'The Indian market potential is mind-boggling'

When

Dan Squiller, president, power conversion, Invensys Power Systems, visited India

on a mid-January foggy Delhi night, he and fellow passengers of the airline took

about an hour to reach hotel Maurya Sheraton from the airport due to poor

visibility. Squiller’s insight of the UPS market in India was only marginally

better. He admitted that he and his counterparts in the United States perceived

the Indian UPS market as "closed and having high tariffs and poor

government policies". Next evening, when DATAQUEST met Squiller, he was

enthusiastic about the Indian market. In his words, "I am surprised that

the Indian market is so dynamic." Some excerpts:

On the potential of the UPS market in India…

Many of us in the US have a perception that the Indian market is closed

because of the high tariffs and irregular government policies. Looking at the

Indian growth rates, quite frankly, I was surprised by the vigorousness of the

economy and also pleased about the government policies, with tariffs being

brought progressively down and the market becoming more open.

On the market dynamics in developed countries…

The Chinese market is similar to the Indian one with lot of local

manufacturers. If you are a foreign player, you essentially need to have a

manufacturing base to be very competitive. Barring some parts of Europe like

Italy, it nearly resembles a market like the United States with just a dozen

players. Markets in both these continents are consolidating with mergers and

acquisitions.

On the dynamics of the UPS market…

At the lower end of the market, the actual product specification doesn’t

matter. Here, cost, channels and brand recognition are more important. However,

at the higher end of the market, it’s the product characteristics that make

the difference.

On Invensys’ plans in India…

We plan to move inside out. This implies developing manufacturing capacities

and capabilities in the country. Also, we are developing relationships with

companies with expertise in design. Though some product or component will be

imported, our aim is to have as much local content as possible. I think this is

the only way to win in a highly price-sensitive market like India.

On the gray market posing a serious threat…

Well, if SOHO sales are going to make the difference between success and

failure, then the gray market becomes an important consideration. Our aim in

India is to have a balance spread across various segments like healthcare,

datacom, government and others. This is in line with our global business plans

where more than half of our UPS revenues comes from ISP and datacoms.

Another important segment is the server market with about 25% of

revenue-generation capability. We intend to replicate the same in India. A big

advantage we see with the ‘Powerware’ or ‘Invensys’ brand is dealing

with tier-one customers like IBM, Compaq, Telco and other large enterprise

customers. They are very particular about whom they do business with.

On buying out Indian partner Crompton Greaves…

In the Indian market, good execution of strategy spells the difference

between winning and losing. So when you have a joint venture partner who does

not breathe, live and die UPS’, it slows things down. If you are a partner in

a JV, you have to pull your weight even if the other partner is good enough.

When we looked at the market seriously, the USP behind success in the UPS

martket is flawless execution. And this can be made possible only when you are

alone and not pulling or being pulled by partners.