India has largely been a power deficient country, with the peak demand hugely mismatching the power shortage. Though power generation has almost doubled in the last decade, it has not kept pace with the growth in demand. This power crisis in the country is, however, helping the growth of the UPS market. With the device offering foolproof protection against sudden power cuts and voltage fluctuations, industries are looking at it as an answer to their backup power woes giving them adequate time to save files and close down the process.
By Srabani Sen
Tuesday, June 16, 2009: The government sector and educational institutions have their own sets of challenges when it comes to coping with the power crisis across the nation. No industry, office or institution can afford to cope with the power crises as all modern offices are going in for automation.
Growth driven by PC sales
The drive for computerisation is an ongoing one—according to MAIT, India presently has 15 million computers and the target being 75 million computers by 2010—and with the power supply situation being a sore point, the need for large number of UPS systems is on the rise. “Therefore, currently, the UPS segment is the fastest growing segment as it is driven by the level of computerisation happening in the country. An exponential rise in PC sales has, in turn, led to the increase in UPS sales,” explains Mahadev Swami, manager, Kirloskar Electric Company Ltd.
Government and education sectors have also realised the need for having a computer literate workforce and student community and, hence, the state and central governments as well as educational institutes, have been bullish on spreading the use of computers across government organisations and educational institutions in a big way with the goal of lowering costs, improving efficiency and providing better services to citizens. Only ten years ago, computers were non-existent in any government department and obtaining any information from any department was a lengthy bureaucratic nightmare. Today, most of the work is done on computers. Now, even the land registration department of the Finance Ministry hands over an affidavit for a property within a few minutes—a computer printout is taken out in a jiffy.
“The upsurge experienced by the the government segment has been responsible for the rapid growthinUPS consumption over the pastyears and it will keep growing for the next five years. The demand ismuchhigherthantheprivatesector,”opines RishiKwatra,seniormarketingmanager,Autometer Ltd. More than 40 per cent of Autometer Alliance’s revenue last year is from the government sector, which is much more than the previous year.
Amongst the verticals dominating the UPS market, government, ITES, BPO and education segments are witnessing a substantial increase in computers, printers, scanners, etc, thereby causing a significant growth of the UPS category. “The government sector has finally entered the 21st century as the Indian government is on the way to becoming a fully automated mechanism,” explains Suresh KS senior manager, process control, Arvi Systems and Controls Pvt Ltd. “We mostly supply to government sector through OEMs. A good part of our revenue is owed to the government segment.”
Huge business potential
With the rise in demand for UPS systems for servers and protection of computers across the government sector, power electronic firms are also diverting their focus towards these sectors. “Since last year, we are more focused on government and educational sectors and did good business in these sectors,” states Sunil Jain, vice-president, public relations, Microtek International Pvt Ltd.
According to R Chellappan, managing director, Numeric Power Systems Ltd. “The government sector is a gold mine waiting to be tapped. Educational institutes also have good budget for IT spends. The exponential growth figures have made these two segments important focus areas for vendors.” Numeric is a major supplier of UPS to government and educational segments and did good business of Rs 4 billion last year.
e-Governance plan to give rise to UPS
- Government plans to computerise nearly 250,000 Panchayati Raj Institutions for around Rs 54 billion over the next three years (from 2008) as a part of the National e-Governnance Plan (NeGP). The amount will be used for computers and connectivity for two-thirds of the panchayats, while the remaining are expected to have the infrastructure via initiatives of the state government.
- As of February 2009, National e-governance Project (NeGP), which envisions setting up 100,000 common service centres (CSC), located in 600,000 villages across the country are on. It aims to bridge the digital divide and make government-to-citizen services more accessible and citizen-friendly. As of October 2008, a total of 20,558 CSCs have been rolled out in 14 states.
