Industry players tried out several strategies to stay in the competition. While some explored new business areas, others reduced prices, while yet others offered customisation as their USP or upgraded their products by adding advanced features
By Richa Chakravarty
Monday, 10 June 2013 : The UPS and inverter players in India have had varied experiences in 2012-13, overall registering a growth of 10-15 per cent. While the big players earned good profits, the small and medium enterprises (SMEs) struggled to do so. However, this seems to be a temporary phase as the UPS and inverter market has always been an upbeat segment, and industry pundits believe the growth in 2013-14 will be around 30-40 per cent.
The economic slowdown and the dip in Indian IT spending are major reasons for the slow growth in the UPS and inverter market last year. On reviewing the market scenario further, it appears that the companies with a wide variety of products and those dealing in higher kVA products have registered good growth in comparison to the ones that sold lower kVA products. As the telecom segment grew, it helped the higher kVA (up to 200kVA) segment to grow.
Big players sailed smoothly
The Electronics Bazaar survey found that big brands like Luminous, Microtek, Su-Kam, Genus, etc, did good business in 2012. With its major focus on the domestic, commercial and industrial sectors, Microtek International grew by 30 per cent in 2012-13.
Luminous Power Technologies grew by 80 per cent in 2012, “We are now looking to double our manufacturing capacity and move closer to our consumers across different geographies and exploring setting up new manufacturing facilities,” says Manish Pant, managing director, Luminous Power Technologies. “The demand for a better lifestyle is what is driving the growth of power storage and power back-up products. For Lumnious, nearly 60 per cent of the demand for its inverters is now coming from rural areas, semi-urban and small towns. This is also pushing the company to innovate and offer cheaper solutions,” he adds.
The inverter division of Genus alone grew by 70 per cent last year. “2011 was a flat year for us. We, therefore, made changes in our marketing and branding strategies, and expanded our product portfolio. This led to a significant growth in our UPS and inverter division,” informs JK Agarwal, director marketing, Genus Power Infrastructures Ltd.
“2012 was a good year for us. Our UPS business grew by 70 per cent and our inverter business saw a growth of 50-55 per cent,” says Rupesh Gupta, head UPS and genset division, Su-Kam Power Systems Ltd.
“For us, the market was good—not only did the industry grow, we also registered a growth of 30 per cent last year. India is a huge country with major power outage problems, so there has always been a demand for UPS systems and inverters. This market is not only huge but moving ahead fast,” informs Manoj Jain, VP, Microtek International Pvt Ltd.
True Power International Ltd registered a growth of 25 per cent in 2012-13. According to Ravi Mundra, managing director, True Power International Ltd, today inverters are used not just to run fans and lights but to charge mobile phones, desktops and laptops, run the TV, etc. So, there has been an increase in the applications in the SOHO segment. “Companies that have upgraded themselves and now offer a more high-tech range of products, have definitely done good business,” he adds.
Uniline Energy Systems also witnessed a growth of 17 per cent in 2012-13. “We had received the orders in 2011, and these were realised in 2012,” informs RK Bansal, director, Uniline Energy Systems. In the coming months, the company plans to launch inverters for the domestic segment, and will also expand its solar inverter business.
SMEs found it tough
The medium and small companies in the UPS and inverter market found the going tough.
While some of these companies grew, others didn’t. According to Rajiv Chatrath, director, operations, Tritonics India Pvt Ltd, 2012-13 was a flat year. “Our business is mostly project-based. Owing to low government spending in 2012-13, the year was static for us, whereas in 2011-12, we grew by 25 per cent. However, we are hopeful that in 2013-14, we will achieve a growth of 30-40 per cent,” he says.
Epoch Electronica registered 12 per cent growth in 2012-13, but had to explore different business areas to survive in the market. “The market demand, especially in the eastern region, has been very poor. We are, therefore, identifying new business areas. Solar power is a new area that we are interested in exploring. We are also upgrading our products and adding new technologically advanced features. We have taken up projects to supply UPS systems for the banking sector, and are therefore hopeful of growing significantly in 2013-14,” informs P Mitra, general manger, operations, Epoch Electronica Ltd, Epoch Electronica Ltd.
Despite upsINVERTER.com growing by 27 per cent in 2012-13 (it grew only 13 per cent in 2011-12), its managing director, Yogesh Dua, says that the company had to struggle hard to achieve this growth. “Big companies that had set bigger targets could not achieve them; hence, they lowered the prices of their products. This increased the competition for small and medium players like us. Hence, we had to change our strategy. In order to sell our products, we offered customisation and modification of our products so that it did not affect our sales figures.”
| Reasons for sluggish growth in 2012-13 | |
|
Less spending by the government: The government is one of the major buyers of UPS systems and inverters, with almost 18 per cent of the revenue generated by UPS system sales coming from government buying. Of late, there have been no major tenders that have been floated by the government, which has resulted in fewer orders, eventually hitting the sales of UPS inverters. “In 2011-12, the government floated a scheme for the computerisation of every school. We carried out this project selling UPS systems in various schools, including NIIT and Educomp centres. We generated good business through these projects. But in 2012-13, no funds have been allotted to the schools, which eventually affected the number of orders, hence hitting our sales,” says P Mitra. IT sector hit by economic slowdown: According to Yogesh Dua, “The economic slow down has adversely affected the IT and IT infrastructure segment. The expansion plans have been put on hold by most of the big companies in the IT and ITES segments. Call centres and data centres were badly hit.” Less demand from dealers and distributors: As the overall economy witnessed slow growth, consumers adopted a conservative approach. This affected the dealer/distributor networks and the entire supply chain. Channel partners also found it difficult to sustain their growth and sell products in the market. |
Expectations from 2013-14
UPS and inverter players are hoping 2013-14 will be the year to do even better business. Industry pundits believe the growth in 2013-14 will be around 30-40 per cent. This will be driven by demand from major sectors such as banking, financial services and insurance (BFSI), telecom, retail, IT/ITES, manufacturing and infrastructure.
Players believe that the industry has reached its saturation point and is, therefore, looking for diversification into the solar business. “Solar inverters and hybrid inverters will catch the interest of consumers in 2013,” says Yogesh Dua.
Says Ravi Mundra, “With solar technology coming up, consumers will generate their own power, and this will boost the sales of UPS systems and inverters. Grid-tied inverter sales will also shoot up significantly.”
In the current financial year (2013-14), the UPS and inverter players aim to tap many new markets in Tier II and III cities, and will introduce new technologies to increase the efficiency of their power products
However, players feel that the future of the UPS and inverter market seems promising, as it finds application in varied industries, ensuring strong growth in the next five years.
| Region-specific demand |
|
While power cuts occur all over the country, the trend over the last two years indicates that the maximum demand for UPS systems and inverters comes from the south. Demand in Tamil Nadu and Andhra Pradesh is the highest, followed by Kerala and Karnataka. Looking at region-specific growth, demand from south India grew between 31 and 33 per cent, and that from the North between 26 and 28 per cent, with more significant demand coming from Punjab, Rajasthan and UP. The western region witnessed a growth of 23-25 per cent, followed by the eastern region with 16-18 per cent. “There was phenomenal growth in the southern region due to which the industry grew very fast. The southern grid is not connected to the main or central grid, so southern states faced more power problems,” adds Ravi Mundra. Genus Power bagged maximum orders from the southern states. “For the past two years we have noticed that demand in the south is picking up, unlike earlier,” reports JK Agarwal. Apart from this, demand from the rural sector, too, is picking up very fast. “Consumers in rural India have also become smarter and more discerning buyers, who now demand technologically advanced products,” says JK Agarwal. |
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine
