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Nov, 03 2012

RECHARGING THE PROFIT-MAKING ABILITY

With erratic power supply becoming a matter of concern for the country, especially in the backdrop of the northern grid breakdown earlier this year, there is a huge demand for batteries and inverters. While big giants like Su-Kam and Microtek are now cate

 

THE widening gap between electricity generation and its demand has left almost every region of the country reeling from acute shortage of power with numerous households and workplaces opting for alternatives like inverters and batteries. The inverter industry was an unorganised sector initially; however, gradual modernisation and the advent of big players have eased the progress of the industry.

Kunwer Sachdev, Managing Director, Su-Kam, asserts: “Su-Kam has played a seminal role in consolidating and upgrading the inverter industry from the unorganised to the organised sector, thereby adding immense value to the industry as a whole. In the process it has established itself as a leader in product innovation, design sensibility and sales distribution network.  As a company we have followed the dealer and distributorship model and have tied up with online portals like Flipkart, Sulekha.com, etc. We have Su-Kam exclusive showrooms by the name of Su-Kam Shoppe, modern trade like Carrefour, Big Bazar, Pantaloons, Staples, etc.”

The inverter and battery industry is growing at a fast pace owing to the increasing power demand, feels Manoj Jain, Vice-President, Microtek. Elaborating on it he says: “At Microtek we follow the distributor and dealer network model and our brand is one of the largest manufacturers of power products. We have products like line interactive UPS, online UPS, and digital and sine wave inverters. Presently, the brand has eight manufacturing plants, each specialising in a different sphere of the industry, which has made it possible for Microtek to harness the world's latest technology.”

 

Swelling market with rich dividends
Big giants of the industry feel that the market-size of power solutions sector is vast owing to the widening gap between demand and supply. Elucidating it Kunwer Sachdev says: “The burgeoning demand for energy due to long and frequent power cuts has led to a revolution in power solutions, especially in the Indian inverter industry. The inverters, which were manufactured mostly in the unorganised sector in local markets earlier, have developed into a huge industry at present. Su-Kam delivers quality power solutions at competitive costs in this segment.”

While Manoj Jain says: “The market size cannot be measured as it is a need-based market depending on the fluctuating power availability scenario. However, there is a good potential as the power situation is not expected to improve in the near future and the market is bound to boom.”

The demand-supply gap of power touched 8.2 per cent earlier this year, according to the Central Electricity Authority (CEA). Thus, as per the information available with the CEA, total generation shortfall during 2011-12 was 8.5 per cent with demand touching   9, 37,199 million units and generation lagging behind at 8, 57,886 million units. The absolute shortfall was 79,313 million units during the year.

Kunwer Sachdev of Su-kam says that considering the fact that technology is changing at a fast pace, it's difficult to predict what may happen coming five years. However, he strongly believes there is a consensus that the number of components and the size of inverter would be reduced to a great extent. High frequency sine wave inverters and grid interactive inverters would be the next major and logical revolution in this segment. "The inverter industry has already developed high frequency sine wave inverters which have 1/5th of the weight of similar lower frequency products. These products are noiseless in operation, sleek in design, light weight and thus, easily portable. However, these products are sold in relatively lesser numbers due to the lack of awareness among people regarding their merits and also the presence of just a few players in the market. But these numbers are expected to increase as these products have numerous features and also due to reduction in the prices of semiconductors at a fast pace,” he adds.

 

Ripe prospects for potential traders
With the industry witnessing a boom, potential dealers and distributors have great prospects ahead. Says Manoj Jain: “As the power deficit is not likely to improve in the country in the coming years, this will be an optimum opportunity for dealers and distributors to join an inverter brand and sell it.”

Kunwer Sachdev, on the other hand, asserts: “The company has grown by 30-40% over the last few years and it's showing consistent growth. The companies are focusing on expansion in solar, battery and LED and also on expanding capacities. We have been doing really well in battery, solar products and in interactive systems such as generators plus inverters, which are also the biggest products for the market. The demand for power products, including batteries, inverters and other energy storage devices in the country are growing and we expect Su-Kam to be a billion dollar company in the next five years.”

Su-kam has a whole range of products divided into eight segments, namely home UPS and inverter; online UPS, line interactive UPS, solar battery and trolley, battery chargers and battery equalizers, and generator sets. The brand plans to focus on expanding the solar product portfolio. Elaborating on it Kunwer Sachdev, says, "We also have joint ventures with leading companies of the world like Kohler, a world-renowned brand in power systems. We have a tie-up for diesel and gas generator sets. We are also joining hands with Gamatronics, a world leader in UPS segment, to bring the futuristic and most innovative modular UPS technology to India. We are also expanding our export markets to Latin and Central America."

 

Training for sustaining biz
The leading brands in the power solutions industry have devised models to ensure the dealers and distributors are able to provide services to consumers. “Su-Kam provides after-sale services to customers. Regular dealer meets and training sessions are provided to maintain the communication channel between the two. There are a range of benefits and loyalty programmes for our channel partners. Our partners are offered privileges such as when we initiated the unique concept of web-based partnership programme, “Club 100”, for channel partners in the financial year starting from April 2010,” explains Kunwer Sachdev.

Likewise, Microtek helps its dealers. Says Manoj Jain: “We help and support our dealers and distributors, and hold regular training sessions for their benefit.”

 

Power solutions: Areas of concern
The brands have completely different opinions on the challenges being faced by the power solutions industry. On one hand Manoj Jain believes that the industry is much organised and they have never faced any major challenge. On the other hand Kunwer Sachdev feels that the sector was unorganised and the leading brands had made efforts in streamlining it. He says: “About 40-45% of the inverter market in the home segment is still dominated by unorganised players with local presence in various cities. The number of such small players is estimated to be over 250 in the country. They mainly offer low technology square wave inverters with low efficiency and waste significant amounts of power. Continuous improvements in inverter technology are very crucial for the organised inverter industry.”

He adds: “Sometime back inverters were nothing but all analog and then Su-Kam revolutionised this market by introducing state-of-the-art MOSFET and IGBT based technology. These inverters were driven by high-end digital signal processors and controllers and thus came the concept of digital inverters. The very presence of these high-end devices not only increased the efficiency of the systems but also reduced the design piracy to some extent. Now, inverters are more intelligent and battery-friendly.”

 

Expansion on the cards
For ideal growth of business the big brands eye for a perfect business model which facilitates smooth expansion. Most of the brands in the power solutions sector opt for the dealer-distributorship model.

Su-Kam has its presence in both domestic and international markets and is present across India through its extensive distributor and dealer network. A continuing focus on quality and strict adherence to international standards has enabled Su-Kam to export its products to various markets across Asia, Africa, the Middle East and the Pacific region. Currently, 25-30 % of the company's turnover comprise exports, and this is poised to rise exponentially in the years ahead.

Whereas Microtek has been growing consistently and has plans to expand at a fast pace in the near future.

For acquiring the dealership or distributorship of Su-Kam, the prerequisites are dependent on the area of business and the potential of the market. It also varies from tier A to tier B cities. Apart from the benefits given to all the dealers, Su-Kam Shoppe is an exclusive showroom of the brand's products where the dealer gets the benefits of complete branding and support for promotional activities from the company.

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