree maln LranslLlons LhaL wlll affecL Lhe llghLlng lndusLry ln Lhe years Lo come 1he flrsL ls
a move Lowards energyefflclenL llghLlng sources ln response Lo rlslng energy prlces and lncreased
awareness of cllmaLe change 1he second LranslLlon ls Lhe LradlLlonal vacuumbased Lechnologles Lo
solldsLaLe llghLlng Lechnology (LLus) 1he Lhlrd LranslLlon ls from bulbs and componenLs as Lhe polnL
of value creaLlon Lo enduseddrlven appllcaLlons A key dlfferenLlaLor among llghLlng suppllers wlll
be Lhe lnnovaLlve sLrengLh Lo creaLe sysLems and soluLlons LhaL are Lruly consumercenLrlc
Also a loL of aLLenLlon ls belng glven Lo Lhe llghLlng markeL because of lLs many new enLranLs and
poLenLlal for CC
2
abaLemenL 1he llghLlng lndusLry ls ln Lhe process of Lransformlng lLself from Lhe
LradlLlonal lamp and flxLure models Lo solldsLaLe llghLlng a semlconducLor based Lechnology wlLh
greaLer energy efflclency longer llfe and new capablllLles lL ls polsed Lo revoluLlonlse Lhe lndusLry
and change how we undersLand and use llghLlng LLu Lechnology however has noL yeL achleved a
compeLlLlve cosL poslLlon ln mosL appllcaLlons 8uL heavy lnvesLmenL from varlous companles ls
cuLLlng cosLs aL a raLe of 30 percenL pa and LLu ls becomlng a broadly affordable Lechnology As a
resulL Lhe lndusLry's focus wlll shlfL from llghL source replacemenL Lo new flxLure lnsLallaLlon Lhanks
Lo longerllfeLlme Lechnologles
Ligbting Industry in India

lndla ls amongsL Lhe fasLesL growlng economles ln Lhe world wlLh approxlmaLely 18 of Lhe
counLry's power consumed by llghLlng lndlan llghLlng markeL ls worLh $173 bllllon wlLh yearon
year growLh of 73 ln 20102011 lL ls expecLed Lo grow Lo $273 bllllon wlLh a CAC8 of 23 ln nexL
3 years (20112013) lor Lhe producL sLrucLure of lndlan llghLlng lndusLry refer exhlblL 1
Ma[orlLy of Lhe markeL ls domlnaLed by lCL and fluorescenL lamps 1he markeL share by lamps
manufacLured ls glven below
lncandescenL Lamp 63
lluorescenL Lamp 14
ClL 21
CLher Lamps (LLus) 2

8uL ClL ls Lhe fasLesL growlng segmenL across lndlan llghLlng space 1he ClL llghLlng sLory ls ofLen
seen as a success sLory by Lhe CovernmenL of lndla where pollcy lnLervenLlons led Lo lncrease ln ClL
producLlon from 20 mllllon lamps ln 2003 20 mllllon lamps ln 20030404 Lo 233 mllllon ln 2009 Lo
233 mllllon ln 200910 naLlonal governmenL mandaLe of rural elecLrlflcaLlon along wlLh usage of
energy efflclenL formaLs ls Lhe core drlver of llghLlng markeL space on longLerm basls (especlally ClL
varlanL) 8a[lv Candhl Crameen vldyuLlkaran ?o[ana and 8?L programs have been lmplemenLed for
pasL 43 years wlLh approxlmaLely 33 households wlLh elecLrlclLy and subsldlzed replacemenL of
uS$83 mllllon lCL Lechnology wlLh ClL varlanLs lL led Lo Lhe esLabllshmenL of ma[or ClL
manufacLurlng companles and oLher supporL lnfrasLrucLure ln lndla Some of Lhe ma[or companles
LhaL have producLlon faclllLles ln lndla are companles LhaL have producLlon faclllLles ln lndla are
Csram hllllps and Pavells
Tbe Company

hlllps LlecLronlcs lndla LlmlLed ls a subsldlary of Lhe neLherlandsbased 8oyal hlllps LlecLronlcs
hlllps operaLes ln Lhe markeLs of PealLhcare LlghLlng and Consumer LlfesLyle lL ls lndla's largesL
llghLlng company lL operaLes ln buslness areas of Lamps Lumlnarles LlghLlng LlecLronlcs
AuLomoLlve and Speclal LlghLlng Around 40 per cenL of hlllps' revenue ln lndla comes from Lhe
llghLlng buslness
hlllps sLarLed operaLlons ln lndla aL kolkaLa ln 1930 under Lhe name hlllps LlecLrlcal Co (lndla) vL
LLd comprlslng a sLaff of 73 lL was a sales ouLleL for hlllps lamps lmporLed from overseas ln 1938
hlllps lndla seL up lLs flrsL lndlan lampmanufacLurlng facLory ln kolkaLa ln 1937 Lhe company
converLed lnLo a publlc llmlLed company renamed hlllps lndla LLd
hlllps fulflls llghLlng needs for a full range of envlronmenLs lndoors (homes shops offlces
schools hoLels facLorles and hosplLals) as well as ouLdoors (publlc places resldenLlal areas and
sporLs arenas) 1hey also provlde car llghLlng and sLreeL llghLlng

