How Bangladesh Lamps thrives amid macroeconomic challenges

Infograph: TBS

Defying macroeconomic challenges, Bangladesh (BD) Lamps Limited –country's oldest light manufacturer – has posted record revenue and profit in fiscal 2021-22 riding on massive sales of energy saving lights.

When the global economic crisis, inflation, and the devaluation of the taka were hindering the businesses of other sectors, the light manufacturer of Transcom Group attained the highest revenue and profit in its history.

A BD Lamps official said there has been electrification across the country in the last 12 years. But at the same time, the price of electricity has also increased.

As a result, to reduce costs, the use of energy-efficient Light Emitting Diode (LED) lights also went up. And based on this, the company achieved record revenue.

According to sources from the Bangladesh Energy Regulatory Commission (Berc), electricity prices have gone up nine times in the last 12 years. The electricity prices increased by 118% at the wholesale level, and by 90% at the consumer level.

The company's light sales went up by 161% to Tk162.74 crore at the end of FY22. About 70% of the amount came from the sale of energy-saving lights.

Back in 2007, BD Lamps entered this segment with only 50,000 lights. Its annual output has now surpassed one crore lights.

The company posted revenue growth also in the July to September quarter of the fiscal 2022-23. The revenue increased by 40% year-on-year.

Its path to net profits has not been so smooth though. In the last 12 years, the company incurred losses for two consecutive years in FY12 and FY13. Then again in FY20, it had to count losses due to the Covid-19 pandemic.

But in FY22, BD Lamps posted the highest ever net profit of Tk8.23 crore despite expensive raw materials and a strong dollar.

Shehnaz Rahman, chairman of BD Lamps, said in the company's FY22 annual report, "Despite several hurdles, such as the pandemic's burden, the Russia-Ukraine war, supply chain disruptions, and costly raw materials, the company managed to achieve the highest revenue and profit in a single fiscal year."

She added that this outstanding achievement was possible because of massive sales of energy saving LEDs, management's timely decision-making regarding critical issues, the optimisation of sales and manufacturing costs, and efficient management of working capital.

In the report, Managing Director Simeen Rahman said the company is taking appropriate steps in alignment with its strategic goal. Some of the measures include expansion of the distribution network up to the thana level and the development of professional resources in key functional areas.

"In addition, the company is continuing to introduce new products in its lighting and electrical accessories portfolio to match modern lifestyle and gain market share," she added.

In the last decade, the company's share price went up by 120% at the Dhaka Stock Exchange (DSE). The last trading price of each of its shares was Tk273.6 on Monday.

Bangladesh Lamps started its journey in 1960 as a subsidiary of Philips, Holland. It also has an exclusive licensing agreement with Philips, under which it manufactures Philips lights.

In March 1993, Philips sold all its shares to Transcom. The company was listed on the share market in 1981.

Seeking anonymity, a senior official of the company said, "We started our business with Philips lights, and this company was the first light manufacturer in the country."

He also said that keeping in mind that Philips will stop producing electronics items under its own management, BD Lamps focused on manufacturing its own products. After 1993, the Transtec brand started marketing its own lights.

Currently, only a handful of Philips lights are being manufactured. A lion share of revenue comes from Transtec, he said.

Transcom has to pay a royalty of 0.25% of the selling price for the Transtec brand. Philips gets 3.6%.

According to company sources, the market size of lights in the country is around Tk4,000 crore. Major players in this market include Super Star, BRB, Walton, RFL, Energypac, ACI, Mohammadi Electric, Partex, Paradise, and MyOne. Over 2,500 small entrepreneurs have also ventured into it.

According to industry insiders, brand companies now meet 50% of the local demand, while non-brand products – both local and imported – cater to the rest.