Central Mission Mode Projects
- Central excise & customs
- Income Tax
- National citizen database
- Passport, immigration & visa
State Mission Mode Projects
- Commercial taxes
- Employment exchange
- Land records
- Property registration
- Road transport
Integrated Mission Mode Projects
- Electronic data interchange for trade
- National E-governance service delivery gateway
In the Educational Sector
In February 2009 government announced the ‘Sakshat’ programme to provide computers for all students. The target is to make it available in six months time
The other side of the coin
Therefore, we see that the government departments call for good business potential for UPS and along with it other accessories like batteries for UPS as well. But when it comes to the procurement procedure, many dread the tedious process. Companies like Kirloskar and Uniline feel that the procedure to procure orders from the government depertments is quite time-consuming as it takes 6-8 months and sometimes even more to pass through all stages of the process. “Payments also get blocked for a long period of time,” says Swami.
According to Bansal, “It is not an easy task to sell to government departments. Tenders are taken out throughout the year and quotations are invited from the firms. One has to go through so many procedures before the tender and after it—long procedure through inspection agency, then material receipt, payment follow up, guarantee card procedure, manual explaining process and many more. Even payment collection period is very long compared to the private sector.”
UPS battery market to grow as well
With the demand of UPS rising in the government sector and educational institutes, the demand for UPS battery is also expected to rise. “A large chunk of less than 1kVA & 15kVA UPS is imported to India from China and Taiwan. Less than 1kVA UPS has an in-built battery. The foreign UPS manufacturers selling in India in less than 1kVA power range, source batteries from countries like China and Taiwan,” says Anindya Das, Industry Analyst, Energy and Power Systems Practice, Frost & Sullivan, South Asia and Middle East.
For other power ranges, that is, from 1kVA onwards, battery manufacturers would benefit due to increase in demand as the batteries are sourced locally. The replacement market for battery used in UPS is also huge.
“The market in India for critical UPS components like IGBT’s, IC’s, power capacitors etc is neither large nor a fast growing one, as majority of the critical components for UPS across all power ranges are imported. The component manufacturers will, therefore, not witness much demand as compared to a battery manufacturer,” he adds.
Departments that call fOr UPS usage
“The year 2009 is expected to witness 2-5 per cent growth rate for government and educational sectors. Government spend in the latter half of the year may speed up the growth. Demand for UPS is expected to rise as several nationalised banks have embarked on programmes to intensify penetration of ATM systems in urban and semi-urban cities. From mid 2010 onwards both the sectors are expected to witness a growth rate of 10-12 per cent. The UPS sales to the educational sector is also expected to witness significant growth through several state sponsored and NGO programmes for computerisation of schools in semi-urban and rural districts,” says Anindya Das, Industry Analyst, Energy and Power Systems Practice, Frost & Sullivan, South Asia and Middle East. The demand of UPS is high in the following departments:
|Departments||Types of UPS|
|Defence||Generally more than 5kVA UPS (5.1-50kVA) are sold apart from less than 1kVA & 1-5kVA UPS. Some defence application/instrument also require more than 50kVA UPS|
|Government offices State and Central govt & PSU||Apart from less than 1kVA & 1-5kVA which are the most commonly used UPS, UPS in the range of 5.1-20kVA are also sold to government research laboratories and institutes. More than 20kVA power range UPS constitutes a major chunk of the requirement apart from the less than 1kVA, 1-5kVA & 5.1-20kVA range|
|Nationalised banks||The use of UPS in banks have increased in the last few years due to the criticality and the need for uninterrupted power for the various banking applications/ operations. Apart from less than 1kVA & 1-5kVA UPS, banks also use UPS in the 5.1-20 and 20.1-50kVA power range. UPS for data centres for nationalised banks are not taken into consideration in this sector.|
|Educational institutions||Less than 1kVA and 1-5kVA are the most prominent ranges which are sold in educational institutions.|
|Government aided schools & colleges||Less than 1kVA & 1-5kVA are the most prominent power ranges|
Chellappan, however, believes that the procedure of supplying to government departments is no longer tedious as it has been streamlined properly. “Government departments go through OEMs like Dell, HCL, HP, etc. These companies have a single point tender for computers, soft-wares, hardwares and the entire power system. These OEMs further have partners like Digicom, Gemini Communications, Bar Electronics, which are quite well structured and streamlined.” One can also go through Directorate General of Supplies & Disposals (DGSND) contract or the Government of India rate contract. “But supplying to private sector is simpler than the government sector as it entails many legal formalities. But despite all these hassles, payments are secure. Whereas in private sector payment is tardy,” points out Kwatra. Players are also dissatisfied as price of the product is given preference over quality. “The government’s inclination is always for the lowest bid and not much importance is attached to quality. Also, the centralised decision-making process is the blockage in fast procedure,” clarifies Suresh.
