The metal road leading up to village Rani Purva is the brighter side of the discordant showcase of its development. On the seamier side, this village — located just 40 km from Lucknow and almost 14 km off the nearest highway connecting Sitapur with Lucknow — does not have power even 19 years after it was shown that dream. The lines laid to supply power to the village were stolen in 1990.

So, every evening when the Sun went down on Rani Purva, Mahku Lal Bhargav’s 15-member family’s life revolved around kerosene lamps. But that was until a few months ago when a grocer in a neighbouring village convinced him to buy Eveready’s LED (light-emitting diode) lantern that runs on batteries. It is 9.30 at night and the family’s nine grand children (four granddaughters and five grandsons) are huddled with their books around the lantern that Eveready branded as Home Lite (it was recently changed to Nu LITE after a trademark dispute) HL 08.

The eldest, 18-year-old Amit Kumar, is a first-year student of political science, sociology and Hindi at the prestigious Christian Degree College in Lucknow. He wants to be a lawyer. His 17-year-old sister Mamta Devi is in Class 12. Eight-year-old Suraj is in Class IV and wants to be a doctor. Each one of them is clinging to the lantern’s milky white light as opposed to the kerosene lamp’s dull yellow rays, smoke and soot. Amit complains that he is not sure how long his grandfather will be able to afford the batteries from the average Rs 20-50 he earns daily from the village’s only grocery shop and the family’s four bighas of land. Last time, the lantern ran only as long as the free batteries that came with it lasted. Convincing Bhargav to buy three more was not easy. 

Bhargav’s family is precisely the customer Deepak Khaitan, executive vice-chairman and managing director of Rs 925-crore Eveready Industries, India’s largest battery maker — had in mind when he introduced the LED lanterns as a substitute to kerosene lanterns in April this year. He thought he was filling a void in the market. But he had no idea how big a void that was. Built on the philosophy of giving better light at a lower monthly cost than running kerosene lanterns — Eveready has plastered front pages of regional dailies with this message — the LED lanterns have sold 2 million since April this year, gaining significant traction in power deficient states such as Uttar Pradesh, Bihar, West Bengal and Assam. In the first month Eveready sold 20,000 units. In May it sold 40,000 and in June 60,000. But as soon as ads broke on 8 July, sales shot up to 278,000 and the company was out of stock. In the three months since then, sales have averaged 350,000-450,000 units a month, largely constrained by manufacturing capacity. Company revenues have gone up nearly 19 per cent. “I can sell 500,000 a month if I could produce them,” says Khaitan who has set a stiffer target to sell 1 million units a month beginning fiscal 2010-11 when his capacity would be in place.

Rarely does a consumer product catch such a customer fancy in such a short span of time. Remember only an estimated 6 million radio transistors are sold in India every year. The total installed base of the seven-year-old DTH (direct-to-home) industry, some of whose offerings are priced at Rs 499, is just 17 million.

At the heart of the LED lanterns business is Eveready’s philosophy: “You can live in darkness. But once you are used to light, you will never go back to darkness”. Banking on this, Eveready hopes to tap nearly 100,000 villages that are still not on India’s power map. There are at least twice that much which have power but the supply is too erratic to call it a supply.

Whether these lanterns will change the lives of the power-starved is still to be seen, but they are making a difference to the image of what is perceived as a rather unadventurous company. “These are trendy. I don’t need it because I have an invertor at home, but I am tempted to buy one,” says 32-year-old Rakshita, examining Eveready’s first LED lantern HL 08 stacked up at the entrance of Spencer’s store at Pacific Mall in Ghaziabad. Rakshita’s bigger temptation was the six D-size batteries (worth Rs 90) offered free with the Rs 350 product.

Lanterns have ushered the company into its most disruptive phase since the Kolkata-based B.M. Khaitan group took over Eveready Industries from Union Carbide in 1994. The LED lanterns portfolio has grown to seven since April, priced between Rs 150 and Rs 450. But Khaitan is now desperate to prevent competition from capitalising on his success. The range will be bolstered to 20 by February, plugging any conceivable gaps in the portfolio. New offerings include mass-market products such as a detachable lamp that can be fixed on a bicycle and niche products such as a headlamp for miners, doctors or hikers. Khaitan, who has been with his suppliers in China and Taiwan for the past one month, travels there every two weeks to keep tabs on the progress.

If Khaitan manages to sell the 12 million units, he would have expanded his company’s revenues by one-third in a year. He estimates that the total households to whom he can sell at least one LED lantern could be as high as 350 million. Theoretically, that is business worth Rs 10,500 crore (around $2.2 billion or nearly 11 times his company’s current turnover) up for grabs. Practically, he is laying the grounds for large volumes too. In anticipation of an even larger portfolio, Eveready has stopped naming its products Jumbo, Stylo or Mylite as it did. Instead, it has adopted the cellphone nomenclatures—HL 01, HL 05 and HL 02 (the Home Lite legacy in the HL prefix clearly evident there).

Necessity: The Mother Of Invention
Incidentally, Eveready’s LED lanterns are an advent of adversity. In 2006 and 2007, the Indian market got flooded with Chinese LED torches, which consumed one-sixth battery power compared to the incandescent bulb torches sold by Indian manufacturers, including Eveready. As batteries began to last longer, it jolted Eveready, which commanded nearly 60 per cent of the market then. Sales of its highest selling battery — the biggest D-size one — collapsed from 600 million units a year to 300 million units.

Making up for the shortfall with exports in very large numbers was not an option for two reasons. One, Eveready does not have the licence to sell under the Eveready brand anywhere except India, Nepal and Bhutan (the brand is owned by Energizer elsewhere in the world). Second, though Eveready exports small numbers under the Lava brand, demand for carbon-zinc batteries is dead in most parts of the world. Alkaline batteries account for at least 90 per cent of the entire developed world demand (in India their share is about 2 per cent).

When Khaitan began looking for ways to perk up battery sales, he found cues in Eveready’s history. The 104-year-old Eveready began operations in India as National Carbon Company, a subsidiary of Union Carbide Corporation of the US by importing dry cell batteries into India. It set up battery plants in Kolkata and Chennai. But to boost battery sales Eveready was forced to diversify into torch manufacturing with a plant at Lucknow in 1958.