Power Backup Market ‐Power Backup Market IndiaFebruary 2009
Executive summary                Devices: Generators or Genset, battery‐based Inverters and Uninterrupted Power Supply (U...
•Market Overview•Segments Segments•Drivers & Challenges•Competition•Key Developments          POWER BACKUP MARKET – INDIA....
Power backup devices comprise generators, UPS and inverters  Device                    Description                        ...
Market segmentation: End‐user based                                           Power backups                      Home     ...
Market segmentation: Product based                                             Power Backups                Generators    ...
•Market Overview•Segments Segments•Drivers & Challenges•Competition•Key Developments          POWER BACKUP MARKET – INDIA....
Stationary generators, which are largely used in industrial and large commercial locations, are driving generator salesGen...
UPS market is the fast growing power back‐up market with demand for huge volumes UPS market overview                      ...
Inverter market serving households, shops and commercial  establishments is growing at 15% p.a Inverter market overview   ...
Quality manufacturing capability is making India an export hub for generators and invertersThriving export market         ...
•Market Overview•Segments Segments•Drivers & Challenges•Competition•Key Developments          POWER BACKUP MARKET – INDIA....
Challenges                                                               Rising input costs – battery; packaging          ...
India has largely been a power deficit country forcing enterprises and consumers to rely on power backup devicesHuge power...
Telecom operators and desktop user base are some of the key target segments for inverters and UPSDemand from telecom opera...
Rising input costs, primarily lead and resultant battery prices, is a concern are for inverter and UPS manufacturersIncrea...
The unorganized sector remain a challenge to the branded players owing to the lack of consumer awarenessCompetition from u...
•Market Overview•Segments Segments•Drivers & Challenges•Competition•Key Developments          POWER BACKUP MARKET – INDIA....
Unorganized sector comprising of assemblers dominates the market with few, large players in the organized sectorGenerator ...
Unorganized sector has a large share in the market although leading brands are competing on basis of quality and serviceUP...
Dominated by the unorganized sector but four leading companies competing on brand equity, quality, and serviceInverter com...
•Market Overview•Segments Segments•Drivers & Challenges•Competition•Key Developments          POWER BACKUP MARKET – INDIA....
Key developmentsDate         Key developments10‐Feb‐09    Consumer durable major Videocon announced its foray into the pow...
Private equity investments have taken place in the industry but are focused on leading, organized players with branded pro...
Thank you for your timeFor an updated report or any customized research requirements, please contact:Gaurav KumarE‐Mail: g...
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Market Research India - Power Backup Market in India 2009

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  • Never buy a product of APC. This is what I have learnt after purchasing two inverters. Two dealers/distributors in Hyderabad, Andhra Pradesh, India, told me that the company follows very unethical practices of not replacing the battery even within warranty period on flimsy and whimsical grounds. I am a victim of this fraud by APC. I have two years warranty as per the literature supplied at the time of purchase but they are now saying that it is only 18 months. I am a legal man but they are trying to cheat me. I am not going to leave so easily. I would file criminal cases of cheating against those reponsible if driven to the wall of not replacing the defective battery.

    Both the call centre and the Rainbow Solutions whose representatives came to check my battery have categorically told me that it is within the warranty period and that they would replace it within one week. Suddenly they told me that it is not within warranty.

    I strongly recommend that no person should buy APC products and I am collecting details of persons who were cheated by APC.

    APC should be taught a lesson and see that their company is closed in India.

