Powerware sees uniterrupted growth

Powerware International, the Indian subsidiary of UK-based Invensys PLC’s $2.8 billion power solutions division, has emerged one of the key players in both the high-end and lower end of the power backup market. Shipra Arora profiles the company’s strategy to capture greater marketshare in India

Considering the huge potential in the SME segment, Powerware set up a specialised channel exclusively for this market in order to tap it more effectively, says deepak sharma

While power infrastructure in India has been one of the fundamental causes of concern when it comes to growth of Indian industry, it has ironically thrown open lucrative opportunities for the power backup industry. This has led many an MNC flocking to Indian shores to partake of the bounty. Powerware International, the Indian subsidiary of UK-based Invensys PLC’s $2.8 billion power solutions division is one such company among the many. Powerware has had many firsts to its credit. Some of the technologies introduced by Powerware to India and patented by Invensys Powerware include hot sync parallel technology, advanced battery management and load segmentation. Powerware has also been the first one to introduce digital signal processing (DSP) technology in the country.

Laying the cornerstone of its presence in India the company bought out its JV partner in December 2000. With its power protection and management solutions ranging from uninterrupted power supply (UPS), DC power solutions to power management software and accessories and services providing multiple level protection for desktop, data centre and specialised communications equipment applications, Powerware has emerged one of the key players in both the high-end and lower end of the power back-up market. The company offers a whole range of UPS systems with power ratings ranging from 550 VA to 5000 KVA. While on the one hand the company is a part of the industry group comprising Siemens, ABB, Emerson, Schneider, Honeywell and APC, on the other hand the company is also competing with local players. This strategy has done wonders for Powerware, which in less than two-and-a-half years of operations has grown to be a Rs 40 crore company, spanning eight offices in Delhi, Bombay, Bangalore, Pune, Chennai, Hyderabad, Calcutta and Aurangabad.

Story so far
According to Deepak Sharma, Powerware Internat-ional’s managing director, with the buy-out in December 2000, it was time for the company to start restructuring. The task on hand was to set up the head office in Delhi, build the team and service existing customers better. Building on this foundation, the company created a suitable product portfolio coupled with adequate awareness for the brand and a distribution network to provide adequate reach. Launching a slew of products within the first year of operations, the company also initiated the process of building a presence for three-phase UPS systems in the Northern region. In 2001-2002, the company continued to concentrate on three-phase UPS systems, the emphasis being on strengthening its presence in the Southern and Western regions. It launched a series of marketing and brand-building exercises to create brand visibility and awareness.

One of the key milestones for the company has been the setting up of its local manufacturing facilities in Gurgaon and Chandigarh. The local manufacturing initiative was driven by the need to address the product gap in the Indian market. This has enabled the company to deliver product offerings more suitably designed to Indian market requirements, apart from driving cost efficiencies. Some of the product features well suited to Indian conditions include widest input frequency range, lower genset capacity and lower floor space requirement and low acoustic noise. Presently, Powerware has achieved almost 20-30 percent of localisation across the UPS product line, which it plans to increase to approximately 60-70 percent by next year. Building greater competencies within the country, the company is planning to move up the value chain to indicate its commitment to the Indian market, says Sharma.

During 2001-2002 the company developed local products for the SOHO market. During this time Powerware launched 500 VA power UPS systems targeting the SME and SOHO segment. The 500 VA model was a potent move by the company towards strengthening its presence at the lower end of the spectrum. According to Sharma, there has been a visible shift in the UPS industry from the unorganised to the organised sector and the company is quite optimistic of capturing the wave in favour of brands. The company’s positioning at the lower end of the market has been built around cost-effectiveness with international quality. In addition to this, the company continued with its emphasis on the high-end as well with the launch of its higher capacity product lines targeted for mission-critical data centres, server farms, communications and broadcasting applications as well as industrial controls.

Strategy
According to Sharma, the fundamental drive behind all the company’s strategies is the variable cost model. It has, in fact, outsourced most of its activities like manufacturing, distribution, service and marketing services to third-parties. This has helped in keeping all its checks and balances right. Powerware’s prudent financial acumen is evident from the fact that it has been operating without making a loss.

