GROWTH OF
THE UPS INDUSTRY
The year 2005-2006 saw
the industry netting revenues to the tune of 1826 crores INR. This is
exclusively the end-user sales figure. However the over all industry
revenue was estimated at 2506 crores INR. The reason why the total
industry revenue is much higher then the actual end-user sales is because
many a companies procure finished products from others & brand them as
theirs, and our survey team gets the turnover from both resulting in
duplication. This year we have painstakingly collected this additional
information so that we can come to the exact end-user sales figure.
Many a companies do shy
away from telling us that they have got the product outsourced from
another manufacturer. With nearly 738 companies responding to our survey,
giving us the information we sought in great detail, knowing fully well
how much the company has manufactured with excise paid. And also trying to
find out, which companies procure finished products from others &
brand them as theirs, an exercise which has never been done in the history
of Power Electronic Industry, before. We are sure the figure which we
have arrived at i.e. the actual end-user sales revenue of 1826 crores INR
is very much close to the exact size of the industry.
Growth wise it has been a
very good year for all majors. Revenue wise : Industry grew by
18.37 % up from 12.40% in 2004-2005. A growth of nearly 6.0% over
previous years growth while Volume wise : Industry grew by 39% over
previous year. This is a clear indicator of shrinking margins. One must be
clear in mind that this is a very good performance considering the stiff
competition and the squeezed margins the companies are facing.
Of the total revenue of
1826 crores, Online UPSs accounted for 84% while Offline / Line
interactive UPSs accounted for nearly 14% while other products including
CVT accounting for remaining 2%, CVT crashed to a all time low. Elent
controls the CVT market with nearly 60% of the CVT market share. Of the
total revenue organized sector accounted for nearly 60% while 24% came
through semi organized sector while 16% share still remains with the
unorganized fly by night operators.
BRIGHT
PROPECTS
|
R K Bansal,
Managing Director,
Uniline Energy Systems Pvt. Ltd., New Delhi. |
With India assuming a key
role in Asia, businesses have become attuned to the fact that they need
robust infrastructure to attract and retain investors. According to Mr. R
K Bansal of New Delhi based Uniline Energy Systems Pvt. Ltd., upcoming
businesses realize the importance of factoring network uptime in as a key
component in the overall business model. Apart from understanding the
critical load requirements, businesses are beginning to pay special
attention to the environment in which the application will run and are
thus increasing the demand for power quality audits.
Today, vendors have power
solutions specifically designed to meet the needs of an Internet data
centre with several enhanced features. Efficiency and reliability most
often depend on the type of unit, the load and the environment. The higher
a unit’s efficiency, the lower the operating cost. The type of load
being protected is an important consideration too. It is to address all
this we have entered in to a technical tie-up with M/s Digital Data
Systems, Europe. “With their technical know how for assembling higher
capacity UPS systems, we will be able to deliver customer satisfaction to
the hilt”, he laments. Mr. Bansal believes that believes that the IT
industry is in a boom stage and is growing in double figures, however the
power electronics
industry is growing at even faster pace, many new avenues are opening up
in bio-medics, tele-communications, process automation and in almost every
sphere of life, this also indicates the future is very bright keeping in
mind the current utility power scenario of the country.
|
Narayan Sabhahit,
MD, Techser Power Solutions Pvt. Ltd., Bangalore. |
Many industry stalwarts
feel the situation will further improve in the times to come. Mr. Narayan
Sabhahit Managing Director, Techser Power Systems Ltd, Bangalore, feels
that the growth rate in the market has been encouraging and UPS shipments
taking a cue from the PC market have also witnessed a very significant
growth. “With UPS industry thriving in interesting times with growth in
industries such as IT/ITeS, Telecom, Banking, Insurance and manufacturing.
What is relevant is that all of these have their typical power
conditioning needs and an all round growth, right from entry level
products to high-end UPS can be predicted. As always, Quality of the
product & support package will remain paramount to us.”, he laments.
According to Mr. Arvind
Tiwari, Chief Operating Officer WeP Peripherals Ltd., Bangalore although
growth continues to happen in volume terms in India, some technology
adaptations are expected that will change the way an Indian customers
perceives an UPS.
Mr. Pradeep Pimpley of DB
Power Electronics Pvt. Ltd. believes that the UPS penetration is now
taking place in cities and towns outside the top 20 cities. According to
him “Today the development process in every vertical is witnessing a
speedy growth. Interpretation of word ‘development’ in its correct
form, has been taken seriously by the concerned agencies / authorities.
