Here’s how homegrown Vinay Electrical Solutions is eyeing a global play

From selling Diwali light on streets to owning a Rs 350-crore business: Here’s how homegrown Vinay Electrical Solutions is eyeing a global play

© M Saraswathy
From selling Diwali light on streets to owning a Rs 350-crore business: Here’s how homegrown Vinay Electrical Solutions is eyeing a global play

Twenty-five-year-old Vinay Chheda had come to Mumbai from Kutch in Gujarat in 1968 in search of a livelihood during Diwali. During that time, his conversation with the locals made him realise that selling Diwali lights on the streets could be a good business to start with.

Chheda had about Rs 5,000 with him, and he invested that to start sourcing materials locally for the toran lights or string lights sold during Diwali. He started selling these lights on the streets of Mumbai’s Lohar Chawl, which is the wholesale electrical goods market in the city, thus laying the early foundation of an electricals products company.

“Diwali has always been a special time for us as we started our journey during this time. The lights remind me of the humble start of my five-decade long journey in brightening millions of lives. It all started with an idea and passion for business. Being a one-man army, it had been difficult to manage, as my days and nights had started to merge into one,” Chheda, chairman, Vinay Electrical Solutions, told Moneycontrol.

But within a few years, he realised that merely selling Diwali lights wouldn’t be a successful commercial business since sales was seasonal and there was a problem of limited cash flow. The idea was to start a business that was closer to the electrical goods space but one that was sustainable in the long term. This sparked the idea of setting up Vinay Electrical Solutions in 1975.

The journey of Vinay Electrical Solutions began through a small shop set up by Chheda in Marine Lines in South Mumbai, selling tube light chokes being manufactured locally. This was followed by expanding into light fittings, industrial fittings and urea switches by 1981. He simultaneously started hiring people to expand the team, which included present Vinay Electrical Solutions MD Kishore Nandu.

Chheda said that it wasn’t easy to get customers, initially, but he was able to grab a foothold in the market through constant interaction with the market, understanding their needs and finding relevant solutions.

In FY20, Vinay Electrical Solutions had a turnover of Rs 350 crore and Nandu said that the company is seeing a 30-40 percent year-on-year growth in revenues. Despite this year being affected by the Coronavirus pandemic, Nandu, who has been with the company since the early 1970s, is confident that the firm will maintain a similar track rate.

How the dream got bigger

Chheda said that the good response from the market for his products motivated him to expand the business.

“I realised there is so much untapped potential in the electrical industry. Slowly and gradually, I shifted towards selling small transformers with light bulbs which were the night lamps. This small step paved way for me to dream bigger,” he said.

After this addition, the company, under Chheda, forayed into the lighting segment, starting with tube lights and then there was no turning back.

In 1993, Vinay Electrical Solutions launched the country’s first polycarbonate switch range called ‘Cozy’. This was a time when even Indian companies were relying on sourcing materials from abroad.

Nandu said that it was Chheda’s conviction and relationship with local suppliers that helped him build a fully made-in-India business from scratch.

“I have always been quality conscious and ensured that the products we offered reflect that attribute,” said Chheda.

Vinay Electrical Solutions operate in a market where competition is tough. Companies rely on its dealer network for product distribution and there is often instances of under-cutting and unreasonable discounting demands.

However, Nandu said that the company was clear from the start that the focus would be on offering quality products at right rates. He added that the company, which has close to 15,000 direct dealers (and another 15,000-20,000 indirect dealers), hasn’t been faced with the ‘rate war’ issue.

By 1998, Vinay Electrical Solutions realised that it was necessary to have one dedicated manufacturing unit to produce goods. Daman was chosen as the location to set up a manufacturing facility, and, at present, the 1,75,000 square feet space in its first phase.

A year later, in 1999, the company started a new production line for wires and cables in the facility. As years progressed, Vinay Electrical Solutions added new added new products, including light fittings and video door phones (2005), glass plate switch range (2012) and home automation system Vibe Smart Homes in 2017.

The company is now present across segments like wires and cables, MCBs, home automation, switches, video-door phones, among others.

Overall, the electrical wires and cables industry is estimated to be worth Rs 50,000 crore in India. Players like Havells, Polycab and Finolex Cables are among the large players.

Expansion plans

At a time when Make-in-India and Atmanirbhar Bharat are being emphasised upon by the PM Narendra Modi-led government, Vinay Electrical Solutions wants to follow this mission.

“We will move to the second phase of expanding the manufacturing unit in Daman in the next few years. The focus will be on building on the research and development (R&D) capabilities,” explained Nandu.

Nandu added that the company is looking to expand its base in the electricals space before looking to enter the appliance business in the next few years.

“We are developing a fan which will be consume 50 percent lower power. We are looking to launch it in the next financial year,” he added.

Close to 65 million fans are sold in India every year. This space is dominated by large players like Orient Electric, Crompton Greaves Consumer, Havells, Usha and Bajaj Electricals, among others. Vinay Electrical Solutions will be competing with these big brands as it enters this space.

In the next one year, the company is also looking to hire 500 more people in India. The company has 800 people currently.

The Coronavirus-led lockdown, in addition to the delay in raw material shipments from China and tougher scrutiny on imports (after Galwan Valley clash) led to electrical goods companies in India getting impacted.

Nandu, however, said that Vinay Electrical Solutions was among the few ones to not see any impact since the company doesn’t import any raw material from China. The company’s manufacturing facilities were shut during April 2020 owing to lockdown but resumed operations from May onwards.

Chheda and Nandu are of the firm view that India could replace China as the manufacturing hub for the world and that companies like theirs could play a role in this path.

“We have always been vocal about being local and are one of the few made-in-India brands for the past 50 years. But, we would also need the government to imply more relevant policies in manufacturing and procuring components that are not manufactured in India currently,” said Chheda.

As far as the business is concerned, Vinay Electrical Solutions has begun moving towards the export market.

Nandu said that the company is in negotiations with Sri Lanka for exporting products and has already approved products for sale in Bhutan.

The company is hopeful that the sudden change in behavioural patterns of Indian customers to buy local will help boost the business.

“Success grows when its shared. We need customers to also have a strong inclination towards products made in India. Every one of us can make a difference and contribute to the initiative by just being conscious enough and checking the made-in-India tags on the products we buy on a daily basis,” said Chheda.

Competitors are of the view that Vinay Electrical Solutions has been able to sustain in a tough market because of its strong word-of-mouth reputation.

The senior vice president at a pan-India electricals firm told Moneycontrol that Vinay Electrical Solutions is among the few companies which has been able to survive despite sourcing materials locally.

“A lot of prejudice is ther
e among dealers about the local raw materials but Vinay Chheda and his team have been able to break those myths by their sheer ability to convince and engage constantly with dealers,” he added.

However, he also sounded a word of advice and added that the company will need to diversify swiftly into allied product segments to keep pace with competitors in the market.