Channel strategy
The channel forms an integral part in establishing Powerware’s presence in the Indian market. While the company started off with a national distribution model, last year it started re-aligning its channel strategy to incorporate a hybrid model comprising both a national and regional distribution model. According to Sharma, the need for setting up a hybrid model was to have a wider reach and stronger reseller relationships, which is effectively provided by the regional distribution model. This is also in line with the company’s strategy of strengthening its presence in the B & C class cities. The regional distributors (RDs) will be basically supplementing the national distributor by providing an option to resellers to buy from either of them. Currently, the company has almost 18-20 regional distributors with around 800 resellers in the next tier. These resellers will largely drive the lower end of the market. While the low-end systems ranging up to 1.5 KVA are being taken care of by the RDs backed by Nebula, for the mid- and high-end systems ranging from 2 KVA to 60 KVA UPS systems the company is relying on its network of power solution partners (PSPs), which it initiated last year. While the RDs primarily push boxes to resellers down the line, PSPs are essentially total power solution providers. Apart from selling the product this channel will also be providing value-adds in terms of providing cabling, understanding and studying the power needs of customers and providing solutions accordingly. The PSPs are largely IT, office-automation and air conditioner resellers, based especially in the B & C class cities as it intends to tap the rising demand for UPS in the non-metros. “Considering the huge potential in the SME segment we realised the need for addressing this market in a more concentrated manner. Hence, the setting up of a specialised channel exclusively for this market in order to tap it more effectively,” he explains. This strategy is expected to fuel Powerware’s growth in the next financial year. In addition to this the company also has a 10-people direct sales force to manage large clients. The regional distribution and PSP strategy initiated last year is expected to fuel the company’s growth in 2003-2004.

Product strategy
The company’s UPS product line is broadly categorised into line interactive and online UPS. Within the online segment its offerings start with the smaller 1-2 KVA segment, moving to up to the 15 KVA segment, followed by the up to 60 KVA capacity UPS. The online segment comprises a majority of Powerware’s revenues. Online UPS contributes to almost 90 percent of the company’s total UPS business. This, however, might go down to an 80 percent share as the line interactive range is slated to grow to 20 percent with new offerings slated for a launch in this segment. The major focus, however, will continue to be online as that is where the value-business lies.

Last year, the company re-aligned its product strategy in line with the changing trends in UPS market, which means that the company will be creating a differentiation along the lines of feature-rich products/offerings and value offerings to provide more choices for the customer. This will enable Powerware to cater to the growing price-conscious market in the prevailing tough market conditions. “The emphasis of our strategy earlier was on delivering a high level of features across all our UPS product lines, whether high-end or low-end, which tended to make them costlier. With the new strategy the idea is to reduce unnecessary feature complexities for lower end products, to be able to deliver them at lower price points,” explains Sharma. In this regard the company plans to launch more and more competitively priced products in the market in order to up the ante not only against branded but also unbranded products in the market. However, the prime positioning of products is in line with quality, reliability and technology. Continuing its spirit of constant innovation and upgradation—on an average the company launches 7-8 new models every year—Powerware will be launching 7-8 new models within the UPS product line in 2003-2004, with the focus being more on local manufacturing.

Services
The effective product line is backed by a responsive service organisation. Over the last two years, Powerware has invested around $2 million to put together a service support network through franchisees in 40 locations across the country. The three-tier service network comprises PSPs, independent service providers and Powerware’s local branch offices.

Last year the company upgraded its activities on the customer service front by initiating an online CRM initiative wherein the company migrated its entire service management system to the Net in order to streamline the after-sales support service to its customers. It is covering all its service partners spread across 52 locations under this initiative. “The strategy is to develop efficiencies whereby we can retain our customers as well as maintain operational efficiencies,” explains Sharma. The in-house developed solution allows the Powerware customers to register on the company’s website www.powerwareindia.com and enter their service request. Thereafter the service need is directed to the concerned Powerware representative on the basis of the various factors like location, type of request, service competencies in a particular area by the system. The request is automatically sent to the concerned service partner after which the system keeps track of request with regulated escalation to top management in case of non-redressal. The system helps in keeping track of the performance of its service network, how long it takes for the individual service partner to resolve complaints and develop MIS on repeated complaints, etc. This is being further upgraded to higher level of efficiency whereby escalations and alerts that are currently available on e-mail will also be available through SMS.

Market strategy
As far as market segments are concerned Powerware has outlined telecom as the major focus area followed by the industrial, government, health and ITES verticals. Telecom comprises almost 50 percent of the company’s UPS revenues with industrial segment contributing at 15-20 percent and health and ITES segment together contributing around 20-25 percent of the revenues. In 2001-2002, Powerware had built a whole product suite, including UPS and DC Power Systems for the telecom industry.

Future plans
The expansion will be on the lines of doubling its PSP population while growing the RD network as well. By the year-end the company will also be capitalising on the telecom customer base already built base the company will further increase its telecom market base while growing the industrial market segment as well. In addition to this Powerware will also be eyeing the exports market targeting Sri Lanka, Bangladesh and Nepal more aggressively.