    Viswanath
    Ex.Principal Secretary to Chief Justice
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Market Research India - Power Backup Market in India 2009

  1. 1. Power Backup Market ‐Power Backup Market IndiaFebruary 2009
  2. 2. Executive summary  Devices: Generators or Genset, battery‐based Inverters and Uninterrupted Power Supply (UPS)Introduction  End‐user segments: Commercial (generators, inverters, UPS) and Residential (inverters and UPS)  Wide range of products manufactured domestically  India developing as an exporter of generators and inverters India developing as an exporter of generators and inverters Domestic Exports Categories Market Size (2008) CAGR (2008‐12) Value (2007) CAGR (2004‐07) Generator G INR 57.5 bn INR 57 5 b 15% INR 2.8 bn INR 2 8 b 35% UPS INR 25 bn 19% N.A. N.A Inverter INR 23 bn 15% INR 14.9 bn 146% Drivers &  Drivers & Drivers ChallengesChallenges  Chronic power deficit; widening supply‐demand gap  Increasing cost of raw materials  Demand from telecom sector  Competition from unorganised sector  Growth in desktop user base  Lack of consumer awareness  Large unorganized sector across all three product segmentsCompetition  Generators: Few leading organized players; unorganized sector comprise of OEAs – In portable segment, Honda Siel and Birla Power are leaders while in the stationary segment Kirloskar,  Cummins, Greaves Cotton, and Mahindra Powerol are some of the major players  UPS: APC Numeric Power Microtek and Emerson account for 54% of low‐capacity UPS UPS: APC, Numeric Power, Microtek, and Emerson account for 54% of low capacity UPS  Inverters: Su‐Kam, Microtek, Luminous, Genus are leading companies POWER BACKUP MARKET – INDIA.PPT 2
  3. 3. •Market Overview•Segments Segments•Drivers & Challenges•Competition•Key Developments POWER BACKUP MARKET – INDIA.PPT 3
  4. 4. Power backup devices comprise generators, UPS and inverters Device Description End‐use Size (2008) Industrial and large residential  Combination of an electrical generator Generator / Generator / complexes while portable gen complexes while portable gen‐ and engine, which run on fuels like diesel  f INR 57 bn Gen‐set sets are used by smaller  or gasoline, to generate back up power establishments like shops  Battery‐based device providing  PC users like SME & SOHO  immediate power backup in case of  setups, shops,  home users,  UPS power failure. Typically used for IT  BPOs, retail chains, server  INR 25 bn equipment. rooms etc. Electric or electro‐mechanical device  SME & SOHO setups, shops,   Inverter converting DC (direct current) from  converting DC (direct current) from home users, BPOs, retail chains,  home users, BPOs, retail chains, INR 23 bn INR 23 bn batteries to AC (alternating current). hospitals etc. Generators are the largest product segment in India. Generators are the largest product segment in India POWER BACKUP MARKET – INDIA.PPT 4
  5. 5. Market segmentation: End‐user based Power backups Home Commercial Small UPS  UPS Generators Inverters (below 5 KVA)  Medium Mid‐endPortable generators Portable (5‐30 KVA) (2.5 KV and 3.5 KVA) Inverter Large High‐end Stationary (600–1400 VA) (30 KVA and above)  (above 5 KVA) POWER BACKUP MARKET – INDIA.PPT 5
  6. 6. Market segmentation: Product based Power Backups Generators  UPS Inverters Portable Small Low‐end Stationary y (0.5‐6KVA)  (0 5 6KVA) <5 KVA <5 KVA (600‐1,400 VA) (600 1 400 VA) Medium  Mid‐end 3‐15 KVA (5‐30 KVA)  2.5 KV and 3.5 KVA Large High‐end 15‐125 KVA >30 KVA  >5 KVA >125 KVA Battery‐based backup y p POWER BACKUP MARKET – INDIA.PPT 6
  7. 7. •Market Overview•Segments Segments•Drivers & Challenges•Competition•Key Developments POWER BACKUP MARKET – INDIA.PPT 7
