However most of companies are facing it difficult to match quarter to quarter sales of 12-13 in 13-14. We are sure the figure which we have arrived at i.e. the actual end-user sales revenue of has definitely crossed INR 4757.00 crore mark .

• Growth wise it has not been a mixed year with some of the majors growing while others dipping.
• Revenue-wise : This year 2013-14, the industry grew by 6.53% & revenues grew up to 4757 crores, a growth of over 6.53% over the last fiscal of 2012-2013.
• Volume-wise : Industry grew by 19.27% over previous year in volume terms. This clearly indicates shrinking margins. Drops in revenues while increase in volume.

One must be clear in mind that this is a very good performance considering the stiff competition and the squeezed margins in view of hammering the companies got during the global economic meltdown & falling Indian Rupee.

Of the total revenue of 4757 crores, Online UPSs accounted for 87% while Offline / Line interactive UPSs accounted for nearly 3% while other products including Servos & change of batteries accounting for the rest.  We have not included the Home UPS sales figure in this.

Of the total revenue organized sector accounted for nearly 62% while 29% came through semi organized sector while 9% share still remains with the unorganized fly by night operators.

SD FINDINGS
Softdisk went about finding the state of the industry and also how deep they were actually effected by recession, The first two quarters of the financial year 2014-15 were not that good. Projects have been badly hit, atleast until July 2014 in the current fiscal no major projects came up baring a few. Banks also restricted their purchases it is only in August that the things started moving. The overall effect is putting expansion plans on hold. They have given more stress on best utilization of their existing facility and infrastructure. Almost flat growth for big IT. The telecom segment even during recessionary trend continued its positive trend for tower infrastructure. This has kept mid segment market for UPS going well (up-to 200KVA). A small power data center with power requirement of 20, 60, 200KVA rating are also going as per plans. The Industrial market segment covering Power, Energy, Manufacturing, Steel, Cement, Oil & Gas, always experienced steady and normal growth of 12-14%. The same is continuing in this year. Softdisk believes that more and more people are moving towards Solar. Solar PCUs units are the new mantra for the UPS Companies, some have even manufactured and installed Solar UPS, with hybrid charge facility (Photovoltaic & Mains).

With consolidation being the mantra for Industry. One can say the entire Online UPS market can be divided into following APC-Schneider, Emerson Eaton, Numeric, Consul, Uniline, Delta, Hitachi, Other Major players (Switching AVO, Socomec, Power One, Tritronics, Techser & Hykon) & the rest. Talking of market share Emerson has the highest market share of 20.0% followed closely by APC Schneider 18.0, Numeric 17%, Consul 6%, Eaton 4%, Delta 3% while other major players account for rest.

SD ESTIMATES
Softdisk had predicted inAugust 2013 that the total industry revenue will cross INR 5500 crore mark by March, 2015. We talked to Industry Captains trying to know what the Industry leaders thought. Many had little or no doubt to what Softdisk has predicted earlier, even though this response was at time when the global economies were trying to come out of worst ever economic crises, and Indian market was also shaken by it. As on date we feel that nearing 5200 crore mark for end-user sales and 5500 crore mark including secondary sales is quite possible if the Indian Industry especially the Modi Govt. keeps up its poll promises Although few may disagree with our figures, but being optimistic has always been the Softdisk attitude.

According to Mr. N K Agrawal of Delhi based Microtek in 2013-14 market had been not very buoyant, This financial year the economy world over is moving under the shadow of fear of major recession in US and Europe, because of this the things have slowed down, it will not impact Indian markets but spillover effect is showing its sign the falling rupee is one such sign. In-spite of all this we still feel that the UPS Segment will show a growth in this year also, he laments. All companies are mooving toward soal, but it delivere resultsafter a ver long time. We have to give some time to the new govt at the center to bring back the economy back on track, he adds(Here it is worth mentioning that Softdisk figure does not include the revenue generated by Inverters)

According to Mr. Rajaram Ramamoorthy of Bangalore based E &C,having a stable government at the centre will aid in better confidence for foreign companies to invest in India. India has been an attractive destination for long for several foreign companies, but the major problem has been the red tape in conducting business as the laws of the land have been inherently quite ambiguous even for Indian Companies and entrepreneurs. This coupled with an unstable government can really hinder the growth of the country. Stable government having a long term focus on growth and development in India will also create a lot of job opportunities in the medium to long term which will have a significant impact on the country’s image globally. Government should now focus on developing the existing industry to emerge from difficulties that are stifling them from growing. Taxation should be made more easy. Introduction of GST which was hitherto delayed due to lack of consensus between various political parties should get implemented soon to enable the trade across states without the requirement of road permits, entry tax and octroi. There is a lot of expectation from the central government and they have a big responsibility to lead the nation through sustainable and robust policies which will help both Indian entrepreneurs and foreign companies.

