'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.