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COVER STORY
Power Electronic Industry Analysis Year Ending March 2023...
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UPS Industry Records 5.7% Growth...
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Classification of UPS Battery - a Costly interruption?...
SOFTWARE
WINDOWS 7 : Too good a software...
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Retailing Market : Now making a statement...
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Gender Equity : Not an even match...
TECHNOLOGY
Technology : The new education Enabler...
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Evolution and Direction of Intelligent Network Architecture...
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Wireless IP-based communications architecture...

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COVER STORY
Power Electronic Industry Analysis Year Ending March 2015
FLAT YEAR
The year 2014-2015 was a flat year for the UPS industry. Some companies grew while others failed to do so.


The industry netted revenues to the tune of INR 4818.20 crore. This is exclusively the end-user sales figure. However the over all industry revenue was estimated at INR 4968 crore. 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. With nearly 331 companies responding to our survey, giving us the information we sought in great detail, knowing fully well how much the company has man-ufactured with excise paid. And also trying to find out, which companies procure finished products from others & brand them as theirs, an exercise which We have been doing only since last six years, we did all of it again to give continuity to the process.
Out of 331 companies responding only 184 companies were awarded with SD Ratings.

However most of companies are facing it difficult to match quarter to quarter sales of 14-15 in 15-16. We are sure the figure which we have arrived at i.e. the actual end-user sales revenue of has definitely crossed INR 5140.00 crore mark .

Growth wise it has been a mixed year with some of the majors growing while others dipping.

Revenue-wise : This year 2014-15, the industry grew by 3.66% & revenues grew up to 4818 crores, a dip from 6.53% over the last fiscal of 2013-2014. A dip of 2.8% in growth in revenue terms.

Volume-wise : Industry grew by 15.6% 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 4818 crores, Online UPSs accounted for 91% 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 analysis .

Of the total revenue organized sector accounted for nearly 78% while 22% came through semi organized and unorganized sector.

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 2015-16 were not that good. Projects have been badly hit, atleast until August 2015 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 10-12%. 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 Grid Tied 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, 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 in August 2014 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. BJP win in & Uttar Pradesh elections will set the ball rolling for sustained growth.

According to Mr. N K Agrawal of Delhi based Microtek in 2014-15 market has been slowed down a lot buoyant. This financial year the economy world over is moving under the shadow of fear of major recession in US and Europe, also the Chinese depreciation of their currency has made the market slowdown further, 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 all though very low, he laments. 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, which too is effected by the slow down. )

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 3000 Cr. Looking at the present market scenario, the revenue collection from this segment shall be within INR 3500 to 4000 Crore in the current fiscal this year. We had a tough time this year with revenue falling by over 30% all though many company done well but general tendency is of slump. 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. Governments buyings has also gone down as many a governments projects have been put on hold.

Fluctuation in rupee price not only raise import billsl 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.

Your take on the 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. In this regard introduction of BIS registration for up to 5 k.Va of UPS’s being made Mandatory is welcome sign. The Objective in particular is correct that products meet certain safety standards. However, the formulation of the process could have been better. They should have been more specific. I feel that the important line of products that need to be certified for Safety are the equipments used for homes. They are mainly off the shelf products which conform to a certain configuration.

ONLINE UPS are used for specific commercial purposes in a supervised environment compared to a home UPS / Inverter. Hence they are not standard off-the-shelf products in the Indian context. Every customer has a different specification requirement and hence it also qualifies as a custom product / solution. Under such circumstances, the product that is built may have a different DC Bus, Charging requirements, Input / Output Sockets, Display requirements, Redundancy requirements etc. It is not practical to get every configuration to be tested and certified considering the high certification and registration costs. Hence, based on the above premise, the Online UPS should not have been included in the mandatory certification / registration requirement, or the guidelines should have been made with certain exceptions. Having said the above, it should not be construed that products can be made and supplied of poor quality. It is certainly a big task for most manufacturers and costs time and money to get certified and registered for meeting the mandatory requirement. As such, the awareness and understanding is missing among several UPS manufacturers and several smaller players are not aware of such requirements. In addition, the home users’ awareness that only BIS certified / registered products should be bought is also low. The business of small players and "fly by night" competition will continue to be the same in the unorganized segment, which has been a good market for the small players. BIS registration is not going to have any impact on the price of products as long as price is the major deciding factor of a customer making the purchase. This will not change in the foreseeable future.The challenges for the organized players in the organized segment is expected to remain the same - price, supply and service.

Mr. Narayan Sabhahit Managing Director, Techser Power Systems Pvt. Ltd, Bangalore, believes that the financial year 2014-15 was a challenging year due to high volatility in the market and fierce competition for top-line pie. Techser during the later part of the year consciously decided to avoid any 'cut-throat' competition paradigm. We diligently decided that it is better to work on healthy orders rather that 'vanity orders' which could only boost top-line but adversely affecting bottom-line. The year also has been a year of consolidation with respect to our restructuring manufacturing and services offerings. We tried to strengthen our work force wherever required so that we can bounce back the market become steadier. Some of the major forecasted orders did not materialize as there were unprecedented delays in decision process. They spilled over to this financial year. This badly reflected on our top-line during last year. Hopefully we will be able to realize those orders this year. Our Indigenous drive is showing results both in new market and service domain. We have launched Tech Glare product successfully and geared up production. 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. These are the areas where continuity of power is very essential, since these companies are facing the Global Challenges.

On the question of Reverse Auction:
While Mr. Cristo George, MD & Dr. Santosh Koshy 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.

BIS certification is a welcome initiative by the government. This will ensure that all goods are safe to be used by the the end users. However lack of testing centres / facilities coupled with vast inventory vide importing by thousand of Indian vendors will make it extremely difficult for importer to get a BIS certificate timely. However he does not think so that BIS certification will throw out small players. Yes, may be fly by night operators will be thrown out. I feel even if small time manufacturer, if they have a good system with satisfactory procedures, BIS certificate will be a blessing and eventually the BIS can be a big tool to improve the small/medium manufacturer.

Mr. K V Nachippan, Marketing Manager, Numeric UPS opines that Softdisk has a scientific approach towards market analysis, for its volume and revenue of the UPS Market (UPS + Batteries and service sales). By 2015-16, UPS sales may touch the 5200 Crore mark subject to considerable recovery in IT business segment.
He believes although the first two quarters of 2014-15 have not been promising, the weakening of the rupee with cost escalation of raw materials has caused the stagnant market growth.

Legrand which acquired NUMERIC UPS, a leader in the UPS industry has taken large initiatives towards a more modern manufacturing infrastructure, to address the mass production and support requirements. Numeric has geographically expanded to over 262 service locations with 950 dealers as of now. With India assuming a key role in Asia, businesses have become attuned to the fact that they need robust power continuity support infrastructure to attract and retain investors. Having mentioned a Robust system, the BIS Compulsory Registration Scheme for Safety is a healthy initiative to provide safety and quality for UPS particularly for Line interactive range.
The entire industry should join together to cooperate towards a healthy price bid and avoid reverse auction which creates an unfair evaluation, especially reverse auction of After Sales Services. Most reverse auctions are based only on price without considering financial, technical, service capability and product reliability of the organization should not be encouraged. Further, such a practice will only reduce and weaken the already stagnant market. The UPS being a technical solution which provides a lifeline for today’s business requirements and financial transactions should not be treated as a commodity sale. But rather, as a technical offer which provides "Power Continuity Solutions" and must be given its due respect.

Softdisk believes that UPS manufacturers 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 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.

Shri Rabindra Agrawal of Kpkatta based Switching AVO Electro Power 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 legs. 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 OEMs and go direct to the same customers that UPS OEMs 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.

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 and the results are showing.

According to Mr. Shankar C Nagali of Managing Director of Cosmic Micro Systems, India’s GDP growth despite slowdown is currently hovering around 4 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:

With customers moving towards Desktops ans smart phones, Increase Server sales will resulting in increased demand for UPS, which is not happening at the required pace right now.

Increase penetration in C & D class cities has been is the reason for the growth in the UPS market.

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 be the part of the solution not the part or source of the problem.

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. Easy way out to match Chinese prices is being a Chinese; by supplying opportunity based solutions, which is not what Indian environment needs.

NORMS OF THIRD PARTY MAINTENANCE
Mr. N P Krishnan, Director Marketing of Consul Neowatt Power Solutions Pvt. Ltd. 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.

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 Hazipur procures a UPS from Coimbatore based vendor thru reverse auction, when the machine fails what is the response time of Coimbatore 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 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. Vinod Kumar of Arvi Systems & Controls 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 2020. 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. I B Rao of Powerone Micro Systems Pvt. Ltd. Bangalore, 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, 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. Implementation of GST is a must.

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. Lorenzo Riboni, 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 vertical 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 & a half 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 will only decrease their profits and ultimately lead to their collapse. So UPS business is not rosy and bright but has still not lost its potential.
 

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