Mr. R K Bansal Managing Director Uniline Energy Systems Pvt. Ltd. elaborated on this issue, according to him when we speak about market, we have an enterprise market segment in mind. Most of the top notch UPS companies like APC, Eaton, Numeric etc to some extent mostly serve this business segment. Our strength lies in Govt. sector & PSUs. As per our understanding, the market segment revenue (excluding precision A/C, Electrical distribution, etc.) for UPS Systems is close to INR 4500 Cr. Looking at the present market scenario, the revenue collection from this segment shall be within INR 5000 to 5100 Crore in the current fiscal this year. We have already crossed INR 100 Crore in revenue and are gunning for 200 Crore in the next two years.

Even after a year of slump, economic slow down has adversely affected IT and IT infrastructure segment. The expansion plans are put on hold by most of the big names in IT, ITES. Even the aggressive companies in IT infrastructure segment are no exception. There is more emphasis on best utilization of existing IT facilities and also human resource. Even the Data Centers projects in telecom segment with few exceptions are either postponed or put on temporary hold.

Fluctuation in rupee price not only raise imports bill but also lead to volatility affecting their businesses. Due to increase in raw material cost, depreciating value of Indian Rupee, increase of excise duty from government side the overall input cost has increased. Considering the above facts, companies have increased their product pricing. Local vendors cannot be matched up with multinationals as they are not up to the mark in terms of international standards, quality etc. Delta follows the concept of economy of scale ensuring right product and right quality. Delta also has its local manufacturing unit at Rudrapur and Gurgaon. Delta Power Solution’s manufacturing plant at Rudrapur, India (first Green manufacturing facility in India) has a capacity of manufacturing UPS up to 4000 kVA along with battery banks, harmonics filters, accessories and allied products to provide an end to end power backup solution. UPS assembly line is equipped with

1. Latest equipments and fully automated test stations to perform full range of parametric test for ratings up to 500 kVA (largest rating as single module)
2. Environment chamber to perform UPS burn- in test at elevated temperature,
3. Variable voltage and frequency source for testing UPS as per practical site conditions and simulating worst case utility conditions
4. Pure resistive as well as variable power factor load to perform UPS full load test for practically all conditions and get rid of any infancy failure in UPS

In addition to providing technologically superior, quality products that meets the global standards, Delta Power Solutions local manufacturing at helps meet another dimension of business needs today - On time and short delivery times. Current day business needs require that projects are completed on time as projects overruns lead to an unprecedented opportunity loss in Telecom, IT setups, Data Centers, Medical establishments and Industry at large.

Mr. Narayan Sabhahit Managing Director, Techser Power Systems Pvt. Ltd, Bangalore, believes that last year for many companies which were restructuring against backdrop economic revival, it was a year of consolidation. Slowly market is realizing that it is not just the buying cost but long term support what is required especially in India as people expect product-life to be atleast double compared to advanced countries. He further adds, 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 in the rural areas. 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. This is a good sign to a certain extent Government is also keen in making efforts towards enduring availability of Power, he laments.

Speaking on the overall scenario of the industry Mr. Sabhahit 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.

Mr. A Balan of Numeric UPS feels that Softdisk has more scientific way of evaluating the market for its volume and quality then any other agency and the overall UPS sales by 2015 might touch 5100 Cr mark subject to IT recovery. He believes that first two quarters of 2013-14 have not been good, not that bad as projected by many. He feels that for manufactures it is not that much of a problem, it is the week India Rupee against US$ which is cause of concern of importers.

Legrand which acquired NUMERIC brand a leader in the UPS industry, has taken larger initiatives with most modern manufacturing infrastructure to address the mass production requirements and geographically expanded to over 262 locations with 2600 dealers as of now. 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 for this having power continuity & quality are paramount.

