Power Palazzo: How Shahs took the LED lighting firm from Rs 80,000 to Rs 120-crore
Power Palazzo: How Shahs took the LED lighting firm from Rs 80,000 to Rs 120-crore
AHMEDABAD: The Shahs have travelled a long way in two decades, from an investment of Rs 80,000 — half of which was borrowed — to a Rs 120-crore LED lighting company
The couple is also member of Entrepreneurs’ Organisation (EO), an elite global non-profit organisation. Kavita and Vipul Shah speak to ET on being sole directors of Power Palazzo and the journey to being millionaires.
What was your start?
We started our business in 1994 with a seed capital of Rs 40,000 and another Rs 40,000 borrowed from a friend for introducing power semiconductor devices in India.
The domestic industry was bracing for new products to tackle the power deficiency. There was a liberalisation wave and big industries were poised for more investment and expansion on the back of next-generation products.
Sensing an opportunity in the demand for power supplies, AC/DC drives and other products, we took the plunge.
Were you worried about your prospects?
We started with such a small amount that we didn’t have any fear of failure, though we knew that we didn’t have any major financial support system in place.
Both of us knew that at the most, I would go back to some job as I have a degree in electronic engineering. I feel it is important for entrepreneurs to work in tandem. It takes time but it works.
What hurdles did you face initially?
Money was never easy to come by as we did not have any collateral and the banks were inflexible. Somehow each year, we cut down costs and managed to run our business. Kavita and I both did the odd banking or even courier jobs together. The first five years were very tough.
We understood the nuances of business in three to four years. We worked with a lean workforce and very tight control over payments. It made us understand the intricacy of finance too.
We started building an initial working capital by ploughing back profits into the business and fast realized that a quick business rotation was essential to generate more volumes. The first six years, we grew at a steady pace of 30 % year-on-year.
What was your next move?
We moved into the lighting business as we felt that there was growing demand for protecting environment. We developed circuit components that would save 60%-70% energy.
We started with CFL parts and simultaneously worked with the industry for fine-tuning of circuits. We even got some engineers from China to help Indian engineers.
What made you enter the LED segment?
Around 2008, we felt there was a second wave of demand for energy-efficient products. At the same time, awareness level of the public had matured. So we entered into a strategic tie-up with Taiwan and Chinese companies for technical collaboration and brought those products to India.
We designed components on specification that best suited Indian conditions. Manufacturing units in China and elsewhere were then given our design. We have our manufacturing contracted units mainly located in Wuxi, Hunan, Chanzhou, Yanzhou and Shenzhen.
We mainly deal in products that serve as a heart (in layman terms) for LED-based products like streetlights, domestic downlighters and LED bulbs used commercially.
What is the size of the LED market in India?
The LED market has caught the imagination of smart Indian consumers in a big way. It is growing at a compounded rate of 100 % y-o-y and the government is also promoting it.
Soon all urban areas and then rural areas will have LED street lights. The market is roughly about $2 billion and it will grow at more than 100 % rate in the next few years too as prices drop.
What is your current turnover?
We are about $20-million plus company (approximately Rs 100 core), including our India and China operations.
What next?
To develop products which can save still more energy and to offer them at a rate which every household can afford. We can contribute to a green life for future generations.