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Margins come under pressure when the channel sells

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DQW Bureau
New Update





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What is your channel strategy?



90 percent of our business comes through the channel. We have segmented our

distribution network. One is the mark distribution, which is through the

distributors. Secondly, we appoint specialized partners who focus on corporate

customers and institutions. We have also tied-up with some re-distribution

partners.

We have a very focused approach for our channel. We currently have 10,000

active dealers across the country and would be looking at adding more in the

next fiscal and have various partner programs planned for the future. We also

want to provide our dealers with various skill sets in terms of training them

with respect to sales and even after-sales services.

With low margins being a constant threat to the channel, does Luminous

have any plans to counter this situation?



Margins come under pressure when the channel sells without much

value-addition. Partners do box pushing without providing any value-addition

along with it-be it in terms of educating customers about buying the right

product that suits their needs best; or without providing after-sales support.

Unless the customer is provided these extra incentives, sales as well as margins

would continue to shrink.

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Many vendors around the globe are opting for technologies like flywheel

mechanisms. Do you have plans to opt for similar technologies?



The flywheel technology can be applied only on large applications. But in

smaller applications, not many new innovative trends have been introduced that

could replace the existing practice of using lead in the batteries. However, the

soaring price of lead is really challenging and we have to work on that aspect

to reduce the cost along with improving the standards.

Sunil Bhalla



Director, Luminous Power Technologies

Do you have plans of involving your channel in offering service as well?



We have a strong team of 400 people that look exclusively at providing

after-sales support. We have our service centers in almost all cities across the

country with completely automated software system, which is capable of handling

the entire operation. We always look for partners with expertise in providing

efficient after-sales services, since we feel that they are closest to

customers.

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What are your predictions for Luminous, keeping in mind your USP?



We are an established player in the inverter market and have also been

facilitated with the Frost and Sullivan's Market Leadership Award in APAC.

We are the only player to have both, power electronics strength as well as

battery strength, apart from a strong R&D setup, good brand equity and

distribution network, supported by an after-sales network all over the country.

We are looking at organic as well as inorganic growth to add to our numbers

and have set a revenue target of Rs 1,000 crore by 2009. We are also looking at

acquisitions in domestic as well as international markets.

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The UPS market is unorganized and fragmented. How do you plan to tackle

this situation?



Local brands have always been there but their share in the market has

shrunk. Few established players dominate the high-end UPS market. The industry

is consolidating with small time players aligning with the biggies. Leading and

established players having good strength in electronics as well as batteries

would dominate the industry.

Are your factories in India manufacturing for domestic sales only?



Currently, we have two manufacturing units in Himachal Pradesh and soon plan

to open another one in the same region. The total capacity of factories is 1.8

million units per year. We also have a battery-manufacturing unit, which no

other power electronics manufacturer in India possess. Once our third factory

would be operational, we would be manufacturing our own VRLA batteries parallel

to SMF batteries. These units are used both for domestic consumption as well as

for export purpose.

NR Sethuraman


sethuramannr@cybermedia.co.in

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