In the past three fiscal years, IKIO sold its products to over 900 domestic and six international customers. IKIO focuses on the premium segment and include lighting, fittings, fixtures, accessories and components. “We provide lighting solutions such as lights, drivers and controls to commercial refrigeration equipment suppliers under our refrigeration light segment,” Singh says. IKIO also manufactures an alternative to polyvinyl chloride (PVC) piping called ABS piping that is primarily used by its US customers for plumbing applications in the recreational vehicles (RVs) they outfit.

According to Sanjeet Singh, whole-time Director of IKIO Lighting Limited, demand from high net-worth residential users drives the demand for top-end home and decorative lighting products. LED lighting comes in a variety of colours and various other levels of customisations like brightness levels, making them ideal for usage in a variety of decorative designs thus boosting the decorative lighting industry’s growth. Increasing budgets for renovating home spaces, India’s ever improving global position as an attractive tourist spot, access to the online world and social media influencing the demand for aspirational luxury items as well as disposable incomes have been fuelling the decorative lighting market.

Decorative lighting market

The post Covid feature of work-from-home has also necessitated the need for better homes with good lighting. The Indian high-end home and decorative lighting market size was valued at Rs3,500 crore ($0.47 billion) in Fiscal 2022. Given the rising importance of decorative lights in helping to create a visual appeal to the house this segment is expected to grow at a CAGR of 15.44 per cent to reach approximately Rs6,000 crore ($0.75 billion) in Fiscal 2026, he says quoting an F&S report.

The commercial application of LEDs is a very important segment contributing heavily to the increasing use of decorative lights, across establishments such as pubs, restaurants, hotels, malls, retail showrooms, shops and museums. It is a trend that enhances the customer experience in these places.

Millennials seem to prefer to visit places where the ambience is premium. Shopping malls, which were once a place where one purchased various products, have now become a destination for meeting friends and families, says Sanjeet Singh.

“IKIO enjoys a history of high customer retention,” says Subhash Chand Agrawal – CFO. In Fiscal 2022, the company derived approximately 93.56 per cent of restated revenues from operations from repeat customers. During the same year, IKIO enjoyed relationships of over 3 years with seven out of these top ten customers apart from building an international customer base, primarily in the US.

With a proven operational and financial track record, “we are well-positioned to capitalise on opportunities provided by the tailwinds in the LED lighting market driven in part by governmental policies for energy saving and environment protection and importantly, the increasing awareness and adoption of LED lighting versus incandescent lighting”, says Agrawal who adds that the company’s revenue from operations on a proforma consolidated basis increased by 55.47 per cent to Rs331.84 crore for the Financial Year 2022 from Rs213.45 crore for the Financial Year 2021.

The company experienced sharp increases in sales of LED Strip Lights, LED Spot Lights and LED Downlights in Fiscal 2022. Profit after tax grew 75.37 per cent to Rs50.52 crore for the financial year 2022 against Rs28.81 crore for the previous year. The company incurred a CAPEX of Rs12.46 crore in FY22.

According to Frost & Sullivan, the recovery and growth in the real estate sector will be one of the key drivers for growth in the residential and commercial LED lighting market. LED lighting is also central to reducing environmental impacts in both the residential, commercial and industrial sectors.

Growth in demand for LED lighting solutions in India will be driven by the rise in smart city projects and overall infrastructure development, increasing demand for energy-efficient lighting, the decreasing total cost of ownership of advanced lights, the pronounced increase in real estate and the increasing use of smart and automation lighting, as per the F&S report.

“Our comprehensive LED lighting offering allows us to offer our customers attractive manufacturing solutions for their products as well as our own product designs as part of our ODM business model,” says Ishween Kaur - Chief Marketing Officer. In fact, the number of LED lighting products manufactured by IKIO has grown by 41.82 per cent from 660 in Fiscal 2020 to 936 in Fiscal 2022, and it is continuously expanding its portfolio. “Our total annual installed capacity of LED lights is 20.31 million pieces,” Kaur says and explains: “It is our intention to continue to be an integral part of India’s journey towards achieving sustainability across key industry segments.”