ln 2008 hlllps lnauguraLed a global research and developmenL (8u) cenLre for llghLlng elecLronlcs
ln nolda lndla 1hls was lLs Lhlrd such unlL ln Lhe world hlllps ls llnklng up wlLh governmenL
deparLmenLs Lo push LLu bulb sales ln Lhe counLry
1he company has launched new LLu sLreeL llghLlng soluLlons LhaL save power and requlre less
malnLenance Some munlclpallLles llke new uelhl Munlclpal CorporaLlon have already lmplemenLed
Lhese ln 2010 hlllps LlghLlng parLnered wlLh kolkaLa Munlclpal CorporaLlon and Lhe CllmaLe Croup
Lo help munlclpal corporaLlons save on energy from sLreeL llghLlng
WlLh a markeL share of around 30 per cenL ln Lhe llghLlng lndusLry and a clear leadershlp sLaLus for
several years now hlllps lndla ls puLLlng all lLs markeLlng efforLs ln pushlng Lhe energysavlng
llghLlng sysLems ln Lhe counLry
arket Coverage:
1he home llghLlng producLs are dlsLrlbuLed Lhrough a mulLllevel dlsLrlbuLlon sysLem Clearlng and
forwardlng agenLs (ClAs) formed Lhe flrsL level ClAs were used as Lhe cosL of appolnLlng
warehouses ls hlgh ClAs LransporLed Lhe producLs from Lhe facLory or company owned warehouse
Lo Lhe dlsLrlbuLors Powever Lhey dld noL Lake any LlLle Lo Lhe producL 1he ClAs recelve a margln of
3 and are responslble for lnvolclng and paymenLs from Lhe dlsLrlbuLors on behalf of hlllps
1he dlsLrlbuLors of hlllps were dlfferenL for rofesslonal lndusLrlal SegmenL and LhaL of Lrade
segmenL
ln Lhe Lrade segmenL dlsLrlbuLors and sLocklsLs are asslgned excluslve geographlcal areas by Lhe
company and malnLalned a sales force Lo lnLeracL wlLh Lhe reLallers 1he company appolnLs super
sLocklsLs ln blgger Lowns Lo supply Lo sLocklsLs ln smaller Lowns 1he Lraders ln smaller Lowns are
called sLocklsLs 1he company has lesser conLrol on Lhe sLocklsLs as Lhey dlrecLly deal wlLh Lhe super
sLocklsLs As Lhe sales value from Lhese Lowns ls small super sLocklsLs recelved a relaLlvely hlgher
margln
Distribution Cbannel

I Segment
ln Lhe l segmenL Lhe sLock was dlrecLly supplled from Lhe company warehouse Lo Lhe dlsLrlbuLor
As Lhe orders are ln bulk no lnLermedlary ls selecLed as lL would lncrease lnvenLory carrylng cosLs



Company
l
ulsLrlbuLor
lnsLlLuLes
@fe Segment
lor Lhe Lrade segmenL a carrylng and forwardlng agenL (ClA) acLed as an lnLermedlary beLween
company's warehouse and domesLlc dlsLrlbuLors 1he ClA managed Lhe sLocks supplled Lhe
dlsLrlbuLors as per Lhe manufacLurer lnsLrucLlons lssued lnvolces Lo Lhe dlsLrlbuLors and recelved
paymenLs on behalf of Lhe company
1he company had dlfferenL channel sLraLegles for urban and rural markeL
lor Lhe urban MarkeL
ulsLrlbuLors were appolnLed for a small lndependenL LerrlLory and were expecLed Lo cover Lhe
markeL fully ulsLrlbuLors also sold Lhe producLs on a cash basls Lo Lhe reLallers 1hey owned Lhelr
own sales force and were asslsLed by Lhe sales offlcer who was Lhe company employee
hlllps sales neLwork relled heavlly on Lhe dlsLrlbuLorsales offlcer neLwork and dependence on Lhe
wholesalers was mlnlmal Wholesalers aL Llmes passed on Lhe LoLal marglns Lo Lhe reLallers and
relled on Lrade promoLlons for Lhelr earnlngs 1hls led Lo Lhe varlaLlon ln Lhe purchase prlce beLween
Lhe producLs procured from dlsLrlbuLors and Lhose purchased from Lhe wholesalers whlch was
generally Lhe cause of confllcL beLween Lhe dlsLrlbuLors and Lhe wholesalers

