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Indian Power Backup Industry

Overview
Market Size: 10000 crore INR Growth of 9% in 2012 over 2011

Power Backup
Expected CAGR of 10% from

Drivers
Power Deficit of 10-15 % on an average Economic Growth, Rise in purchasing power and disposable income Increase in demand from high growth industries such as IT Services and Telecom Demand from rural pockets, SMEs Real Estate Boom Gradual shrinking of unorganized market

2010-15

Gensets

Well-Organized, Competitive Market

UPS

Organized Sector Expected CAGR : 13%

Inverters

45% unorganized market Expected Growth Rate of 18%

Challenges
General lack of consumer awareness Competition from unorganized sector Low cost imports from China and Taiwan Increased sales of laptops (65% growth) over desktops (4% growth)
Generators expected to concede market share to inverters due to Improved operational efficiency Pollution-free, Environment-friendly, Noise-free Simplicity of operation Cost-Effectiveness

Fluctuating commodity prices

UPS and Inverter Market Overview


UPS Market Market Share (Company) APC 40% 16% 16% 13% Emerson Numeric Eaton DB Power 9% 19% 26% 11% Market Share (Capacity) 14% 21% Inverter Market 45% of total inverter sales from North India
Sales > 4 million per annum Primary Market Small Office Home Office (SOHO), SMEs Price Sensitive Industry Major Players Microtek, Sukam, Luminous

7% 8%

Others
<1 KVA 1-5 KVA 5-20 KVA 20-60 KVA 20% 20%

Market Share (Capacity) 15% 1400-1500 VA 800-850 VA 600-650 VA 200-250 VA $1,500.00 $1,000.00 $500.00 $0.00 $398.50 Market Value $1,400

45%

$1,000.00 $500.00 $0.00

Market Value $528.50

$828

2010

2016

2010

2016

Market Value (milion dollars)

Market Value (milion dollars)


(Source: Frost and Sullivan Power Industry Report, 2012)

Inverter Market Analysis


Need Analysis of Markets
Urban Households: Run electronic appliances including ACs, TVs etc shifting from earlier trend of inverter usage for only lights and fans Telecom Sector : Cell phone towers since operating costs of genset high Hotels and Restaurants : Emergency Lighting Apartments, Malls and Offices: Run Escalators and Lifts Hospitals: Running non-life supporting equipment

Target Market
Rural and Semi-Urban Centres (Tier II and III cities) Duration of power cuts and load shedding is higher

Genset Market Opportunity


Newer pollution control norms could force generator
suppliers to upgrade engine designs Huge opportunity for the Indian power inverter industry to deliver viable complementary products and solutions for generator sets in the lower power rating category

Rural Farmers: Run tubewells for irrigation Differentiating Factors for Manufacturers
Price After Sales Service Availability

Customer Preferences
High Backup Time Compact Systems Simple to operate

Performance Metrics
Idle Current Consumption Output Power Factor Total Harmonic Distortion

Challenges for Manufacturers


Price Pressure compete with unorganized players Inferior Quality Lack of technological innovations

Capacity
Efficiency

Solar Photo Voltaic (PV) Power Industry


Drivers India, tropical country with 300 sunny days in a year on an average Minimum operating cost Environment Friendly Challenges High setup costs and initial capital expenditure Lack of awareness
Bargaining Power of Suppliers: Low High number of suppliers and choice of technology Low Import Duties

1500 1000 500 0 20 2010

1000

2012

Solar Capacity (MW)


(Source: Ministry of New and Renewable Energy Report, 2012)

Triggers and Policy Initiatives National Solar Mission Policy 20 GW of solar power by 2022 as per JNNSM Increasing domestic photovoltaic production to 5
Threat of Substitutes: Low Few energy efficient and cost reducing alternatives

Entry Barriers: High High Capital Investment


Economies of Scale Extensive Marketing Capabilities Requirement

Intensity of Competition: Medium Generation Based Incentive Business Model High Exit Barriers

GW by 2020 according to JNNSM Achieving grid parity for solar power in 2020 according to JNNSM Funding of 20-25 percent of capital expenditure under the semiconductor policy Fund allocation for R&D activities and rural electrification programs

Decreasing cost of production, Bargaining Power of competitive Buyers: Medium international market

Key Enablers for Power Backup and Solar PV Industry


Cost Economics Demand Supply Gap

15 10 5 0 4
Imported Coal

14 8 8.58

Diesel Power

Natural Gas Solar Power

Cost per unit (INR) Synergy


Source: Load Generation Balance Report by Central Electricity Authority, 2011-12

Merger and Acquisitions in Indian Power Backup Sector

Acquirer
Emerson Schneider Legrand Reliance Luminous

Target
DB Power Electronics Ltd

Numeric Power Systems Su-Kam

Entry of MNCs indication of huge potential in sector Peak power requirement in summer months of March, April and May -> Seasonal Variation Solar Power Availability also highest during this period -> High Synergy

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