Emerson price hike rattles channels

The price rise of Emerson's UPSs by 5-7% for the ongoing quarter of FY13 has created lot of dissatisfaction amongst the partner community, with the instances where certain partners have even started dealing in other Indian power vendors.

When asked by the The DQ Week to clarify the price rise in this April, Ankesh Kumar, director, channel products and marketing at Emerson Network Power India said, "Yes, we agree that Emerson has raised its price on the UPS category by 5-7 % this April, which can be attributed to the varying market conditions in terms of rupee depreciation against dollar value. In fact, the increase in the excise duty by 2% post the Union budget has definitely prompted us to take an action, as it was seriously affecting our gross margins. Hence, we have decided to revise our price hike structure in a way that suits our partners, else we could have hiked it to 15% as per the unstable tax and the market scenario."

He also added that the new price is valid from April to June this year. And post June, Emerson will think over of further revising it depending on the stability of the market. It had also raised its product prices by flat 5% in February 2012.

Further when asked about this frequent price rise and how it will impact Emerson's channel partners, Kumar informed, "We have not raised the prices of our UPS to burden our channel partners. In fact, we are highly committed to our channel partners and we had not increased the products' prices in the last year."

However, the channel partners do not agree to the Emerson's 'highly committed channel' strategies.

On the request of anonymity, one of the oldest partners who is working with Emerson since 19-20 years said, "Emerson's frequent price hike structure has led to our business dip of about 30% for the sale of Emerson's products. Our business on Emerson's products is going down as compared to that of the products being sold 3-4 years ago. We are looking forward to a tie-up with a prospective power company, instead of slowing down our business with Emerson."

The concerned partner also added that Emerson has gone down on its channel enablement and training program for the new partners in the power segment.

Holding onto a similar conviction, Abhijeet Katre of SAS Powertech, said, "The price rise is not helping our business to grow, though the product quality of Emerson products rules the market. It should help the partners in getting the right share of margins in meeting the sale targets and should aggressively start focusing on training the partners from non-metro regions."

Also, adding to it, Surjeet Kumar, CTO of MM9 Information Technologies, said, "Although Emerson can be rated excellent in their product strategies, but it is absolutely a poor partner-driven company. Their UPS distribution to the channel partners is very uneven, which can further cause a problem to us to reach target and generate a good profit margin from Emerson's UPSs. It is not even concerned about the losses that their partners will incur."

Further, clarifying on the channel enablement issues put down by the partners, Kumar explained, "With Emerson's global acquisition of Chloride (who had earlier acquired DB Power), we have ensured a proper channel integration wherein there will be no channel conflicts regarding the strategies. And regarding the frequency of the training programs, we conducted a training program in 2-3 months ago for our channel partners in 8-10 cities. We also have an online portal where all our partners even from the upcountry regions can login and share their issues with us. "