UPS Market – Competition Sets The Rule

The UPS market no longer sneezes when the PC market catches cold. It has survived its over-dependence on the PCs. UPS installations have become vital to all segments be it in the public or private sector. 

The size of the UPS market today stands at around Rs 1,100 crore. This revenue is generated by 10 big players, 90 medium and over 500 small manufacturers.

The biggest contributor to the UPS pie is the western region which generates 35 percent of the revenue, followed by north at 30 percent, south at 25 percent and 10 percent by the eastern region. “But these figures are very dynamic and keep changing. For instance, the southern market is growing rapidly now,” says Taranjit Batra, Head (Channel Sales), Invensys Powerware International.

Substantial growth

UPS Market Overview

Turnover for 2000-2001:
  • Rs 1,100 crore
Total number of manufacturers: 
  • 600
Growth during last three years:
1998-99  30 percent
1999-00 25 percent 
2000-01 40 percent
Top five players (with respective market share): 
Tata Liebert 16.23%
Numeric 12.30%
APC 11.96%
TVSE 6.00%
DB Power 5.13%
Others 48.38%
(Source: Frost and Sullivan)
Region-wise market size:
West 35%
North 30%
South 25%
East  (10%)

The UPS market has grown substantially in the last five years. If there were 100 manufacturers in 1995, today there are 600 across the country. Not surprisingly, the industry achieved around 40 percent growth during 2000-2001 compared to previous year’s 25 percent. This is despite the fact that the pervasive economic slowdown affected the PC and telecom market, which are highly UPS-intensive since October last year. 

Some manufacturers attribute this growth to the orders they had received before the slowdown had set in. Nevertheless, increase in bank automation, government computerization and purchases by corporates, software development companies, ISPs and SOHO contributed to the comfortable growth.

Manufacturers do admit that they have borne the brunt of the slump for the last two months rather acutely and do not foresee the same growth of last year. Says Ranjit Mohite, Joint MD of Pune-based Aar-em Electronics, “Now the market is gradually picking up. Given the present conditions, the market should grow by 30 percent this year.”

Biting into the market pie 

According to Frost and Sullivan, during 1999-2000, the top five UPS companies with respective market shares were Tata Liebert (TLL) (16.23 percent), Numeric (12.30 percent), American Power Conversion (APC) (11.96 percent), TVSE (6.00 percent) and DB Power Electronics (5.13 percent). Those holding the remaining 48.38 percent include Wipro, Vintron, Microtek, Zener, Elent, Elnova, Aar-em, Invensys, Aplab, Electronics and Control, Enertech, Microsys, et al.

Presently, all global UPS majors operate in India. Today, 40 percent market share is held by MNCs like Liebert, APC, Merlin-Gerin, Piller, Mitsubishi, IMV and so on. And their share in the over-100KVA rating is around 80 percent. Of this, TLL claims that it alone has 60 percent market share. 

Brands like APC and TLL dominate the national market. In the lower-end segment, Wipro, Microtek and Vintron are catching up. Down south, Numeric and TVSE have shown their market strength. 

Pune-based DB Power Electronics has its presence in most areas, but its turnover is modest. In Maharashtra, excluding Mumbai, Aar-em leads with its ‘Champion’ UPS. The Mumbai market is dominated by APC which has around 50 percent market share.

Low entry barrier

The UPS manufacturing segment has remained highly unorganized. This is because of low entry barriers and low-cost technology that is involved in the manufacturing low- end
UPSs. 

This has led to the emergence of many weak players. Also, there is no common understanding among manufacturers since they are concentrated in a few pockets like Delhi, Pune and
Mumbai.

Local manufacturers have taken very little initiative to organize themselves. Some feel that this is an impossible task since a large number of people are scattered across the country. “Though local manufacturers are unorganized, the bigger players have come together under MAIT,” says Harshesh Malhotra, Divisional Manager,
TLL.

MAIT has 18 members from the UPS industry and a special interest committee in the executive council to address the problems of UPS manufacturers. For instance, core issues like uniform sales tax and categorization of UPS as an IT product were represented by MAIT, though with partial success. States like Tamil Nadu, Karnataka and recently Maharashtra too, have given IT status to
UPSs.

Replication of designs 

As in any other business, the UPS market too has its share of gray operators. Most players agree that there are local
manufacturers who replicate designs and technology of big companies. Usually, these copy cats, after quitting big
organizations, start manufacturing on their own. A large section of this segment operate from their homes.  

These local ‘garage operators’ have many advantages. Having no billing on sales, they evade taxes. Besides, lower overheads involved in their business help them sell UPSs at throw-away prices. 

At the same time, MNCs have unleashed a price war to fight the cost advantage of the local manufacturers. Says Pradeep Pimpley, GM, Operations, DB Power Electronics, “The unknown brands have spoiled the market by reducing average price level and made the situation difficult for the known manufacturers to compete.”

The fierce price war has hit manufacturers, especially the medium ones, quite badly. Though their volumes have grown on an average of 40-50 percent last year, the revenue has not grown at the same pace. The revenue loss mainly occurs because Indian manufacturers want to retain their price advantage vis-a-vis
MNCs.

Marketing trends

Bundling has become the buzzword in the UPS segment these days. Several PC manufacturers have started bundling their PCs with UPSs. Compaq, for instance, bundles their PCs with APC UPSs. So do Vintron and
Wipro.

UPS manufacturers also tie-up with enterprise solution providers to reach out to newer clients. For example, TLL has tied up with Compaq and IBM. The UPSs sold are of TLL brand.

The advent of more and more MNCs has hit the local players in a big way. Pune had around 75 active local UPS manufacturers last year. But, their number has come down to 25 this year. Unable to survive fierce competition in the lower-end segment, some of them have switched over to new businesses like manufacturing inverters and server stabilizers.

MNCs have the most advanced technology, better service support and now they have equated their pricing with that of the local manufacturers too. To add to the woe of domestic players, MNCs who used to address only the high and medium segments, have started manufacturing lower-end UPS also. 

To compete with MNCs, domestic manufacturers have to produce UPSs of international quality. Says Harshesh, “Being competitive in India is not enough. Domestic manufacturers have to be competitive internationally.”

There is a lot of pressure on the indigenous manufacturers to compete with MNCs on technology, pricing and service support. The fact that Wipro, Microtek and others have made an impact in the market in recent times speaks for the determination of the Indian players. 

Saji M P in Mumbai with inputs from Sunila Paul in Bangalore and Mohit Chhabra in Delhi

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