In today’s world, IT has become an essential part of educational institutions as well, giving rise to a huge market for UPS, UPS battery and components for UPS. Inadequate power supplies resulted in situations where computers sit idle for extended periods of time. UPS systems are, therefore, in great demand in schools, colleges and other educational institutes across the country to save computers from sudden power cuts and ensure continuous operation. “Educational institutes, particularly B Tech institutes, follow the norms of All India Council for Technical Education (AICTE) and are required to have standard computer labs to meet its norms. This new system calls for spending in computers and server network along with UPS systems as well,” construes Chellappan. Last year Numeric sold Rs 6 billion worth of UPS in educational institutes across the country, particularly in Punjab, Uttar Pradesh and Bihar, besides Chennai. It had supplied more than 0.1 million online and offline UPS to schools and colleges.
According to the Planning Commission, the Indian government is committed to provide computers in all government schools by the end of the Eleventh Five Year Plan (2007-2012). There are approximately 80,000 government schools spread across India. Some 20,000 schools have already set up computer laboratories, while the remaining are targeting to provide computing access to middle and higher secondary students by 2012. Andhra Pradesh is the first state to provide computing access to 5,000 government schools. The state is installing a total of 50,000 computers in these schools. This indicates a steady growth of UPS, battery for UPS and component markets and is expected to surge ahead over the next five years or till the power situation improves.
“The UPS market is poised for rapid growth, thanks to the number of PCs doubling in the next couple of years,” expounds Jain. Microtek has changed its strategy and diverted its focus to education sector besides others as “the education segment is playing a big role in helping the market for UPS to surge ahead.”
Uniline sold 10,000 UPS to IIM Indore, Delhi University colleges, Guru Govind Singh University, IIT Delhi, Kanpur, Guwahati, NIIT, Delhi College of Engineering, Netaji Subhash Institute of Technology and many others, deriving 7 per cent of its revenue from this segment. “The UPS market offers tremendous opportunity for both multinational and Indian manufacturers to introduce improved products at competitive prices with excellent after sales service,” says Bansal.
However, Suresh is of the opinion that the market for UPS driven by computer needs is picking up slowly in schols and colleges. “Demand for UPS in educational institutes is not yet very high. There is still a huge gap between demand and supply of UPS in both public and private institutes,” he says. Arvi Systems and Controls did a 20 per cent business in this sector last year. “While government institutes go by the lowest price quoted by companies, private ones consider the quality of the product,” he adds.
Kirloskar supplied online UPS to schools and colleges, earning 15 per cent revenue. “The market for UPS will grow over the years as computer labs require protection and power backup. Schools and colleges also need UPS to run small equipment as well. Therefore, we expect to double our business next year,” declares Swami.
Nuline did a business of Rs 1 million last year and hopes to double it this year. “While we procure orders through tenders in government institutes, we do direct marketing in private institutions. Price is not a criteria for the private schools and colleges if the product is good and give good backup,” states Goel.
Even though the government and education segments are fast realising the importance of network uptime, they continue to remain price conscious causing branded UPS players to design and offer the best possible power conditioning equipment by keeping the cost factor in mind.
“Seeing the influence of the segment on the market we offer different UPS models to suit the requirements of these enterprises,” explains Amit Kumar Yadav of Su-Kam.
“Enterprise customers have moved to higher capacity UPS as their loads have increased. A typical example is the shift from 3 to 5 KVA units in many institutes,” says Arun Ghosh, managing director, Hita Technology Pvt Ltd.
Optimum backup time is seen to be the second-most important feature that is considered by the maximum number of governments departments and educational institutes before purchase followed by brand name, after sales service, pricing and reliability. Commenting on the customer’s mindset, Yogesh Dua, director, upsINVERTER. com, states, “Our UPS meets this parameter very well—during the backup time users can finish their work, close their files and shut down their PCs during a power cut.”