On the question of Reverse Auction:
While Mr. Cristo George, MD of Thrissur, Kerela based Hykon India Pvt. Ltd. believes that after experiencing severe declines following the global recession in 2009, this is a repeat. As most of the components of UPS are importing, the cost of UPS will go up due to the increased Dollar rates. It is good in one sense for Indian UPS manufacturers as the cost of finished UPS from China will be increased further. So time has reached for the Indian manufacturers to mass produce the UPS below 5KVA instead of depending on the China Import. But at the same time reverse auction is killing all & sundry. The only way customers can be spoken out of is by explaining the demerits of Reverse Auction and making them understand. (1) In some tenders, customer is procuring at prices which are higher than what they would otherwise procure in closed tenders. (2) Customers are getting supplies which are compromised in terms of specifications which they are unaware. On the Supplier’s side, (a) the reverse auctions are just too time consuming, sometimes the process takes almost a full day, (b) too much dependence on network/internet connectivity and infrastructure issues (c) Customers themselves setting unrealistic starting bid prices. Customers have to understand that they should not buy at very low prices at the cost of suppliers for their own long term benefit and realize the value for money.

Numeric’s Mr. A Balan was critical : The entire industry must boycott reverse auction without any exception. Reverse auction makes everyone to cut the others leg and their own as well since there is pressure in the minds of the participants. Reverse auction should be avoided as these terms enable open and non-ethical competition wherein vendors are not rated on their financial, technical, service capability and product reliability and are allowed to participate with only price as the criteria. This resulted in many tenders being scrapped and vendors who quote unrealistic rates in reverse auction were enabled to supply and destroy the market and the industry itself. He further adds : After all we are supplying and installing a POWER CONDITIONING product, A CAPITAL EQUIPMENT and not a box pushing activity. In the absence of a detailed technical selling based on performance, reverse auction becomes a simple number game for everyone. This will lead to killing the very industry practice itself simply and the customers will realize this after few years later. If this is for computer stationery (or) purchase of tube lights etc then the reverse auction is Ok as most competitive bidder will sell more.

Mr. N P Krishnan, Director Marketing of Consul Consolidated Pvt. Ltd. Believes that in Reverse auction there is an urge to become L-1 even if it is at the cost of going down on Bill of Materials. So all of us must be alert and not bring down prices, just for the top line. We must mature to the level of ensuring that we don’t cut each other’s throat. He further adds that the market has been customer driven and price plays a decisive role in most cases. Can we find a way out for UPS Manufacturers staying away from such auctions? Can Customers be explained the de-merits of reverse auction and gain they will have in normal tendering process. Yes, this is a must. The UPS and battery suppliers should boycott reverse auctions. The battery suppliers must not undercut the UPS OEs and go direct to the same customers that UPS OEs helped develop for the battery suppliers. The UPS industry needs a complete make-over. All manufacturers must get together and have a common voice on this.

According to Mr. Y B Suresh of TPC Smaller players are finding it difficult to access to new customer and volume based order because of the big players are coming out with very competitive price and products ranges & reverse auction. Earlier banks used to be priority customers but now with reverse auction we are out of it. So, Small player should focus on providing effective service support to retain their existing and grow in their reference market and focus on providing complete solution to customers and focus much on related products requirement in existing customer base. Reverse Auction Monster is a threat not only to specific industry but it is a common problem faced by all industries. Unless people in their own industry understands the seriousness of the problem in its due course and unitedly they have to fight against this otherwise a solution cannot be found.

Softdisk believes that All said and done, simple way out for UPS companies to avoid getting squeezed by customers is to boycott all reverse auction.

The Market & Price pressure :
According to Mr. I B Rao & Mr. M R Rajesh of Power One Micro Systems Pvt. Ltd. today Indian power conditioning market is getting more sensitive and mature to the evolving needs of the businesses. With India assuming a key role in the Asian economy, businesses have become attuned to the fact that they need to be robust in terms of infrastructure to attract and retain investors. Hence, Business Critical Continuity is being viewed strategically and upcoming businesses are realizing the importance of factoring and aligning it as key component in the overall business model. Adding further they say we view the present market scenario as an opportunity to strengthen our company’s presence in Industrial market segment. Extremely low prices are unsustainable if quality/service levels are to be maintained. Price erosion beyond a point hurts all stake holders – manufacturers, channel partners, customers, etc. If it continues beyond a point it will lead to disastrous consequences for vendors. We have taken a wise decision not to take up orders were we have to cut down on margins this has lead to try our luck in area like SPCU, where we are successful to a great extent.