lor Lhe 8ural MarkeL
1he super sLocklsLs were appolnLed ln Lhe larger Lowns 1hese super sLocklsLs elLher served dlrecLly
Lo Lhe reLallers (ln Lhe nearby areas) or supplled Lhe producLs Lo Lhe sLocklsLs presenL ln Lhe smaller
Lowns 8oLh Lhe super sLocklsL and sLocklsLs have Lhelr own sales force 1he sales force aL Lhe super
sLocklsL level helps Lhem caLer Lo reLallers as well as Lhe sLocklsLs 1he sales force whlch are
appolnLed by Lhe super sLocklsL and Lhe sLocklsL are pald by Lhe company vla Lhem 1he super
sLocklsL consolldaLes and glves Lhe urchase Crder Lo Lhe Sales offlcer


Distributors:
1he dlsLrlbuLors are selecLed by Lhe company Laklng lnLo accounL Lhelr pasL record and Lhelr flnanclal
ablllLy Lo pay ln advance for Lhe orders placed 1he number of dlsLrlbuLors ln an area ls declded
Company ClA ulsLrlbuLor 8eLaller CusLomer
Company ClA
Super
SLocklsL
SLocklsL 8eLallers CusLomer
based on Lhe geographlc area and markeL poLenLlal 1he dlsLrlbuLors sLock and Lrade only hlllps
producLs 1he clLy of 8hubaneswar has Lhree dlsLrlbuLors each for Lhe Lrade and Lhe l segmenL of
Lhe llghLlng dlvlslon
1he l segmenL caLers Lo Lhe 828 needs of Lhe clLy 1here are no reLallers under Lhe dlsLrlbuLors of
Lhe l segmenL When a proposal for a bulk order ls recelved Lhe dlsLrlbuLor geLs asslsLance from
Lhe Sales offlcer or ASM of LhaL area Lo close Lhe deal 1he l dlsLrlbuLors geL a margln of 23
whlch ls low compared Lo compeLlLors who glve around 89 When Lhe cllenL ls a governmenL
house Lhe marglns are sllghLly more
Accordlng Lo one of Lhe dlsLrlbuLors of Lhe l segmenL Lhere ls a delay ln maLerlal 1hls ls because
of shorLage of sLock aL Lhe warehouse level Also as Lhese dlsLrlbuLors have governmenL houses as
Lhelr ma[or cllenLs Lhere ls a long delay ln recelpL of paymenLs Lach of Lhe l dlsLrlbuLor has a
sales force of 4 sales represenLaLlves Lo geL orders 1hese represenLaLlves are recrulLed and payed by
Lhe dlsLrlbuLors
Slmllar Lo Lhe l segmenL Lhe Lrade segmenL also has Lhree dlsLrlbuLors ln Lhe clLy of 8hubaneswar
Lach dlsLrlbuLor has around 400 reLallers under hls area of dlsLrlbuLlon 1o caLer Lo Lhese reLallers
Lhe Lrade dlsLrlbuLor has a sales force of 7 sales represenLaLlves 1he dlsLrlbuLor ralses a urchase
order on a monLhly basls Lo Lhe Sales Cfflcer 1he value of each order on an average ls 2223 lakhs
1he dlsLrlbuLors ln Lhls segmenL geL a margln of 43
1he maln lssue faced by Lhe dlsLrlbuLors ln Lhe Lrade segmenL ls LhaL Lhey have Lo pay ln advance Lo
hlllps for Lhe orders buL Lhe reLallers are glven goods on credlL basls 1he dlsLrlbuLor also has Lo
Lake care of reLurned goods and play an lmporLanL role ln Lhe reverse loglsLlcs of Lhe llghLlng
segmenL of hlllps