The Infrastructure development required to address the challenges of 21st
century is being put in to place.
|
Pradeep Pimpley,
VP Operations
DB Power Electronics Pvt. Ltd., Pune. |
This is a good sign to a
certain extent Government is also keen in making efforts towards Power
sector reforms, building roads, IT, Telecom and other infrastructure.”
Indian IT and ITEs industry, the darling of Indian Business, today is
placed in a special category by the International community.
Mr. Pimpley believes that
all this put together, there is growth pattern happening. These are the
areas where continuity of power is very essential, since these companies
are facing the Global Challenges. And hence the demand for the UPS and
Complete Power solutions is on the rise. Especially in IT, Infrastructure,
Small and Medium enterprises, Engineering and Automation, Hospitality,
Banking etc.
NEW
TRENDS IN UPSs.
Today’s UPS units
should be capable of supplying non-linear type loads without de-rating or
degradation in total harmonic distortion (THD). This would require the
computation of critical electrical loads, before selecting the UPS
capacity, considering the power requirements of each piece of equipment to
be protected. An ideal UPS system should take care of the output voltage
and frequency regulation. Finally, a good UPS should also allow for 25 to
30 percent future expansion. In addition, the service capabilities of the
UPS manufacturer also matter greatly in case of mission-critical
applications. Some of the recent innovative features that have been
introduced in the UPS over the past year are load bus synchronization
(multi-level redundancy), remote monitoring software (Web-based
monitoring) and DSP-based UPS systems.
|
R. Chellappan, MD,
Numeric Power Systems Ltd., Chennai. |
According to Mr. R
Chellappan of Chennai based Numeric Power Systems Ltd : The high-end UPS
segment is a value-driven business. Today the driver for the high-end UPS
segment is the cost of downtime due to the non-availability of critical
systems. Manufacturers and service providers are looking to reduce
operating costs and raise productivity. In the early days, companies just
concentrated on increasing efficiencies but now the focus has shifted to
reducing downtime. As most Indian organisations, especially in the
software services and BPO sector, have to abide by strict SLAs (Service
Level Agreements), there is strong demand from this segment for UPS
solutions. As these facilities cannot be down even for maintenance
purposes, it requires a completely different structure of power solution,
which encompasses the concepts of multi-level redundancies, right from the
grid to the load point (including distribution) and not just for the UPS.
Technology-savvy customers insist on solutions based on true online
technology for their critical applications in this space, as they would
not like their load to be exposed to even frequency fluctuations at any
point of time. Neutral isolation also becomes essential in such facilities
to avoid any noise or disturbances entering the network. “Numeric
Product are well tuned to address all these and that is one of the prime
reasons why we have been able to retain and repeat major orders”, he
laments.
|
Sandeep Nair, MD,
Emerson Network Power (India) Pvt. Ltd. |
According to Mr. Sandeep
Nair, Managing Director, Emerson Network Power (India) Pvt. Ltd. In case
of large installations, a customer is more worried about the quality
rather than the pricing. Across the world, Emerson is known for its
high quality work, quickest turn around time and best after sales support.
At Emerson, we are not box pushers or merely solution implementers. We act
as consultants, who recommend the kind of solution that is required for a
particular location based on a detailed site study. Because of the above,
clients see value in our offering and are not particularly focused on the
monetary aspect. Moreover, Emerson has always been on forefront of
innovation we come across as the most trusted advisor to the client, he
adds.
In the case of the
low-end segment, the UPS is bought typically for single PC applications.
Most applications are not very critical and hence users can afford to go
in for offline or line interactive UPS. These UPS systems offer value for
money to the customer in this segment, and price is the deciding factor.
Other users in this segment, those whose work is critical, go in for
online UPSs.
|
ARVIND TIWARI, COO
WeP |
Talking of low-end line
interactive UPSs Arvind Tiwari – Chief Operating Officer WeP Peripherals
Ltd, Bangalore, which operates only in the Line Interactive segment, says
we have been focusing on our offering. WeP realizes that in the future
business can be sustainable only if it offers differentiated, value-added
products to the consumer. With this philosophy towards the UPS market, we
have launched – a multi-functional next generation UPS called as TOP.UPS
Under brand “0 WeP”, that offers the consumer added benefits like a
mobile charger, Front rotational lamp, Digital clock and CD-rack, and is
ergonomically & aesthetically so very pleasing that will become a real
desktop assistance.