Mr. Ramesh S Managing Director, Powertronix Ltd., Bangalore, believes that “In the past year the net materials cost of all the products gone up and we are taking all cost cutting measures to control the pricing and offer great value to customers.” We are doing reverse engineering and research to check all the possibilities to reduce cost without compromising on quality, he laments. flow going, some people started quoting very low. But surely they can not repeat and sustain but certainly some of listed companies could do it for long time. That is to play a different game to keep the share price high. Even they have to revert back at some point of time. We are focusing on diversified market segment like solar PCUs and closely working with few OEM buyers in that segment and working on new design to reduce cost of production and support small time OEM buyers.

According to Mr. Shankar C Nagali of Managing Director of Cosmic Micro Systems, India’s GDP growth despite slowdown is currently hovering around 5 percent mark which gives us an indication of the industrial expansion that is already started happening under the new regime. The rigidity of the Indian economy was reflected during global meltdown.

As UPS category rate in an economy that is already the world’s fourth largest in real terms (Purchasing Power Parity) is expected to grow the faster then any other country barring China. The key factors for India’s growth in the UPS market are would be:

• Increase in PC & Server sales resulting in increased demand for UPS.
• Increase penetration in B, C & D class cities has been another reason for the category growth.
• Growth in the economy will lead to the growth and increase in IT spends of vertical like IT, ITES, manufacturing, BFSI and Government. There by leading to the increased demand for the UPS systems in these vertical.

Let’s understand UPS as vital link in the process chain, not as an end product. It should the part of the solution not the part or source of the problem. The only way to match Chinese prices is being a Chinese; by supplying opportunity based solutions, which is not what Indian environment needs. But if we are talking about reliable, economical, value for money products I think many Indian manufacturers have almost achieved it except for lower capacities where there are huge volumes.

NORMS OF THIRD PARTY MAINTENANCE
Rabindra Agarwal of Switching AVO, Kolkatta believes that it is common knowledge that, though UPS being a proven technological concept, differs in its construction based on manufacturer. Components for spares sometimes become inaccessible leading to servicing difficulties resulting in replacement of a UPS with another equivalent product. This method proves costly for the maintenance vendor and the customer loses the original asset quality which is not clearly visible during the life of the maintenance contract. This is a perceived loss to the customer. UPS OEMs on the other hand lose their valuable service revenue which was hitherto their assured income, which is now being threatened. This unhealthy practice is being practiced by most UPS OEMs, and as a matter of safeguarding their own interests and incomes. Refraining others from taking maintenance of other makes is difficult to implement, as there are numerous unorganized players.

Customers should also verify the claims of a third party service company about their capability to service other makes as the absence of that could lead to a huge loss to them in the form of degraded product / performance and damage the operational efficiency of their organization leading to fresh purchase.

Rajaram of the E & C here according to him Third Party Servicing / Maintenance is a concept that is emerging since the last few years. Big Customers adopt this concept to ensure single point of contact for maintenance to ensure that they concentrate on their core competency. It is a good option, as long all UPS are serviceable by anybody.
Several big service companies are adopting this and the concept is catching up. This is mainly because of poor understanding and trivializing the important issue. Most organizations are becoming too sensitive to costs and are taking hasty decisions to award support to third parties.

Refraining third parties from taking maintenance of other OEM makes is difficult to implement as there are numerous unorganized players. There are also cases where several OEMs are not providing after sales support and customers are left high and dry. Again, this is because the customers are resorting to purchase from OEMs based on purely price that are not geared up for support.

However Mr. Sumanth Kumar of Powernet has a different opinion, if the original manufacturer is providing proper service at proper price, customer may not look for a third person to get the support. One can think by common sense it is easy for original manufacturer to provide better service at better price than the third person. So if we try to make the manufacturer to reject the offer will lead to a monopoly for the manufacturer and disadvantage to the customer, no one will refuse on a written format and same time he may charge the customer heavily or take a ride on customer. So keeping our customers with us is mainly depends on the original supplier, so we should consider it as more responsibility than a birth right. Always working with responsibility will take you long journey than working with rights.

Mr. Sumanth Kumar of Powernet Solutions Pvt. Ltd. adds “All manufactures have to unite on this, specifically for capacities above 5 kVA/10 kVA and to adhere to this in the interest of the client and the suppliers. Generally as a manufacturer we maintain spares for the next 8 years from the date supply.”