  8. 8. Stationary generators, which are largely used in industrial and large commercial locations, are driving generator salesGenerator market overview  Market size & growth•Market size (2008): INR 57.5 bn INR bn•Expected growth rate : 15% p.a up to 2012 Expected growth rate : 15% p.a up to 2012  120 +15% 100.6•Generator sales are declining as inverters gain  100 preference since the latter are: 80 57.5  More efficient & cost effective 60  Pollution free Pollution‐free  40  Easy to operate and do not require fuel 20 0 2008 2012Product sub segmentsProduct sub‐segments Segment share Segment share•Stationary: Primarily run on diesel  Portable  <125 KVA used in large residential & commercial  10% complexes, hotels, hospitals  >125 KVA used in large core sector industries >125 KVA used in large core sector industries,  process industries•Portable (0.5‐6KVA) run on:   Petrol 90%  Diesel  Kerosene Stationary POWER BACKUP MARKET – INDIA.PPT 8
  9. 9. UPS market is the fast growing power back‐up market with demand for huge volumes UPS market overview Market size & growth•Estimated market size in 2008: INR 25 bn  INR bn Volume Unit mn•Estimated market volume in 2008:  Value 120 12 +19%  UPS below 5 kVA: 2.3 mn units  100 10  Overall market: 4.6 mn units 80 8•Sub‐5 KVA segment is the largest because of its  60 50.1 6 popularity in SME and SOHOs popularity in SME and SOHOs 40 25.0 25 0 4•Growth rate in value is slower than volume  20 2 suggesting a reduction in end‐user prices: 0 0 2008 2012  By value :19% p.a  By volume:25% p.a Segment share Segment share•Additionally, input costs are increasing due to  Large (>30 KVA) rise in battery prices, thereby putting margins  under pressure 25% 50% Small (<5 KVA) Medium (5-30 KVA) 25% POWER BACKUP MARKET – INDIA.PPT 9
  10. 10. Inverter market serving households, shops and commercial  establishments is growing at 15% p.a Inverter market overview Market size & growth •The market for inverters includes households,  INR bn Volume Unit mn shops, commercial establishments, other  120 Value 12 institutions 100 10 •Inverter market size (2008): INR 23 bn  80 8 •Growth rate: 15% p.a 60 +15% 6 40.2 •Square wave inverters command 85% of the  •Square wave inverters command 85% of the 40 4 23.0 market 20 2 0 0 2008 2012 Pricing of segments Pricing of segments Segment share Segment share INR Lower Estimate Low-end High-end 2,250 10,500 Upper Estimate 1400VA(600-1,400 VA) Mid-end 15% 5% 15% Mid-end 22,000 26,000 800VA 50% (2.5-3.5 KV) 35% 80% 600VA High-end Low-end Above 46,000 (>5KV) POWER BACKUP MARKET – INDIA.PPT 10
  11. 11. Quality manufacturing capability is making India an export hub for generators and invertersThriving export market Export Data – Generators & Inverters•Leading Indian manufacturers produce quality  Generators and innovative products on par with  Inverters international standards ‐69%•High quality and performance of products is  INR bn establishing India as a manufacturing base to  14.9 15 +146% cater to local demand as well as an export hub p•Exports have grown considerably since 2004,  especially for inverters 10•However, global economic conditions in 2008  +35% hit the export market in India hit the export market in India 6.5  Significant decline in inverter exports 5.5 5 4.6  Generator exports, however, nearly doubled +96% 2.6 2.8•Companies are investing in domestic  1.6 1.1 1.0 11 10 1.3 manufacturing capacity e.g.  Cummins invested  INR 200 mn, in a new export‐ 0 2004 2005 2006 2007 2008 oriented unit with capacity to produce 50,000  open and closed generator sets annually POWER BACKUP MARKET – INDIA.PPT 11
  12. 12. •Market Overview•Segments Segments•Drivers & Challenges•Competition•Key Developments POWER BACKUP MARKET – INDIA.PPT 12
  13. 13. Challenges Rising input costs – battery; packaging Competition from unorganised sectorDriversPower shortages and demand supply Power shortages and demand supply Lack of consumer awarenessgap in IndiaDemand from telecom operatorsDemand for UPS for desktopsDemand for UPS for desktops POWER BACKUP MARKET – INDIA.PPT 13
  14. 14. India has largely been a power deficit country forcing enterprises and consumers to rely on power backup devicesHuge power deficit Demand supply gap ~ 17%•India’s power deficit is about 10%, with a peak  Energy (BU) Average Energy Demand deficit of 17% leading to chronic power  800 Generation shortage 600•Most areas – urban and rural suffer from  varying degrees of power shortage 400  Sudden power cuts often lasting for hours or days Sudden power cuts often lasting for hours or days  200  Scheduled load shedding 0•Despite the massive investment in power  VI VII VIII IX X projects by government and private sector,  demand is forecast to outstrip supply demand is forecast to outstrip supply Future Demand Supply Scenario Future Demand‐Supply Scenario•Backup power will be crucial to support: Peak 315 255  Large manufacturing base and growing industrial  Base 197 output 120 147 101 B i Business continuity in small enterprises, offices  i i i ll i ffi 173 197 71 75 107 112 and commercial establishments such as retail Demand Supply Demand Supply Demand Supply 2007 2012 2017 As in the past, continuing shortage is the fundamental long‐term driver for backup  As in the past continuing shortage is the fundamental long‐term driver for backup power market in India. POWER BACKUP MARKET – INDIA.PPT 14
  15. 15. Telecom operators and desktop user base are some of the key target segments for inverters and UPSDemand from telecom operators New tower additions Indus Towers•The rapidly growing telecom sector is one of  RTIL the largest customer segments  Dec 08 Dec‐08 172,000 GTL•Generators and invertors are used at towers  5% BSNL 8% 5% and network management facilities with the  9% Bharti Infratel New 192,000 52% Others latter gaining preference 21%•Significant network expansion with new towers •Significant network expansion with new towers will drive demand for backup power Mar‐10 364,000  Indus Towers (owned by Bharti, Idea, and  Vodafone), and Reliance will lead expansionDemand for UPS from desktop salesDemand for UPS from desktop sales Desktop sales in India Desktop sales in India•Growth in desktop sales is a driver for UPS  mn units Total % sales in homes and offices Home share 6 5.5 5.5 40•Growing share of home desktops creates an  4.6 5 sizeable target market for sub‐5KVA UPS sizeable target market for sub 5KVA UPS 3.6 30 4•Desktop sales, however, appear to be  3 3.0 20 stagnating as notebook sales growth outstrips  2 that of desktops  10 1  Since 2003‐04 desktops grew by 16% p a vs Since 2003 04, desktops grew by 16% p.a. vs.  116% for notebooks 0 0 2003‐04 2004‐05 2005‐06 2006‐07 2007‐08 POWER BACKUP MARKET – INDIA.PPT 15
  16. 16. Rising input costs, primarily lead and resultant battery prices, is a concern are for inverter and UPS manufacturersIncreasing cost of battery and packaging LME Lead Prices ‐ Historical •Increase in battery prices is a major challenge  since lead‐acid batteries are used in UPS and  inverters•Lead constitutes almost 70% of the cost of a  Battery prices  battery  raised by 5‐10%  thrice in 2007•Dependent on imports which accounts for 40‐ Dependent on imports, which accounts for 40 50% of domestic lead demand•Lead prices quadrupled between 2004 and  2007•Although prices have come down to 2006  Al h h i h d 2006 levels, volatility still exists and will continue to  be a concern area•In addition, increase in packaging costs is also  pressuring input costs POWER BACKUP MARKET – INDIA.PPT 16
  17. 17. The unorganized sector remain a challenge to the branded players owing to the lack of consumer awarenessCompetition from unorganised sector Impact•India has a huge presence of unorganized manufacturers across the genset,  Inability to raise  inverter, and UPS product segments prices or charge  prices or charge•These players primarily compete on price by providing cheaper alternatives to  premium for  branded products better products•Organized manufacturers are therefore under pressure to maintain or reduce their  prices to effectively compete prices to effectively compete•However, quality and after‐sales service is a major issue with these products, which  in turn leads to dissatisfied customers and a loss of trust in the industry as a wholeLack of consumer awareness•Consumer knowledge and selection criteria for power backup products is poor Consumer •Consumers tend to overlook important technical details such as resistive loads, type  education is  of lubrication, safety features, and other parameters necessary to •This not only leads to people buying the wrong product for their needs but also in  Thi t l l d t l b i th d t f th i d b t l i grow home  grow home segment operation and maintenance issues•Overall, it has an impact on consumer perception on quality of local products POWER BACKUP MARKET – INDIA.PPT 17
  18. 18. •Market Overview•Segments Segments•Drivers & Challenges•Competition•Key Developments POWER BACKUP MARKET – INDIA.PPT 18
  19. 19. Unorganized sector comprising of assemblers dominates the market with few, large players in the organized sectorGenerator competition Portable Genset Sales (Organized)• Fierce competition from unorganized players, which  No. of Units Sold Birla compete on price, and Chinese imports 2006 6,635 Honda Siel 59,219 ,• In stationary generator segment: 12,612*  Leaders: Kirloskar, Cummins, Mahindra Powerol and  2007 59,150 Greaves Cotton  Others: Atlas Copco, Caterpillar, Wartsila 2008 5,797 62,227• Few organized players in portable gensets Few organized players in portable gensets  Honda Siel and Birla Power are market leaders More than 90% of organized market is accounted for Honda  Siel Power and Birla Power combined  Greaves Cotton entered the market in 2008 instead of  * 18‐month period ending 30 September 2007 supplying through assemblers• Unorganized segment comprises Original Equipment  Stationary Generators (Organized) Assemblers (OEAs) Units Sold (sales in INR mn)  Have exclusive understanding for sourcing engines from  Company manufacturers like Cummins, Kirloskar etc. 2007 2008  Buy engines and alternators for assembly and sale to  Kirloskar 9204 (2037.25) 10482 (2257.22) customers Cummins C i 7455 (1176 17) (1176.17) 8878 (1617 52) (1617.52)  Major OEAs are dominate their respective regions: – Mumbai: Powerica Mahindra Powerol 8781 (1751.90) 16295 (2147.48) – Delhi: Jakson, Sudhir and Bhaskar Greaves Cotton N.A. 1023* (N.A.) – Chennai: Power Electrics – Bangalore: DPK * Production figures; sales data unavailable POWER BACKUP MARKET – INDIA.PPT 19
  20. 20. Unorganized sector has a large share in the market although leading brands are competing on basis of quality and serviceUPS competition Organized vs. Unorganized•UPS production in India comprises more than  300 suppliers •Large unorganized sector  Competes primarily on price  Organized 55.4% 44.6% Unorganized  Predominant at the lower‐end of product spectrum•Organized players focus on selling:•Organized players focus on selling:  Performance  Reliability   After‐sales service Market Share‐ Organized (<5KVA) APC 18% Others 38% 18% Numeric 4% 10% 5% 8% Powercom P Microtek Mi t k Wep Emerson POWER BACKUP MARKET – INDIA.PPT 20
  21. 21. Dominated by the unorganized sector but four leading companies competing on brand equity, quality, and serviceInverter competition Organized vs. Unorganized•Entry of small local manufacturers and cheap Chinese products is fuelling competition•However, branded players are gaining market share quickly by: Organized 40% 60% Unorganized  Offering better after‐sales services  Constantly upgrading their products technologically•Other major players who entered this market are: Revenues of major players  D Link under brand name ‘Digi Power’ D‐Link Digi‐Power  Texonic instruments under brand name ICE Revenue (INR bn)  APC India Su-Kam 4.3 Microtek Mi t k 3.0 30 Luminous 2.5 Genus 0.4 04 POWER BACKUP MARKET – INDIA.PPT 21