However Mr. S Srinivasan
of Numeric Power System feels that ergonomically & aesthetically
designed UPS may be fine but ultimately it is the quality and good after
sales service that matters. This is how we have been able sell very large
numbers of line-interactive UPS systems in very short span of just over 2
years since launch, he laments.
Softdisk feel that
aesthetically designed UPS with high quality good after sales service will
come out winners.
|
I B Rao,
MD,
Power One Micro Systems Pvt. Ltd.
Bangalore |
THE
CHINISE DOMINANCE
For the past two-three
years the Indian UPS industry has been facing stiff competition from Taiwanese/Chinese
players who by virtue of mass production have advantage on pricing on
smaller UPS where as in larger UPS, European players will fight the Indian
manufacturers and that too with plants located in China. “We feel there
is a trend in the market where slowly manufacturing activities are
shifting to sourcing because of low cost kits available for cheaper price
but the threat is whether these kits are suitable for Indian power
conditions requiring UPS to give higher back up time and extreme
temperature fluctuations like high especially in summer. People are simply
carried away by price tags rather than compatibility of these kits to our
country.
Today no company in India
can claim they are actually manufacturing atleast in lower kVA ratings. If
doing some cosmetic work and fixing some nuts & bolts amounts to
manufacturing then that be it, laments Mr. I B Rao, of Bangalore based
Power One Micro Systems Pvt. Ltd.
|
N P Krishnan,
Director Marketing,
Consul Consolidated Pvt. Ltd.,Chennai. |
Mr. N P Krishnan,
Director Marketing of Chennai based Consul Consolidated Pvt. Ltd.,
believes that the Market is as good as ever. However the lower capacity
UPS systems upto 5 kVA are no more economical to manufacture in India.
Products from China and Taiwan are flooding the market, but of poor
quality is not suiting our conditions. We are waiting and watching what
turn the industry is going to take., he laments.
|
Ullas Potnis,
MD, Aplab Ltd., Thane. |
Similar views were
expressed by Mr. U S Potnis, Managing Director of Thane based Aplab
Electronics Limited according to him UPS is a growing market and is fed to
large extent by imported UPSs in small ratings of 1-5 kVA, mainly from
China, Taiwan etc. because of the economics of that are suitable to most
Indian companies. But he too agrees that they are not perfectly suitable
to vagaries of Indian Power conditions. He further adds those importing
UPS kits make cosmetic changes and sell it out as their brands.
This is cost effective to
those with smaller turnover and also those operating from tax free zones
like Parwanoo.
He adds at Aplab “Our
concentration is on the Middle & Higher range of UPSs. We have a huge
demand of these UPS Systems from BPOs & CALL CENTERs”, he laments.
|
Arun Ghosh,
MD, Hita Technology Private Ltd., Kolkatta. |
Softdisk believes that
although most of the manufacturers today are importing from China and
Taiwan, but certain companies like Delta Energy Systems India Pvt. Ltd.,
an 100% subsidiary of Delta Group, world wide leaders in Power Electronic
Equipments and Best Power Equipments India Pvt. Ltd. marketing BPE-Ablerex
brand of UPS systems under a co=branding agreement having manufacturing
facilities in China & Taiwan & Hita Technology Pvt. Ltd. are more
true to customers on telling them how and where they are manufactured in
comparison to certain Indian companies outsourcing to China/Taiwan and
branding them as their own.
According to Mr. Arun
Ghosh of Hita Technology the UPS market is now polarized to MNC/imported
category and local make. The tilt is towards MNC/imported category. This
is mainly due to the Latest technology, compactness, look etc. Even local
manufacturers now started importing to stay in the competition. In near
future, only Imported reliable UPSs will be favored and rule the market
like Computers where one can only find MNC / Imported brands nowadays.
Softdisk believes that
finally it all boils down to service, companies with better service
infrastructure will always survive.
FOREIGN
COLLABORATIONS
Taking of collaborations
it has been a year full of alliances and divorces. There is not a single
company in top 20 list which does not have a foreign collaboration. Either
these foreign companies are directly present in India thru 100% subsidiary
or thru JV, technical tie-ups or a distribution arrangement. Only
exception to this list is Delhi based Tritronics India Pvt. Ltd., headed
by Mr. Rajeev Chatrath, who preferred to duck this question when queried,
why no tie-ups?
