NTL Electronics: focusing on reliability and quality in a hypergrowth market

Customer intimacy and solving customer problems help the company to become the key supplier in the LED market

In our previous blog, we discussed the hypergrowth in the Indian LED market. In 2010, the LED market was 6% of the conventional lighting market. Today it is double the size. (Source: statistics published by the Electric Lamp and Component Manufacturers Association).

NTL Electronics, located in Noida, is a key player in this market. It supplies LED lights to all major lighting companies: Crompton, Halonix, Havells, Osram, Panasonic, Philips, Surya Roshni and Wipro Lighting. To these customers, NTL Electronics is known for its focus on reliability and quality.

LEDs are light-emitting diodes, semiconductor devices. They emit light when charged with an electric current. They are far more energy efficient than fluorescent lights. LEDs require specialized electronic components called LED drivers to operate. LED drivers provide LEDs with the electricity they need to function at their best. They are similar to ballasts and chokes for fluorescent lamps. LED drivers perform two critical functions. First, they convert the higher voltage, alternating current to low voltage, direct current. Second, also keep the voltage and current flowing through an LED circuit at its rated level. When LEDs were introduced in India, there were many complaints of failure. The power quality in India’s distribution infrastructure often fluctuates. This led to the failure of LED drivers, which in turn led to the failure of LED lights.

NTL focused on solving this problem. It started by analyzing the components of the power driver. A typical LED driver has many components: transistors, capacitors, magnetic cores, resistors, MLCCs (multi-layer ceramic capacitors). They tried to understand the function of each component and overall design. They then worked on the materials and the manufacturing process. For example, it developed its own material for the ferrite cores in transformers. This material allowed the optimum saturation level in the cores. They also worked with their own supply chain to build components that could meet Indian power conditions. All within reasonable costs.

The second area of focus is on the thermal management of the LED. About 70% of the energy put into an LED during operation is converted to heat and not visible light. If a LED “runs hot” it would fail before its rated life. There could also be more than expected “lumen depreciation”. (The light from LEDs does reduce over time. However, with improper thermal management the reduction is often more than expected). There are various approaches to thermal management. NTL Electronics innovated by focusing on the precision in the manufacturing process. For example, it worked on avoiding electrostatic discharge. It also used better materials (such as adhesives and using thermal conductive plastics).

The third area of focus was in procuring the right type of LEDs to contain the “lumen depreciation”. The colour of the light emitted by the LED depends on the type of semiconductor material used. A phosphor coating is used to combine the different photons (the elementary particle of all light) to produce white light. Over time the phosphor degrades, resulting in the delivered light shifting in colour. NTL Electronics worked with LED suppliers to put in place measures. These measures helped contain the lumen depreciation and colour shifting.

NTL Electronics also put in place stringent quality controls in the manufacturing process. Each component is tested as rigorously as the final product. Testing is done for light and electrical characteristics. Failure rates are tested at different temperature and power conditions. The causes of failures are investigated.

The company’s breakthrough in the LED market came in 2011. Lemnis Lighting, a Netherlands based company, had received an order to supply 5 million bulbs to Ikea. Their search for a vendor brought them to NTL Electronics. NTL Electronics was already in the business of CFL lighting. NTL Electronics was also audited by Ikea for quality and EHS (Environmental, Health and Safety) standards. The company was able to meet the audit standards and able to deliver the 5 million bulbs. It was able to reach the quality standards. It was also able to reduce the costs down by focusing on innovations in the manufacturing process.

In 2011, NTL Electronics was already a player in the CFL lighting area. It was a supplier to all the major lighting brands. The CFL products had started to come to India in the mid-1990s. The product category had gone through a similar trajectory. Chinese manufacturers were developing CFLs for the developed markets. They were not designed for Indian power conditions and suffered widespread failures. The company was able to develop the electronics for the ballasts (chokes) for CFLs and FTLs. This helped reduce failures.

NTL Electronics entered the lighting industry in the early 200Os. The company was incorporated in the early 1990s. In the first decade, it developed electronic solutions for the telecom and information technology. In the telecom industry, its customer was C-DOT (the Centre for Development of Telematics). In the information technology, the customers were HCL-HP, Wipro, Acer and IBM. For these computer giants, NTL manufactured wire harnesses and multimedia speakers. In the telecom industry, NTL Electronics manufactured power filters. This component filters the radio frequencies and electromagnetic interference between the external power line and the electronic circuits. NTL also manufactured high frequency ferrite (a type of ceramic) and adapters. They found that there was a lot of similarity in the circuits of these electronic components and those of CFL lights. The company had also imbibed systems and processes from its large corporate customers. It had the confidence to make the leap from the telecom industry to the lighting industry. “NTL owes a lot to its customers”, the founders of the company told me several times. While this credit is due, NTL had also innovated. It took the main product designs from its customers and made the product easier to manufacture. It focused on lowering the costs and improving aesthetics. It did so by tinkering with both processes and materials. The experience of doing this over a decade gave the company confidence to develop its own products.

The experience of NTL Electronics is very similar to that of Chinese companies. George S. Yip and Bruce McKern have documented fascinating examples in their book China’s Next Strategic Advantage: From Imitation to Innovation. The first wave of innovation is incremental. It is process related aimed at reducing manufacturing costs and complexity. NTL Electronics worked with designs from C-DOT and the large multinational computer companies. “These innovations are pragmatic and profitable”, as the authors would say. In this first phase of innovation, NTL Electronics was helped by the then focus on domestic technology development. In the second phase, the innovation is to build to world standards. In the phase, companies build to world standards. NTL Electronics manufactured for Ikea, one of the world’s largest companies. The technology originally came from Lemnis Lighting, a Netherlands based company. Integrating into the global supply chain brings new lessons. It helps companies in improving quality and reducing costs. This allowed NTL companies to make technology advanced products. The lesson from NTL Electronics is customer intimacy. It worked very closely with customers and developing products that solve their problems. In particular they focused on the local needs and made sure that the lights work in India. NTL Electronics is now embarking on the third phase of innovation. It is introducing products in both domestic and export markets. It is also integrating software to make smart lighting.

The series of blogs is based on my experiences in working on the KfW SIDBI Innovation Finance Programme between 2013 to 2015. It was one of the most satisfying periods of my professional life. I worked with a wonderful team of Dr. Jürgen Bischoff, Mikael Henzler, Harsh Kaul, Rakesh Rewari, Rukmini Parthasarathy, Maike Lerch, Ravi Tyagi, Laxmi Narayana, Cosima Strahr and Chinmay Dholakia. These series of blogs are my way of appreciating them and all the inspiring people I met. NTL credited Ms Anubha Prasad, then in charge of the Noida Branch for investing time in learning about their business.