  22. 22. •Market Overview•Segments Segments•Drivers & Challenges•Competition•Key Developments POWER BACKUP MARKET – INDIA.PPT 22
  23. 23. Key developmentsDate Key developments10‐Feb‐09 Consumer durable major Videocon announced its foray into the power backup equipment space with the launch of a range of devices, and expects to clock revenues of INR 10 bn by 20118‐Jan‐09 Luminous power technologies has launched a range of eco‐friendly inverters and batteries in Tamil Nadu. The new range of inverters can run air conditioners, refrigerators, microwaves, LCD TVs, coolers, water pumps, washing machine and all other heavy ‐duty home appliances1‐Dec‐08 Birla power solutions is in the process of expanding its product portfolio and has set a turnover target of INR 5 b b 2011 2012 Th company i making i t t f bn by 2011‐2012. The is ki investments i th i t t in the inverter b i t business, hi h high kv diesel gensets and farm equipment. It is planning to increase production capacity at its Dehradun unit for home UPS and inverters from 3,000 units to 5,000 units from last quarter of 2008‐200925‐Sept‐0825 Sept 08 Greaves cotton is planning to setup a new plant at an investment of INR 150 mn it will also mn, manufacture portable gensets (900 VA to 2800 VA) apart from petrol/kerosene pumpsets (1 hp to 5 hp)15‐Sept‐08 Mahindra powerol has launched its B100 bio‐diesel generator sets. The generator set uses electronic controller which ensures start and stop in diesel mode and switches to bio‐ diesel mode bio when the generator set is running. POWER BACKUP MARKET – INDIA.PPT 23
  24. 24. Private equity investments have taken place in the industry but are focused on leading, organized players with branded products Private Equity firm  Deal descriptionCLSA Capital Partners Funding of INR 1 bn in Delhi‐based inverter and battery maker Luminous power  technologiesReliance Capital Sponsored a INR 10 bn private equity fund to power equipment company Su‐Kam (they  f ( make power inverters, UPS and batteries)Goldman Sachs and General  Invested INR 3.75 bn for 10‐ 15% stake in Gurgaon‐based genset manufacturer Sudhir Electric GensetsStandard Chartered Private  Invested a total of approx INR 2.5 bn for a 11% stake in Powerica, one of the largest Equity makers of gensets in India POWER BACKUP MARKET – INDIA.PPT 24
  25. 25. Thank you for your timeFor an updated report or any customized research requirements, please contact:Gaurav KumarE‐Mail: gaurav.kumar@netscribes.com; sales@netscribes.comPhone: +91 33 4064 6214; +91 983 030 9715Netscribes’ Services:RESEARCH & ANALYTICSRESEARCH & ANALYTICS MARKET INTELLIGENCE MARKET INTELLIGENCE CONTENT SOLUTIONS CONTENT SOLUTIONSInvestment Research Market Monitoring & Competitive  Social Media MarketingEnterprise Market Research Intelligence Marcom Support ServicesPatent Research Sales & Prospect Intelligence Content Management ServicesSyndicated Market ResearchS di t d M k t R h Listening & Media Monitoring Li t i & M di M it i Book Packaging Services B kP k i S i Brand SurveillanceFor further details, visit us at: www.netscribes.comAbout NetscribesNetscribes supports the organic and inorganic growth objectives of global corporations through a combination of Enterprise Market, Investment & Patent Research, Market & Sales Intelligence, Social Media Monitoring & Management and Custom Publishing solution.Disclaimer: This report is published for general information only. High standards have been used for preparing this market research report; Disclaimer: This report is published for general information only High standards have been used for preparing this market research report;however, Netscribes, Inc. or “Netscribes” is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes and prior permission is required for guidelines on reproduction. POWER BACKUP MARKET – INDIA.PPT 25

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