Reputation of the vendor in the market as well as after sales service play a key role. Bansal adds, “The brand name is a primary factor since brands stand for a certain level of assured quality as well as service. Today customers are looking at immediate, 24/7 support and it’s important to assure them that if anything happens to the UPS it will be taken care of immediately.”
So, manufacturers and OEMs, if you are still not sure where to expand your business, this this is no less indication. Better late than never! •
Factors driving demand for UPS
• Huge potential due to power shortage and power cuts and Need for reliable power protection solutions
- Demand for higher backup time
- Multiplication of small and medium enterprises, especially in small towns and cities
- Ever-ascending sales of PCs and servers
- Largescale computerisation programmes
Better late than never
Su-Kam, which was earlier concentrating on the home segment, has diverted its attention to government and educational sectors and wants to foray into these on a largescale as these sectors, particularly the government sector, are spending massively on IT. This year, Su-Kam did 4 per cent business in the government sector. The government is also spending freely on computerisation projects in rural areas.
Compared to last year, Microtek International is more centered on government and educational sectors and did good business in them. A leading manufacturer of power electronics equipment, Microtek is popular for its products and claims to meet all government parameters.
Hita is a new entrant in these sectors and did 20 per cent business in the government and 10 per cent in the education sector. Hita products have special features due to which, the company finds it difficult to abate prices. However, since government departments give orders to those players who quote the least, Hita has now changed its strategies in order to enter this segment because it is the only sector which has not been weakened by recession.
At the moment, upsINVERTER‘s business relations with government departments are negligible. There is a greater demand for online UPS in this sector, which, at the moment they do not manufacture. However, the company has realised the need to enter this segment and has decided to produce online UPS systems by next year. Also, as the government sector desires low-cost products, they are making an effort to develop economical products. They are already providing to the education sector and their revenue from educational institutes is 10 per cent now.
Luminous has also ventured into these segments lately. It has done business of 15 per cent in the government sector and 5 per cent in educational institutes. Luminous proffers enterprise-wide power and connectivity solutions to corporate offices, telecommunication service providers, data centres, healthcare centres, process industries and now hopes to expand in the government and education segments as well.
“We had supplied 75,000 UPS to government departments last year. These were mostly single phased UPS—50 per cent online and 50 per cent offline,” adds Chellappan.
“This year is an important year for Numeric as a number of e-government and automation projects are coming up in various government sectors, particularly in the revenue, finance and immigration departments and food corporations.” Numeric expects to do a business of Rs 5 billion this year in single phase segment in the government sector and about Rs 10 billion in three phase segment.
Kirloskar also supplies UPS to government departments directly as well as through dealers. Last financial year, it derived 50 per cent of its revenue from the government sector by selling online UPS.
According to Kapil Goel, CEO, Nuline, “The demand for UPS is very heavy in the railways. Here UPS is required not only for protection of computers but also for railway machineries.”
“Every year, the government spends huge amount on computerisation projects in departments like healthcare and education. Recently its computerisatons projects are on in police stations and courts across the country,” informs R K Bansal, managing director, Uniline. “This year, the demand for UPS in public sector will be higher by about 15 per cent. Usually, purchasing in the public sector is done in the last quarter,” he adds. About 50 per cent of Uniline’s revenue through UPS sales comes from the government sector. Last year Uniline sold 30,000 UPS to the government sector through OEMs as well as direct marketing.
Recently, about 226 AIR stations and offices were computerised at an estimated cost of Rs 43.1 million in one year. Computerisation in post offices involved an expenditure of Rs 6.28 billion across the country in the first phase. In another phase the government approved computerisation of postal services at a cost of Rs 62.90 million. State governments are also going in for computerisation, slowly but surely.
Even villagers now understand the benefits of computerisation and automation. The village of Bellandur (18 km from Bengaluru), for example, is credited with being the first gram panchayat in the country to introduce e-governance. And this is possible through a centralised UPS system, which controls automation efficiently.
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine