Notwithstanding the critical role played by UPSs in the
smooth functioning of computer systems, the UPS industry continues to be a
nobody’s child. With the continuance of the Government’s bureaucratic
attitude, the industry itself is unable to lobby its case successfully.
Though the recent initiative by the Government to categorize
UPS as an IT product has been a blessing, issues like an uniform tax structure
for the product and its components still needs to be addressed.
The UPS industry is highly fragmented with most of the
trading taking place in the unorganized sector. Ashok Mazumdar, Executive
Director, Association of UPS and Power Conditioning Systems Manufacturer, a
recently-formed organization, estimates that as much as 75-80 percent of the
total UPS sale in the country comes from the unorganized sector, though other
market sources put the figure roughly at 50 percent as against 60 percent for
other IT products. The UPS market is estimated to be around Rs 1,050 crore with
a annual growth rate of 35 percent. Says Dependra Mathur, GM - International
Operations, Wipro ePeripherals, "Despite its potential, the industry has
not been able to take off due to lack of organized representation."
DOMINATION BY LOCAL PLAYERS
A large part of the UPS market is today dominated by local or regional
players. Majority of these players run their business as a one-man show and
churn out inferior quality products.
“Despite its potential, the industry has not been able to take off due to lack of organized representation” |
Dependra Mathur, GM- International Operations, Wipro ePeripherals |
By and large, they neither follow any standardization norm
nor do they have any quality processes in place. Says Vinayak Joshi, Western
Regional Manager - Marketing, DB Power Electronics Ltd, "Many local players
manufacture products without laying much emphasis on quality and service.
However, they continue to sell well on account of their low cost."
The UPS sector, specially the low-end segment, attracts many
such manufacturers, as it is not very difficult to come out with mediocre
products. And with customer awareness still not reaching a desired limit, many
see this as a good way of making some fast money.
Dependra laments, "Growing end-user demand and low
product knowledge has increased the number of players emerging out in this
segment."
ISSUES HINDERING UPS BUSINESS
Among many issues faced by the industry, the most pressing one is
counterfeiting or imitation of leading UPS brands.
Confirming this, Yogesh Shah, Partner, Mahavir Enterprises
says, "There have been cases of small players trying to imitate recognized
brands as far as looks and aesthetics are concerned." Thus, these inferior
products give the established brands a bad name.
While the channel has embraced famous names like APC, WeP,
TVSE, Numeric, vendors have become very cautious about the replication of their
brands. "Our vigilant partners bring instances of duplication of our
products to our notice," says Anand Iyer, Country General Manager, APC
India.
Gray market sales are also a serious issue that still remains
unresolved. According to sources, gray market accounts for more than 20 percent
of the total UPS sales in India. Though the favoring elements are still not
clear, sources say that the primary factor could be illegal imports, which makes
the products available at prices that are 15 to 20 percent lower than the
reputed brands.
DEALER LOYALTY
Anand Ekbote, MD, Emerson Network Power India Ltd, believes in maintaining
exclusivity with his channel partners thus helping them work closely with the
company. "We do not believe in blind expansion of channels. By appointing
select partners we can closely monitor their performance, thus maintain dealer
loyalty," adds Anand.
"Dealer loyalty can be maintained by providing
world-class quality products backed by excellent after-sales support and good
incentives," points out Vivek Jain, Director - Marketing, Microtek
International Ltd.
How important are schemes in the UPS business? Not much, if
partners and vendors are to be believed. Brand, features, warranty and service
drive the popularity of UPSs among partners. When MNCs brought down prices at
par with those of indigenous players, the channel logically turned to brands,
which met all these factors. Says Anand Iyer, "Resellers now look for a
state-of-the-art product, good distribution network and sound warranty
policy."
Generally established companies have very clear warranty
policies, which favor loyalty of several channel partners. Some companies offer
warranties that include battery as well for the entire warranty period while
others exclude battery after a certain period. However, there are players with
unclear warranty policies in the market. Says Anand Ekbote, "Players who
lack business ethics would have fine prints and ambiguities in their warranty
policies."
Currently most vendors offer one to three years warranty. The
nature of warranty, like on-site, off-site and swap, varies with the product.
The presence of MNCs has alerted domestic manufacturers with
respect to warranty and service. Previously, barring a few exceptions, most
local players were lacking when it came to service. Today, to be at par with
MNCs, Indian players too are improving their service policies.
The service is provided either by vendors or by partners.
Emerson has a service center for end-users and also has business partners, who
have their own service set up. Wipro supports its customers only through
partners.
NEW PLAYERS
Recent trends in UPS business seem to favor channel partners. PC vendors
like Wipro and Vintron have become UPS manufacturers in recent times. They
bundle UPS with their PCs and sell them through channels. This has helped
partners to sell more number of PCs and give better value to their customers.
The current slowdown is expected to bring about a
metamorphosis in the UPS industry. Only big and strong players, be it domestic
or overseas, are expected to survive in this tough and competitive market.
The organized channel operation of big players is expected to
hit many weak local players, who sell directly. These players will have to
quickly move up the value chain if they want to survive.
SUNILA PAUL in Bangalore with inputs from MOHIT CHHABRA in
Delhi and GOLDIE in Mumbai