MGE Systems to set up manufacturing base in India

By Balaka Baruah Aggarwal

NEW DELHI: The French UPS manufacturer MGE Systems will be setting up a manufacturing unit in India by April 2000. With a worldwide turnover of $450 million, MGE has two units in France and one each in the US and China. The fifth unit will manufacture mid-range UPS and is likely to come up in Pondicherry, owing to tax advantages. These mid range UPS manufactured to address specific needs of the Indian market will also be exported to other SAARC countries. The finer details of the project, such as its investment plans, are yet to be worked out.

This is not MGE's first exposure to India and Indian market. It has been present in India through the Chennai-based Numeric Power Systems. It was the growth potential in the Indian market that actually led MGE to set up a manufacturing unit in India. For instance, the Indian market is growing at 50 per cent as against the worldwide growth of 8 per cent. There were other tangible reasons as well such as the support infrastructure and quality service provided by Numeric Systems to the service-sensitive product. And, of course, the customs duty of over 60 per cent on the import of UPS as against the 15 per cent levied on import of PCs. Ironically, import of UPS and PCs is free in most countries.

The MGE-Numeric Systems partnership in India has a network of 10 regional offices, and 54 customer support centers. It has around 32,000 installations in India and registered a turnover of Rs 73 crore during the last fiscal. This works out to about 15 percent of the UPS market in India, which is pegged at a value of Rs 550 crore. The company has targetted a turnover of Rs 150 crore by 2001. The relationship between the two companies, which has essentially been technical in nature, is expected to change with the setting up of the manufacturing base. It is reckoned that MGE will take a stake in the company.