BLOSSOMING UPS INDUSTRY
The year 2006-2007 saw the industry netting revenues to
the tune of 2300 crores INR. This is exclusively the end-user sales
figure. However the over all industry revenue was estimated at 2735 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. Since last two years we
have been painstakingly collecting 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 710
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 2300 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 26 % up from 18.37% in 2005-2006. A growth of nearly 8.0% over
previous years growth.
Volume wise : Industry
grew by 41% 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 2300 crores, Online UPSs
accounted for 86% while Offline / Line interactive UPSs accounted for
nearly 13% while other products including CVT accounting for less then 1%,
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 25% came through semi organized sector
while 15% share still remains with the unorganized fly by night operators.
BRIGHT PROPECTS
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.
Mr. Pradeep Pimpley of DB Power Electronics Pvt. Ltd.
believes that the average market in enterprise segment (in which we
operate) is expected to grow at the rate of 12-15%. The data center market
is expected to see a growth of 20 25% as compared to last year. However,
the remaining IT market growth is expected to the tune of 10 - 12%. Good
growth is expected in Industrial segment where we have established our
credentials, he lament. 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.
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 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.
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. 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.
Especially in IT, Infrastructure, Small and Medium enterprises,
Engineering and Automation, Hospitality, Banking etc.
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 electronic
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.
According to Mr. Pankaj Sharma Managing Director, APC
MGE (ISB), India’s GDP growth at 6-8% gives us an indication of the
industrial expansion that is already happening at a rapid pace. The
buoyancy of the Indian economy is reflected in the growth of the UPS
category. This growth rate in an economy that is already the world’s
fourth largest in real terms (Purchasing Power Parity) is expected to grow
the fastest amongst the four engines of world growth, BRIC (Brazil,
Russia, India, China).
The key factors for India’s growth in the UPS are:
-
Increase in PC & server sales resulting in
increased demand for UPS.
-
Increased penetration in B, C & D class cities
has been another reason for the category growth.
-
Growth in the economy has led to the growth and
increase in IT spends of verticals like IT, ITES, manufacturing, BFSI
and Government. There by leading to the increased demand for the UPS
systems in these verticals.
-
Increased awareness for quality of power has also
boosted the demand for UPS systems. UPS provides protection against
voltage fluctuations and low voltage.
According to Mr. I B Rao & Mr. Rajesh of Powerone
Microsystems, Bangalore, while the UPS market is still very scattered and
dis-organized at the lower end, the higher end of the market has
commendable organized players. In India, the five cities of Mumbai, New
Delhi, Chennai, Kolkata and Bangalore have been the largest markets for
PCs and UPS. However there has been a shift towards B & C Class cities
such as Pune, Chandigarh, Lucknow, Hyderabad, Jaipur to name a few. These
locations are fast becoming global hubs in terms of R&D, ITES &
BPO, Retail, and Manufacturing and given the criticality of operations
undertaken in these sectors, there is an increasing need for comprehensive
network uptime solutions, Besides, given the upward spiral in terms of PC
penetration in these cities, these cities have been showing a marked
growth. Verticals that are fuelling the demand for UPS are Telecom, IT,
ITES, Industrial, BFSI, processing and critical medical applications. One
industry that is often underestimated but today accounts for a large
portion of IT spending and therefore critical infrastructure is the
government.
NEW TRENDS IN UPSs.
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 and energy savings. 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.
With the advent of SOCOMEC NUMERIC JV, we are now
moving fast, grabbing high end mission critical installations. With the
battery cost growing by the day, we have come up with the Flywheel
Technology, which is still in a nascent stage in India, however it has
been successfully commissioned and working in Europe. Back in India, we in
process of getting some installations, This will allow us to time test the
technology in local conditions. Once the Economics of Flywheel are
understood, it will go a long way in eliminating the need for batteries
especially at places where quick start gensets are available.
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. Today, Emerson has moved from
being a UPS and Precision AC manufacturer to a “Global Leader in
enabling Business Critical Continuity Solutions.” Emerson’s solutions
cater to an array of large enterprises spanning across Datacenters,
Telecom Shelters, BPOs, Industrial Process Control Rooms, Food Processing
Industries, Broadcast Facilities, Building Services Control Rooms,
Surveillance and Monitoring Centers, Medical Equipment Installations,
Government, Banks and Financial Institutions and Retail Malls. Through its
extensive network of Business Partners and Channel Partners, Emerson has
successfully penetrated the B & C class cities in India to cater to
the fast-growing SME segment.
In August 2005, Emerson Network Power entered the SOHO
UPS segment, with the launch of two UPS models, the 600VA and the 1000VA
under the ITON range. With the acquisition of Knurr AG of Munich, Germany,
the global leader in Rack and Enclosure Technologies for IT and Telecom
vertical, Emerson Network Power India has become the only player in India
to offer cooling solutions at the room, rack or chip level. These
solutions are available in the Indian market from March 2006.
In February 2006, Emerson acquired global leaders in
rack solutions- Knurr AG. Knurr’s broad platform of rack systems has
integrated with Emerson's cooling and power management technologies,
helping customers solve problems in new and existing installations and
giving data center managers more flexibility in facility design. Emerson
has always been on forefront of innovation we come across as the most
trusted advisor to the client, he adds.