Manufacturing - key driver

Post Covid, the shortage of chips has certainly put pressure on leading chipmakers. This gives a great potential for India to develop its own chip research and development system. The Indian Government has allocated funds for incentive schemes such as Modified Special Incentive Package Scheme (M-SIPS) as well as an Electronic Development Fund (EDF) to spur semiconductor manufacturing in the country. The biggest beneficiaries of this initiative will be companies like IKIO Lighting that use semiconductors devices in reasonably large quantities, says the F&S report.

Making these chips locally can help reduce significant dependence on imports from China, Taiwan, Japan, USA, and other countries during situations like disruptions in supply due to natural disasters, trade disputes, pandemic, etc.

IKIO’s manufacturing operations are a key driver of its business. It has four manufacturing facilities – one in the SIDCUL Haridwar industrial park in Uttarakhand and three in Noida in the National Capital Region. “In line with our focus to provide end-to-end product solutions and to develop better control of our supply chain and improve our margins, we have backward integrated our major manufacturing processes. We have developed in-house capabilities so that we manufacture all mechanical components inhouse,” says Singh.

To capture the projected growth, IKIO is looking to expand its capacity for LED home lighting. It has already acquired a parcel of land located in Noida, where it will construct a new manufacturing facility over approximately 500,000 sq ft.

“We also manufacture interior refrigerator lighting solutions (lights, drivers and controllers) which are sold to commercial refrigeration equipment suppliers such as Western Refrigeration,” says Sanjeet Singh. “Our diverse product offering allows us to cater to the increasing requirements of our customers, and, more importantly, we are able to supply a larger portion of the products needed by our customers in their project engagements,” he says.

For instance, IKIO customers, Rlux RV LLC and Znergy Inc, supply components to Forest River RV which is a division of Forest River, Inc, a Berkshire Hathaway company, that produces RVs, pontoons, park models, buses, cargo trailers and commercial trucks.

Going public

“With our wide array of offerings, we are able to supply these customers with a number of products such as ABS piping, LED interior and exterior lights, switches, change controllers and solar energy solutions,” he says.

IKIO is going public soon and it has already received the SEBI observations for its IPO. The offering consists of a fresh issue of equity shares worth up to Rs350 crore and an offer-for-sale (OFS) 7,500,000 equity shares by the promoter and selling shareholders, Hardeep Singh and Surmeet Kaur.

From the fresh issuance, IKIO will invest Rs236.68 crore in its wholly owned subsidiary, IKIO Solutions Private Limited, for setting up a new facility at Noida, and use R50 crore for settling debts and the remaining for general corporate purposes. Motilal Oswal Investment Advisors Limited is the book running lead managers and KFin Technologies Limited is the registrar to the offer. The equity shares are proposed to be listed on the BSE and NSE.

The global electronics industry as a whole is growing rapidly and is central to the long-term success of electronic manufacturers around the world. According to the F&S Report, the industry is expected to grow at a CAGR of 4.9 per cent from CY2021 to reach a projected market size of $3,168 billion by CY2026. Also, according to the F&S Report, the Indian electronics market is expected to grow by a CAGR of 17.9 per cent from an estimated market size of Rs9,263 billion in Fiscal 2022 to Rs17,902 billion in Fiscal 2026.

Looking at these opportunities, IKIO wants to focus its expansion on North American markets and then gradually expand to the European and South East Asian markets, says Hardeep Singh. “We will also look for new partners in our focus markets to establish a local presence, and, in certain markets, we may establish subsidiaries or local offices,” he says. The company will also leverage its relationships with marquee customers such as Signify (Phillips), Honeywell, Frigoglass and Western Refrigeration to showcase the quality of its product offerings and ability to provide our services globally.

IKIO will continue to focus on sustainability by emphasising quality, environment, health and safety as “we believe that maintaining a high standard of quality for our products is critical to our brand and continued growth,” he says. “We have a growing commitment to environmental management systems,” sums up Singh.