Himoinsa Award Write Up

2016 European Generator Set Growth Excellence Leadership Award

2016

BEST PRACTICES RESEARCH

© Frost & Sullivan 2016 2 “We Accelerate Growth”

Contents Background and Company Performance ........................................................................ 3

Industry Challenges .............................................................................................. 3

Growth Performance and Customer Impact ............................................................. 3

Conclusion........................................................................................................... 5

Significance of Growth Excellence Leadership ................................................................ 6

Understanding Growth Excellence Leadership ................................................................ 6

Key Benchmarking Criteria .................................................................................... 7

Best Practice Award Analysis for Himoinsa ..................................................................... 7

Decision Support Scorecard ................................................................................... 7

Growth Performance ............................................................................................. 8

Customer Impact ................................................................................................. 8

Decision Support Matrix ........................................................................................ 9

The Intersection between 360-Degree Research and Best Practices Awards ..................... 10

Research Methodology ........................................................................................ 10

About Frost & Sullivan .............................................................................................. 10



Background and Company Performance

Industry Challenges The generator set (genset) industry, comprising of diesel and gas gensets form the key components of the distributed power market in Europe. Mainly used in back up or primary power production, gensets are integral in fulfilling the power needs of European industrial and commercial establishments.

The current economic slowdown poses significant challenges across Europe for the genset industry, as industries and individual consumers cut back on investments and consumption, leading to stagnation and even decline for the sector. Also, stricter environmental regulations could lead to higher emission requirements from gensets leading to a change in technologies and types of gensets used. A reduction in subsidies for renewable energy sources also impacts the genset industry, as gensets are used as base load power source for renewable energy production. Companies are also facing intense competition from North American and Asian companies, leading to players having to innovate and offer unique tailor made solutions in order to survive and thrive in this market. Companies which are able to offer a combination of price, quality and reliability would be able to succeed under these tough market conditions.

Growth Performance and Customer Impact Growth Strategy

Due to the fast changing nature of the business environment today, Himoinsa has adopted a flexible strategy which combines offering high-quality products and providing world class service. Geographic expansion and diversification is another strategy that has ensured Himoinsa’s growth in an otherwise stagnant/declining genset market. The company continues to purchase and open new subsidiaries in countries where demand for gensets is high and will continue to grow in the future. By drawing on external market analysis as well as internal reports, Himoinsa is able to generate its growth path for the year, with the management team taking the lead to facilitate fast decision making and communicate the growth strategy clearly to its sales team and key stakeholders. By analyzing qualitative and quantitative information from various sources and with data gathered from internal teams across regions, the company is able to get a real time picture of every market it is present in and is able to align its growth path along with the company’s expectations, enabling it to achieve significant growth Year-on-year.

Therefore, it is not surprising to see Himoinsa grow by 15% in 2015 as compared to 2014, in a market that is witnessing low single digit growth. According to recent Frost & Sullivan analysis, Himoinsa is one of the top 5 companies in the European diesel generator set market with a share of 8% in 2015.

Share of Wallet

Himoinsa serves a diverse client base across industries. By offering specialized products which are tailor made for each industry’s need, Himoinsa products are well suited for a



wide range of end-user applications such as telecommunications, datacenters, hospitals, shopping malls and so on. A key strength of Himoinsa is also that it is a complete energy solution provider. It works closely with its clients from start to finish. A team of business engineers work alongside the client for each of their product, in order to adapt products to client specific needs. These highly skilled engineers combine business as well as technical skills along with market knowledge and are thus able to adapt the engineering designs to unique regional and client requirements. Moreover, as compared to its competitors, who have standard product processes in place, Himoinsa is able to undertake special projects which require significant changes to the end product. These special projects are the company’s USP, as it is able to demonstrate strong engineering capability as well as manufacturing flexibility along with short delivery times. Being a vertically integrated company manufacturing all the genset components in-house, Himoinsa not only delivers the highest quality product but also boasts of shortest delivery times in the market.

This added value has enabled the company to increase its market share among end-users and made them invest in its products.

Growth Diversification

Himoinsa’s engineering efforts are focused towards developing new generator models which satisfy the needs of its wide customer base. It has also been able to expand geographically by establishing several subsidiaries across the globe as well expanding its brand within Europe. The company currently has 11 subsidiaries in the UK, South Africa, Singapore, Dubai, Poland, Germany, Portugal, Angola, Argentina, Panama and the Dominican Republic. By focusing its sales teams on markets with the highest potential, the company is able to stay ahead of the competition and gain market share across the globe. Its strategy to tap into new and upcoming distribution channels such as rental companies and engineering companies is reaping rewards, as it is able to better understand customer requirement and offer a customized product. By growing organically with new sales offices, opening new distribution centers and investing in distribution companies in new regions, the company is creating a stable growth network in the regions they serve. Currently, there are more than 130 HIMOINSA dealers across the five continents providing direct market support. This regional presence increases the company’s visibility, brand value and customer confidence, all of which contribute to revenue growth.

Growth Sustainability

In order to stay on the growth path, Himoinsa believes in its distribution network providing customers with the best sales and service experience. The company works constantly to improve the financial terms for distributors and in setting up warehouses at strategic points so that the distributor can ensure faster customer service. These warehouses help reach the customer faster. Himoinsa also ensures that the engineering team accompanies the sales and distribution teams in order to understand the client and project requirements, serving the client better, faster and in a cost effective manner. With investments in customer service and distribution network efficiency and by lowering project costs for customers, the company has ensured a steady flow of orders from all



regions of the globe, thereby ensuring a sustainable growth for its business even in times of downturn.