Talking of tie-ups,
Consul’s Krishnan is very optimistic, “We are currently celebrating
our Silver Jubilee Year and gunning for a turnover of 100 crores this year
and at present we are on the right track and target.” The tie up with GE
Digital Energy has given us many valuable entries and this will open more
doors. “The overall scenario has never looked so good in the past and we
are looking forward to a very good year.”, he laments.
Here it worth mentioning
that GE has many distributors in India, Consul, Hi-Rel, Infinity Power,
SuKam and GE also directly sell to its Global & National Accounts.
This results in cross tendering between its distributor making the
customer suspect about who will provide the service. GE Digital Energy
Country Head Yogesh Bharadwaj when queried on this said each one of them
has their territory defined. When pointed out that Consul & Hi-Rel are
very much National Players and a case which GE lost due to very reason was
brought to notice, he pledged ignorance and said it must be one off case.
This certainly is a very peculiar marketing strategy.
MGE decided to part ways
with Numeric and decided to go alone. This resulted in Numeric &
Socomec joining hands together in a 50-50 joint venture, resulting in yet
another formidable formation. Power One tied up with EPI, Uniline has a
technical tie-up with Digital Data Systems of Europe. Techser has
collaborated with Autometers who inturn have technical collaboration with
Powertronix of Italy. Aplab has a technical tie-up with Ward of China for
its rack mounted online UPS systems. Electronic and Controls tied up with
Newave, with worldwide headquarters in Quartino, Switzerland for their
Conceptpowerä Modular three phase UPS solution. Ablerex operates thru BPE,
while APC, Emerson, Eaton, Powercom & Delta have direct presence thru
100 percent subsidiaries.
|
Deepak Sharma,
Managing Director,
Eaton’s Power Quality Pvt. Ltd., New Delhi. |
Speaking on these new
alignments, Deepak Sharma, Country Manager, Eaton Electrical laments “I
think these developments have greatly impacted those people who were
actually involved in the alignment shifts. To an extent customers now feel
more secure while doing business with those
companies that are independently positioned to service their requirements.
Although these
collaboration are good from customer point of view who can now choose from
a array of best of technology, but the companies already established in
India are facing what can be termed as employee pouching.
Talking of Employee
Pouching Mr. Sharma says “While a large number of employees were
approached and a significant number of them received offers. We have not
been severely impacted as actual loss of employees has not been high. Most
have opted not to accept.” According to him Eaton is viewed as an
ethical, stable and fair employer by most people. Employees have seen that
good performance is rewarded and that development inputs are consistently
provided thus adding long term value to them.
They also recognize that
Eaton Electrical, the parent organization of Eaton Power Quality has
ambitious plans for India and that there will be significant growth
opportunities for consistent performers. All of these have probably
resulted in low turnover amongst employees.”
According to Sandeep Nair
of Emerson Network Power India Pvt. Ltd. Industries across have been
facing the problem of lack of skilled manpower and attrition. I would like
to state here that our employee-friendly HR policies are aligned with the
HR policies at Emerson Worldwide. Our training modules, growth plans,
policies are designed to add value to an individual professionally and
personally. This is one of the key reasons why we have not been affected
so much by shortage of manpower in the industry.
Here it is worth
mentioning that what Mr. Chellapan had to say “Poaching the employees
(knowing well that they are under service agreement and court injunction
etc.) is a covered approach as some companies want to enjoy others hard
work and easy route using their money power. This may not last long as
such poachers have thrown out some people already as their expectations
are not met with by some of the people whom they poached. Pouched once are
being treated as commodities with no human values. The senior team that
has been delivering good results stayed with Numeric. The poaching has
disturbed one other leading company also and all such things will have
their own effect later.”, certainly a more realistic answer.
|
Suresh Srinivasan,
Managing Director,
Auro Power Systems, Chennai. |
Softdisk which interacts
regularly with almost all leading UPS companies on regular basis at
various levels, has seen it all for them selves.
ON GOVT.
TAXATION POLICY
Mr. Suresh Srinivasan of
Chennai based Auro Power Systems was very empathetic when he says “GOI
introduced VAT to create a uniform taxation, currently 4% but we find some
state Govt.’s not ready to implement. This is ridiculous. He further
adds “Duty free imports should be avoided as it would totally kill the
domestic industry. At least a minimum duty should be levied on imports of
all sorts as it would help survive and sustain the domestic industry.”
