UPS industry's strategy to beat slowdown

AS A fallout of the global economic crisis, the Indian UPS (uninterruptible power supply) segment has revised its estimates to expect a 12 per cent growth rate the coming year. ``The industry needs to watch costs and widen its channel distribution sales to thwart the backlash of the economic downturn,'' according to Mr. Deepak Sharma, Powerware International managing director, South Asia. The Indian UPS industry has reflected a consistent growth rate of 30 per cent over the last five years fuelled by power surges and frequent blackouts in an economy driven by hitech industries, in particular the information technology sector.

Market size

While Powerware, an American UPS company, is a relatively new entrant to the industry, several well established players - APC, TVSC and Mitsubishi - are firmly entrenched in the Rs. 1,000 crore UPS market. The lucrative UPS industry in India comprises the organised sector which generates a turnover of Rs. 600 crores and the unorganised sector with a turnover of Rs. 400 crores. The smaller UPS firms have given cause for concern to the organised segment triggering brand-building exercise and marketing initiatives to capture new marketshares.

Engines of growth

The fundamental drivers which ignited the growth of the UPS industry include the deplorable power conditions across the country and the upsurge of the information technology industry. For instance, an average power outage of half an hour can cause a company to lose $6,000 in revenues, explains Mr. Sharma. Coupled with these factors have been the marketing and technology strategies adopted by the UPS segment. ``We realised the importance of channel partners with wide distribution reach. This goaded us to establish a network of 1,300 resellers in 125 cities besides having 69 authorised service centers,'' APC Marcomm manager, Mr. Balu Pandian, said.

Strategic partnerships with OEMs, distributors

Channel distributors with widespread reach have enabled the larger UPS firms to have a strong market presence. While APC already has a well-established network, Powerware has initiated the process through its tie-up with Salora, ACI and Electronics and Control, which provide Powerware with a 1,000 strong computer reseller network to sell their distributed solution UPS products upto 6 kVA.

OEMs also play a major role to jack up sales of UPS products. For instance, Powerware partners IBM and Compaq while APC has tie-ups with several OEMs including Microsoft, Intel, CISCO and Dell. Hence, the rise and decline of the IT sector has a direct effect on the UPS industry.

Price bands and low costs

``We brought down the price band due to our wide market presence and local manufacturing facilities especially in the 500 kVA market.

The 500 kVA product which was priced at Rs. 12,000 a few years back, is available now for Rs. 5,000,''claims Mr. Pandian. Both APC and Powerware have local manufacturing units allowing the two companies to sell their UPS solutions at costs which are on a par with the unorganised sector.

Quality of UPS solutions is also a crucial factor with the UPS firms sourcing critical components from global vendors.

The UPS industry is bullish on its future prospects even the late entrants like Powerware.

Technology will play a major role in pumping up sales volume so much that Powerware plans to host an online helpdesk and an electronic exchange for its resellers and distributors. APC already has an online helpdesk. Both companies are clear that mass production will bring economies of scale translating into a more cost effective solution to hike sales and increase industry growth.

Preeti Mishra

in Bangalore

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