Massive electrification sparked electrical goods industry

From massive electrification in rural areas to booming urbanisation, rising purchasing power of people and the government's tax incentives – all these have pushed the domestic electrical products market to a five-fold growth in just a decade.

Industry insiders say starting from scratch, the market size has now crossed the Tk7,000 crore mark annually.

The electrical product sector has also reduced dependence on imports to a great extent and generated a lot of employment by drawing in investments to the tune of Tk5,000 crore till now, they add.

Tax break for new investment was another incentive propelling local manufacturing of electrical products.

Mainul Islam Bhuiya, president of the Bangladesh Electrical Merchandise and Manufacturers' Association, told The Business Standard that many companies, such as Walton, RFL, Energypac, ACI, BD Lamps, Mohammadi Electric, Super Star, BRB, BBS, Partex, Paradise, and MyOne, have stepped up in manufacturing electrical products. Over 2,500 small entrepreneurs have also ventured into it.

Brand companies now meet 50% of the local demand, while non-brand products – both local and imported – cater to the rest, he said.

Countrywide electrification and a rise in people's purchasing power have massively contributed to the growth of electrical products market, including fan, light, switch, circuit breaker, cable and generator, Mainul Islam noted.

Bangladesh's power generation capacity has registered a nearly five-time rise to 24,000 megawatts since 2010-11. Almost 100% of the population now have access to electricity and the number of beneficiaries have reached 4.64 crore with a three-fold rise within a decade, according to the Power Division.

On the other hand, per capita income increased to $2,500 from $750.

Electrical products sold by 60,000 retailers

For selling electric products, around 60,000 retail shops have also sprung up across the country, Mainul said, adding that from production to marketing, 4-5 lakh jobs have been created.

Kamruzzman Kamal, director for marketing at Pran-RFL Group – the market topper with an 18% share – mentioned that luxury, which now adds to essential use of electric products, and a massive rise in demand for these products in different industries has fueled growth in the industry.

RFL started the business of electrical products in 2012, cashing in on the increased availability of electricity.

Starting with ceiling fans, the company now manufactures more than 1,200 types of products, such as fans, lights, switches, sockets, circuit breakers, cables and batteries.

"Electrical products of our brands, such as Bizli, Click, Blaze, have better quality than many foreign brands. Our annual growth is more than 20% and we expect such a growth will sustain for at least next five years, he noted.

"We have not been affected by Covid-19 as demand for electric products did not drop with continuation of construction even in lockdowns." 

Kamruzzaman also said they employed around 4,000 people in production and marketing.

Sohel Rana, chief of business operation at Walton Electronics, said the government has provided a 10-year tax holiday for electric companies. Duty on raw material imports has been reduced too, leading to a gradual growth of the market.

Starting its journey in 2016, Walton Hi-Tech Industry now manufactures more than a 1,000 types of products, such as different types of switches, circuit breakers, DB boxes, fan hook boxes, holders and ceiling roses, UPVC electrical pipes and fittings, and hardware and accessories.

Stating that the company has created at least 5,000 jobs, Sohel said, "Our target is now to gain a global foothold. Last month we visited the African market where we witnessed a lot of potential for our products. Besides, opportunities in neighbouring Nepal and Bhutan are also up for the grab.

Another big player, Energypac, which now makes 500 types of electric products with a 5%-6% market share, has made massive expansion over the last decade. 

Nurul Aktar, chief executive officer and a director at Energypac Electronics Ltd, said they were gradually expanding into production of all types of electric products. "We are now exporting our products to India and we also have a big opportunity to enter different countries, including African ones."

Humayun Rashid, director at Energypac, said the company has made an investment of Tk1,200 crore and employed 4,700 people.

Over the last four decades or so, Mohammadi Electric has emerged as one of the leading market players with its annual turnover reaching Tk430 crore – nearly 8% of the domestic market with an array of some 1,600 items.

Mohammadi Electric now has two large manufacturing units, producing most essential electric products, such as ceiling fans, all kinds of lights, cables, switches, sockets etc. 

Besides, both BRB and BBS hold at least 4% market share each.

Non-brand products occupy 50% market

Non-brand local and imported goods have grabbed 50% share of the electric market.

Around 5,000 retail shops have sprung up in the capital's Nawabpur, the country's largest electric market. They sell all types of electric products but most are non-brand ones. 

Businesses at the market say they sell products collected from small entrepreneurs as branded ones cost much higher.

Saifuddin Johny, owner of Taj Electric, said, "We can buy a dozen light sockets produced in a small factory for Tk50-80, but the same quantity from a big brand costs Tk150-Tk200. So, we prefer selling non-brand products."

The traders said they also sell products of several thousand small brands, such as Sunplus, Winer Deluxe, Superstore, Osaka, Tisha, Sunlight, Hosaf, Toshiba, BRB, Paradise, BBS, Sohana, City, Falcon, Transtec, PHB, Smart, Padma, MK, Grameen, Anik, and RK.

Kamruzzman Kamal, director for marketing of Pran-RFL Group, said as a safety factor is associated with electric products, quality and safety is more important than price. But some importers are supplying low-quality products to markets at low prices. Besides, the market has been flooded with counterfeit products.  The government should pay attention to it.

Big brands feel that it is important to ensure quality of electric products, saying that if quality of such products are poor, there is a risk of electric accidents.

Dr Md Kamrul Hasan, head of the Department of Electrical and Electronic Engineering at Buet, said a company, be it small or big, should have technicians to produce electric products. There should be a regulatory body to ensure that all products are of good quality before they are marketed.

Over 2,500 new entrepreneurs join the industry 

After graduating in 2014, Mubarak Hossain from Nawabganj started a business of electric products on the advice of a friend. 

He used to buy goods imported from China by various importers and sell them at his shop named "Maa Electric".

Later, he himself had started importing after having obtained a licence in 2015. Besides, he would sell products of local manufacturers. In 2017, he went into production by importing three machines.

Mubarak, who currently produces about 800 types of electrical products, said, "My factory has employed 30-35 workers. At present, I am selling products worth Tk8-10 lakh daily. "

Like him, more than 2,500 new entrepreneurs have ventured into manufacturing electric products over the last 10 years. Starting with a capital of Tk3-Tk5 lakh each, many of them now have a working capital of up to Tk1 crore, industry insiders say.