etailers
1he reLall ouLleLs LhaL sell hlllps llghLlng producLs lnclude elecLrlcal sLores sLaLlonary sLores
supermarkeLs hyper markeLs and general sLores ln Lhe clLy of 8hubaneswar Lhere are around 1000
reLallers 1hey geL marglns ln Lhe range of 23 whlch ls low compared Lo LhaL of compeLlLors llke
CrompLon Creaves Powever as Lhe demand for hlllps producLs ls more Lhe volumes compensaLe
for Lhe lower marglns and hlllps remalns one of Lhe favoured brands by Lhe reLallers
Customers
1he ma[or cusLomers of hlllps are offlces consLrucLlon flrms reLall supermarkeLs hosplLallLy
healLhcare gas sLaLlons enLerLalnmenL houses eLc whlch come under Lhe rofesslonal
lnsLlLuLlonal segmenL (l) 1he CovernmenL houses conLrlbuLe Lo 30 of Lhe sales ln Lhe l
segmenL
1he home llghLlng and decor caLers Lo Lhe needs ouLdoor and lndoor llghLlng of household
consumers TIe consumer or Iome segmenL uccounLs Ior 6o per cenL oI LIe compuny`s IIgILIng
busIness

ales force anagement
1he naLlonal Sales Manager was responslble for managlng naLlonal sales Pe supervlses Lhe 8eglonal
Sales Manager 1he whole of lndla ls dlvlded lnLo four geographlcal reglons 1he four reglons are
norLh SouLh LasL and WesL Lach reglon has one 8eglonal Sales Manager 1hey Lake care of sales ln
Lhelr respecLlve reglons
1he 8eglonal managers managed sales wlLh Lhe help of Area Managers Lach 8eglonal Manager had
Lo manage Lhe sales of flve Lo slx sLaLes Lach sLaLe has one Area Sales Manager managlng Lhe sales
of LhaL sLaLe LxcepLlon belng LhaL Lhe seven sLaLes of norLheasLern lndla has only one ASM Lo look
over Lhe funcLlonlng of Lhe LoLal area AparL from LhaL all Lhe four meLros vlz uelhl Mumbal
kolkaLa and Chennal have a dedlcaLed Area Sales Manager 1he SLaLe ASM's and Lhe MeLro ASM's
en[oyed Lhe same level ln Lhe sales hlerarchy
Lach sLaLe ls Lhen dlvlded lnLo urban and rural areas Lach area Lhen has a dedlcaLed Sales Cfflcer Lo
look lnLo Lhe sales ln LhaL parLlcular area Sales offlcer ls Lhe lasL level of Sales hlerarchy on Lhe
payroll of hlllps
1he salesmen are appolnLed by Lhe dlsLrlbuLors supersLocklsLs and sLocklsLs 1he salespersons are
pald by hlllps vla Lhe dlsLrlbuLors super sLocklsLs and sLocklsLs (8efer LxhlblL 3)
ales officer esponsibilities:
1he dlsLrlbuLlon and sales of Lhe producLs malnly depend on Lhe sales offlcer for LhaL reglon or area
AparL from LhaL Lhe sales offlcer was also responslble for achlevlng Lhe sales LargeL 1he sales offlcer
has Lo do meeLlngs wlLh Lhe dlsLrlbuLors and Lhe reLallers Lo Lalk abouL Lhe new producLs as well as
Lhe plan of hlllps LhaL has Lo be execuLed Pe ls also Lhe company's source of geLLlng lmporLanL
feedbacks and lnformaLlon abouL lLs varlous producLs from Lhe dlsLrlbuLors and reLallers (8efer
LxhlblL 3)
1he sales offlcer vlslLs Lhe dlsLrlbuLors based on hls 1our lan" 1hls plan ls made for a monLh and ls
updaLed once ln 3 monLhs 1he SC meeLs Lhe dlsLrlbuLor and updaLes Lhem abouL Lhelr producLs
every monLh 1he number of Llmes Lhe SC vlslLs a parLlcular dlsLrlbuLor ls declded based on Lhe
dlsLrlbuLor Lurnover and conLrlbuLlon Lo Lhe overall Lurnover under Lhe SC
Sample calculaLlon ls shown ln Lable below 1he calculaLlons are made by Laklng an average of 24
worklng days per monLh
tto @nove Contton
A 30 73 (30/160)*24
8 30 43
C 20 3
u 40 6
L 20 3

1C1AL

160
24(assumlng LhaL Lhere
are 24 worklng days ln a
monLh)