He further adds there should be a single point tax and any number of
resale should just attract a minimum of 1% as resale tax, strong words
from a man who advocates and practices end-user education as a deterrent
to mushrooming small time UPS manufacturers who do not hesitate in
compromising on quality and service while eying the price conscious
customer.
|
Mr. Anil Gupta,
Managing Director of Microtek International Pvt. Ltd., New Delhi |
Similar view were echoed
by Mr. Anil Gupta, Managing Director of Microtek International Pvt. Ltd. ,
there is no support coming up from the Govt. side to the power backup
industry, since the import duty on finished products is being eliminated
while the part and the components are still not fully exempted from levy
of import duty. This inverted tariff structure is acting as a negative
element in the much needed industry in the present scenario. It is
therefore desirable that the duty on raw material is maintained at lower
rate then the finished end product for the development and growth of
domestic sector, laments Mr. Gupta.
Softdisk believes that
irrespective of type of the commodity there has to be preference given to
manufacturers and all customers will enjoy this from the local industries.
If there are some entry barriers (at least a min of 5-10%) for all
products then customers decide what they want to spend for. In-spite of
all the promises, the Government has still not regularized, this happens
sooner the better.
CRITICAL
PROBLEMS
Intensive introspection
has brought to the fore a number of problems that have plagued this
industry over the years, but which had been glossed over during the
generally prevailing euphoria prior to the slowdown. Most of the industry’s
troubles originate in the lack of standards for the product and hence have
resulted in host of UPS companies ending up with tie-ups. The Organized
player suffers most at the hands of un-organized player. It has been
observed that in last 3-4 years, the competition level has gone down. Not
because of market pressure, but due to unprofessional approach by UPS
vendors themselves. People tend to commit or agree for the things which
are not technically feasible. This has created unwanted price pressure on
the reputed brands. This needs to be avoided.
To explain it more, take
a case of warranty on Sealed Maintenance Free VRLA Batteries (12V). The
battery manufacturers specifies battery life in number of charged and
discharged cycles, which is some where to 200 – 250. In Indian power
conditions, most of the time this will be finished within maximum two
years. The battery manufacturers gives one year warranty on battery. The
battery is consumable item and still the UPS manufacturers are agreeing
for three years warranty, just to grab the business or please the
customer. This needs to be corrected. There are many issues related with
UPS business which are common for all UPS vendors.
We feel that, the leading
UPS vendors should come together and start dialogues to discuss common
issues.
After
Sales Service
Another key area, of UPS
industry which needs focus is the after sales service. Numeric along with
Eaton’s Power Quality were the first power electronics company to
introduce a web based UPS monitoring system, so their customer don’t
even bother to call them. They can just contact online and log a call -
thereafter the entire process is automated. So if a call is not attended
on time it gets escalated. Call management and call escalation process
work very well, this provides their customers superior value for their
money. Numeric became the first Indian UPS manufacturer to introduce a
toll-free customer care number. A service now practiced by many a leading
brands.
|
Mr. Dalip
Sharma, Managing Director Delta Energy Systems Pvt. Ltd. |
The
Future
Adverse business
conditions in the last year had resulted in an increase in price
sensitivity. This resulted in the SOHO and home user markets moving to
products that were not necessarily feature-rich or built for sustained
reliability. The enterprise solutions market however has realized that a
“cheaper” UPS is not necessarily a cost-effective solution.
According to Mr. Dalip
Sharma, Managing Director Delta Energy Systems Pvt. Ltd. today most
corporate are willing to pay a premium for a truly reliable product rather
than take the risk of suffering outrages by compromising on quality. “It
is pretty much like paying somewhat more for an insurance policy where you
are sure that you are truly covered in the event of a mishap.” lament
Mr. Dalip. According to him industry is shifting toward smaller more
efficient design coupled with competitive prices. What was also noticed
was a migration of users to variants of the line interactive technology in
the enterprise solutions area as well. This was driven by the fact that
the initial investments are lower. However users realized that given the
brutal power conditions that exist in India, only true double conversion
technology is good enough.
The government, both at
the central and state level, driven by the increased use of IT, has been a
major buyer for UPS products. This trend is expected to continue in the
next few years. Some of the other segments that have seen increase in UPS
spending are banking and insurance, telecom and process automation. As the
networked economy grows in India, the dependence on reliable uptime
solutions will grow correspondingly. Increasingly, SME segments are also
becoming IT-savvy and network-dependent. These trends are resulting in a
higher dependence on UPS and power protection solutions.
No
wonder, the future is really rosy for Power Electronic Industry in India.
|