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.
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.
According to 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. Govt. should take some remedial step to protect
Indian manufacturers, 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.
Ramesh S, MD Powertronix, Bangalore who is also the
General Secretary of UMDA feels the Quality power is the basic facility
the government should offer to the industries. When the government is
failing to provide, then the power conditioner’s industry has an
opportunity. So government should consider the subsidy for the UPS
customer. Instead the tax structure and Excise duty etc. Secondly, this
product is affordable to manufacture by small scale industry. If this can
be restricted through permit to manufacture by SMALL SCALE INDUSTRIES
only, Which can create many Indian Entrepreneurs. The Government should
invest on the R&D to develop a product and the technologies to be
offered to Indian Entrepreneurs. So that Indian industries can compete
with the MNC’s.
While many a companies take a stand for Govt support
for improving the situation of Indian UPS manufacturers. Mr. Arun Ghosh,
Managing Director, Hita Technologies Pvt. Ltd. Has different take
altogether. Frankly we are behind China as far as manufacturing is
concern, he laments. It will take long term consolidated approach for us
to match their standard and efficiency. With our vast potential market, we
should concentrate Indianisation of the products to cater to our local
market rather than try to compete with China as an equivalent leading
World Standard manufacturing base. It is definitely not means that we are
lacking knowledge and skills but in order to succeed as a True
manufacturing nation, we have to adopt realistic approach for improving
the basic Infrastructure for conducive environment to become a successful
manufacturing Hub. Govt. need to play the vital role of improving the
basic Infrastructure, easing the norms, introducing easy and quick
approval procedures, encouraging the entrepreneurs with incentives and
proper raw materials supply chain management, he adds.
THE CHINESE 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.
According to Mr. N P Krishnan, Director Marketing of
Consul Consolidated Pvt. Ltd., Chennai - Hindi
Chini Bhai Bhai ! There is no going back on this relationship when
it comes to outsourcing lower capacity UPS from China. This is a thing
that has come to stay. Esp. upto 20 KVA, Indian manufacturers have no
choice. This has to be done for the very survival. This has now become box
selling. Above 20 KVA, and for transformer based UPS, China does not have
much to offer. The bulky, Indian transformer based UPS are reliable and
rugged. No doubt about that. However, the Govt. has to be a little more
clear on their policy on how to treat the UPS in terms of listing of the
UPS. There still seems a lot of confusion. Excised duty is still high, and
should come down. He was obliviously talking about the harassment in
Custom Clearance, every time proving that UPS will be used for Data
Processing Application and not for any other purpose.
Here it is worth mentioning that Amitansu Satpathy of
BPE (INDIA) Pvt. Ltd. says, one has to be ready to face these small
hick-ups, after all you are in business. BPE is one of leading companies
marketing Ablerex and Astrid brand of UPS Systems in India.
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,
he laments.
According to Mr. S A Joshi, Executive Director Aplab
Ltd. UPS is a growing market and is fed to large extent by imported UPSs
in small ratings of 1-10 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, adds Mr. Joshi.
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.
According to Mr. Tejas Sheth of Asia Powercom Pvt. Ltd.
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
have 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 brand.
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 because of
their better service support network.
According to Mr. Deepak Sharma, Country Head, UPS
Division, Delta Energy Systems Pvt. Ltd. There’s a huge market potential
lying untapped for quality power; as with the growing economy India is
facing acute power shortage with a peak power shortage of over 13%.
There is also a visible increase in IT spends by the
SMB segment and industry verticals such as BFSI, IT, Retail, education,
Banking and government. There’s also usage shift towards the online ups
from the line interactive ups systems especially in the SMB segment. The 1
to 10 KVA is selling like a hot cake in the SMB Segment. In the Mid
Segment, 30 to 80 KVA, three phase systems are showing phenomenal growth.
The greater trend is of IT infrastructure consolidation throughout all the
industry verticals, which is majorly driving the High-end UPS demand.
In today’s scenario the Chinese produce has become
almost redundant as today world’s 85% manufacturing is China based and
all MNCs have their manufacturing plant in China in some way or the other.
Also, Most Indian brands are buying the products from Chinese ODM/OEM.
FOREIGN COLLABORATIONS
Taking of collaborations 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 completed 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. However, Mr. Ramesh-sankaran,
Chariman, Consul went proverbial …. (Purasana Uttoto, Arsana Nambalama)
clearing indicating that Manufacturing will be Consul’s Forte.
APC MGE are under Schnider now. 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. Ablerex operates
thru BPE, while Emerson, Eaton which recently acquired MGE OPS, Asia
Powercom & Delta have direct presence thru 100 percent subsidiaries.
DB has tied up with Chloride PLC London.
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. As far as MGE OPS acquisition by Eaton is concerned,
you need to give it us as it is a complete take over and not just
hand-shake or JV which can broken-off any day. So the customer still feel
at easy with, he laments.
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.
Sumant Kumar of Bangalore based Powernet Solutions Pvt.
Ltd. believes, 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.
Softdisk has seen it all over the past 16 years, 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. 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. User should take into
account all these before making a purchase decision.
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.
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.
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.
If the first half of 2007-08 is any indicator It is
going to to be a party time for UPS companies in India.
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