Powever Lhe flnal Lour plan also lnvolves Lhe SC's lnpuL lf a dlsLrlbuLor ls very proacLlve Lhen Lhe
SC may vlslL lesser Lhan Lhe calculaLed and lf a dlsLrlbuLor needs Lo be pushed more Lhe SC mlghL
vlslL more Lhan Lhe calculaLed value
1he beaL plans are prepared by Lhe SC and glven Lo Lhe dlsLrlbuLors 1he Lour and beaL plan ls
declded by Lhe sales offlcer ln consulLaLlon wlLh Lhe sales represenLaLlve for LhaL area 1he
conLrlbuLlon of Lhe reLallers Lowards Lhe Lurnover for LhaL parLlcular area plays an lmporLanL parL ln
decldlng upon Lhe beaL plan 1he calculaLlons are slmllar Lo LhaL of Lhe Lour plan
1he beaL plan has Lo be followed by Lhe sales represenLaLlve under Lhe dlsLrlbuLor 1he sales offlcer
makes occaslonal vlslLs Lo Lhe reLallers Lo check wheLher Lhe sales represenLaLlves are worklng
accordlng Lo Lhe beaL plan or noL 1he key reLallers ln Lhe area also seek hls asslsLance Lo address
Lhelr grlevances

erformance of ales force
1he company reallses LhaL lL needs Lo acknowledge Lhe good work of lLs employees and reward
Lhem accordlng Lo Lhelr conLrlbuLlon Lowards Lhe proflLablllLy of Lhe company 1he comprehenslve
grade polnL sysLem followed by Lhe company helps Lhem achleve Lhls ob[ecLlve
1he Comprehenslve grade polnLs vary wlLh Lhe level ln hlerarchy 1he general comprehenslve grade
polnLs are as below
ueslgnaLlon
CC
olnLs
Sales Cfflcer 2030
AsslsLanL Manager 40
uepuLy Manager 30
Area Sales Manager 3060
8eglonal Sales
Manager 70
naLlonal Sales Manager 7090

1he company evaluaLes Lhe performance of lLs employees on Lhe basls of many parameLers 1he
parameLers on whlch evaluaLlon ls done lnclude
O o Nftonf Sfe mfnfge kegonf Sfe Mfnfge Aef Sfe Mfnfge epty Sfe
Mfnfge
4 Sales LargeL
4 roper plannlng
4 ulsLrlbuLlon and channel managemenL
4 8elaLlonshlp wlLh dlsLrlbuLors reLallers and subordlnaLes
4 number of cheque bounces
4 number of reLurn of sLock


O o Sfe offne fn Atfnt Sfe Mfnfge
4 Sales LargeL
4 no cheque bounces
4 no reLurn of sLock
4 aymenLs pendlng

Incentive tructure:
Sales personnel perform Lhe key Lask of earnlng revenues for any organlzaLlon Powever as Lhelr
ouLpuL ls dlrecLly relaLed Lo Lhelr level of moLlvaLlon lncenLlves come lnLo Lhe plcLure Lo spur Lhem
on as well as Lo recompense loyalLy and achlevemenLs lnLeresLlngly an lncenLlve sLrucLure Lhus
fulflls Lwo purposes lL ls forwardlooklng as well as a reward for pasL accompllshmenLs hlllps lndla
acknowledges Lhls facL and follows a wellplanned lncenLlve sLrucLure for lLs sales force

1here exlsL Lwo Lypes of lncenLlve compensaLlon schemes ln Lhe company 1he one ls Lhe monLhly
flxed baslc pay and Lhe oLher ls a quarLerly varlable lncenLlve scheme
1he baslc pay ls based on Lhe comprehenslve grade polnL of Lhe employee 1he comprehenslve
grade polnLs are updaLed every quarLer
ln Lhe quarLerly componenL Lhe lncenLlves are dlrecLly lnfluenced by Lhe LargeLs and wheLher Lhey
have been meL by an lndlvldual lf an lndlvldual meeLs Lhe LargeL number asslgned Lo hlm he geLs
Lhree Llmes Lhe baslc pay lf he manages Lo overshooL Lhe asslgned LargeL he ls enLlLled Lo four
Llmes Lhe baslc pay 1o moLlvaLe Lhe lndlvlduals who have mlssed Lhe LargeL by less Lhan 3 Lhe
company glves Lhem Lwo Llmes Lhe baslc pay
hlllps also follows segmenL based lncenLlves schemes 1he rewards for Lhe lndusLrlal producLs sale
ls more compared Lo small domesLlc bulbs
1he dlsLrlbuLors along wlLh Lhe company conducL sales promoLlons vla archlLecLural meeLs Lrade
falrs and conLracLor meeLs 1he lnformaLlon abouL new producLs and Lhe beneflLs boLh ln Lerms of
usage and flnanclals ls dlscussed








LxhlblL 1 (roducL SLrucLure of lndlan LlghLlng lndusLry)

LxhlblL 2 (roducL orLfollo of hlllps)

LxhlblL 3 (CrganlsaLlonal Sales SLrucLure of hlllps)


LxhlblL 4 (roducL CaLalogue)


















LxhlblL 3 (ually Sales 8eporL 1rade)






LxhlblL 6 (ConLacL ueLalls)










LxhlblL 7 (Condensed L for pasL 3 years)