Mr. Sumanth Kumar who is also the President of UMDA wants to find a way out for UPS Manufacturers for staying away from such auctions? Can Customers be explained the demerits of reverse auction and gain they will have in normal tendering process. I feel that Reverse auction is not suitable for customized solutions, which is what UPS selling has now become, he laments.

Mr. N P Krishnan of Consul & Mr. Christo George of Hykon also agreed, he believes otherwise fly by night operators with no support base would flourish and OEMs will be at disadvantage.

Softdisk believe that buying UPS starts from conducting a Power audit, determining specific loads, and then proposing a solution which includes proprietary software and patented technologies. In reverse auction the customer compromises on features of the UPS he is going to purchase, who so ever sells, it the customer who will loose. A reverse auction bundles apples with oranges, notwithstanding if it’s appropriate for the buyer or not. All the more important is the service center audit. Somebody sitting in Saharanpur procures a UPS from Madurai based vendor thru reverse auction, when the machine fails what is the response time of Madurai based company, we believe downtime will be something between 48 to 72 hours, horrible from banking institutions point of view, all this simply because of L1.

ON THE TAXATION FRONT
Divergent view were expressed by on taxation front. Where one segment believes that UPS imports should be exempted for taxes the segment talks of protecting the interest of Indian UPS Manufactures. According to Mr. I B Rao of Powerone Micro Systems Pvt. Ltd., Bangalore believes Govt. should considering the importance of UPS systems in a growing economy and keeping in view the power Scenario what it is, the Govt. should certainly exempt all UPS systems from import duties Customs Duties, excise duties etc. Although “The government is quite conscious of the power scenario in the country, yet it seems that all the new addition to the installed capacity do not gives us the comfort of continuous power even by the year 2015. Despite this grave situation, there are no special incentives or support for the UPS installation except in a very limited way. Considering the importance of UPS Systems in a growing economy and keeping in view the power scenario what is it, the Govt. should certainly exempt all UPS Systems from import duties and excise duties” , he laments.

Vinod Kumar of ARVI has setup a 100% EOU for exporting Online UPS and solar solutions. ARVI has also commissioned solar solution for irrigation purposes, which has a huge potential apart from enhancing its market share in niche products specially designed for medical and industrial sectors for critical applications. He also believes that Immediate implementation of GST on the tax front is absolutely essential.

Mr. Balan of Numeric UPS suggests to have a common taxation structure for UPS System across India so that the same rate of tax is followed across India. This is beneficial to the customer and to the Government. Different tax rates makes the product unnecessarily costlier to the end-user (customer) as the one who is paying the taxes. With the government opening up markets for FDI and making the environment more conducive for foreign players to conduct business in India, consolidation is imminent and the only way to go. With price war among the players consolidation for achieving economies of scale will happen. Price being the foremost parameter for purchase, technology is taking a backseat as far as purchases are made.

Legrand intends to accelerate the growth of its brand by sustained investment, launch of new products, and focus on growing the market backed by the pan India sales and service network. According to Mr. Marc Werle, CEO (UPS OPERATIONS) Legrand, we are also backing up the same with dedicated global R&D team to support the launch of the state of the art UPS for the Indian market in the coming months. The challenge being faced by most manufacturers has been the weakening of the Indian Rupee against the US Dollar which is the concern for importers and the policies of the Government recently to accelerate investment in Retail and Industrial verticals will certainly support the industry and its growth. With the existing power situation not improving the UPS industry can witness a positive growth in the coming months ahead.
Softdisk magazine does a thorough analysis of the UPS industry and provides detailed information on the various players, rating & ranking them on their various important parameters than any other agency. We thank Softdisk for their dedicated efforts from 1993 to bring up the Indian UPS Industry to a status of recognition from where it was in the early 90's.

CONCLUSION :

Softdisk believes that being a negligible contributor to the GDP, Power Electronic Industry does not receive enough attention from the Govt., we believe the Govt. should realize the importance of Power Continuity as it is the life line of major GDP contributors. Softdisk has seen it all over the past two decades, more often then not some of the companies use a lot of word jugglery in there promos, it must be the same thing which some one else must be offering without making lot of noise and at a better price. It is one area where customers need to be watchful.

Softdisk believes that if Manufacturers mad rush for sale at any cost continues, one cannot expect a growth of 25-30% as it used to be but settle for 6-8% growth, at-least for next two years, unless some thing miraculous happens. So UPS business is not rosy and bright but has still not lost its potential.