Customer Service Experience

Himoinsa has taken a qualitative step recently regarding communication with the customer and customer service. Digital platforms connect production plants and customers, providing them additional value by communicating their needs directly to the facility in real-time. This platform can also be used to request any changes to the equipment or to order any spare parts directly by the customer. This reduces the time taken to serve the customer as the customer is constantly in touch with the production teams. Himoinsa also operates a 24/7 online spare parts ordering platform which enables clients to order even if the factory is closed.

The company's sales network is highly structured and is located in close proximity to the customer with the intention of maintaining a constant personal relationship. This network helps Himoinsa serve its clients better by receiving regular feedback from them, thereby enabling Himoinsa to serve them at shorter notices, which enables faster turnaround for the customer, at lower costs.

Himoinsa has also developed several digital tools that provide its clients with the latest product upgrades, product development information and other sources of information that help them to operate their machinery in an efficient manner. In order to enhance the customer service experience, it also features an online 24/7 customer service platform which enables them to service any customer globally.

Brand Equity

Himoinsa has a 35 year history which has helped it to establish a strong and long lasting relationship as well as brand presence with various customers in its home European market and also across the globe with highly reliable and efficient products. It also makes sure that it is represented in various trade shows by its sales teams and also by its distributor networks, where their products are showcased. Himoinsa's distribution network is provided with a corporate identity manual that describes how to advertise the brand through the various available communication channels. This presents a strong brand presence through which Himoinsa enables the creation of a strong brand identity not only within Europe, but also across key regions of the globe.

Conclusion Himoinsa has established itself as a leader in the genset space with efficient and reliable products by leveraging its years of experience in providing power solutions across industries and across geographies. By combining it with good relationships with key suppliers, Himoinsa is able to provide tailor-made and innovative solutions to clients as per their requirements, hence enabling them to solve some of their critical power needs

With its strong overall performance, Himoinsa has earned Frost & Sullivan’s 2016 Growth Excellence Leadership Award.



Significance of Growth Excellence Leadership Growth Excellence Leadership is about inspiring customers to purchase from your company, and then to return time and again. In a sense, then, everything is truly about the customer, and making those customers happy is the cornerstone of any long-term successful growth strategy. Companies that excel in driving growth strive to be best-in-class in three key areas: meeting customer demand, fostering brand loyalty, and carving out a unique, sustainable market niche.

Understanding Growth Excellence Leadership Companies that creatively and profitably deliver value to customers ultimately set up their businesses for long-term, rapid growth. This is what Growth Excellence Leadership is all about: growth through customer focus, fostering a virtuous cycle of improvement and success.



Key Benchmarking Criteria

For the Growth Excellence Leadership Award, Frost & Sullivan analysts independently evaluated two key factors—Growth Performance and Customer Impact—according to the criteria identified below.

Growth Performance Criterion 1: Growth Strategy Criterion 2: Above-Market Growth Criterion 3: Share of Wallet Criterion 4: Growth Diversification Criterion 5: Growth Sustainability

Customer Impact Criterion 1: Price/Performance Value Criterion 2: Customer Purchase Experience Criterion 3: Customer Ownership Experience Criterion 4: Customer Service Experience

Criterion 5: Brand Equity

Best Practice Award Analysis for Himoinsa Decision Support Scorecard To support its evaluation of best practices across multiple business performance categories, Frost & Sullivan employs a customized Decision Support Scorecard. This tool allows our research and consulting teams to objectively analyze performance, according to the key benchmarking criteria listed in the previous section, and to assign ratings on that basis. The tool follows a 10-point scale that allows for nuances in performance evaluation; ratings guidelines are illustrated below.

RATINGS GUIDELINES

The Decision Support Scorecard is organized by Growth Performance and Customer Impact (i.e., the overarching categories for all 10 benchmarking criteria; the definitions for each criteria are provided beneath the scorecard). The research team confirms the veracity of this weighted scorecard through sensitivity analysis, which confirms that small changes to the ratings for a specific criterion do not lead to a significant change in the overall relative rankings of the companies.



The results of this analysis are shown below. To remain unbiased and to protect the interests of all organizations reviewed, we have chosen to refer to the other key players as Competitor 2 and Competitor 3.

Measurement of 1–10 (1 = poor; 10 = excellent)

Growth Excellence Leadership Growth Performance

Customer Impact

Average Rating

Himoinsa 9 9 9.0

Cummins 8 8 8.0

Caterpillar 7 8 7.5

Growth Performance Criterion 1: Growth Strategy Requirement: Executive team has a shared vision for the organization’s future growth, and has created and implemented a strategy that is consistent with that vision

Criterion 2: Above-Market Growth Requirement: Company’s growth rate exceeds the industry’s year-over-year growth rate

Criterion 3: Share of Wallet Requirement: Customers allocate a greater percentage of their total spend to purchasing products or services produced by the company

Criterion 4: Growth Diversification Requirements: Company is equally able to pursue organic (e.g., distribution channel optimization, new product innovation) or inorganic (e.g., acquisitions, partnerships) growth opportunities consistent with the long-term objectives of the organization

Criterion 5: Growth Sustainability Requirement: Company has consistently sought out opportunities for new growth, enabling the organization to build on its base, and sustain growth over the long-term

Customer Impact Criterion 1: Price/Performance Value Requirement: Products or services offer the best value for the price, compared to similar offerings in the market

Criterion 2: Customer Purchase Experience Requirement: Customers feel like they are buying the most optimal solution that addresses both their unique needs and their unique constraints

Criterion 3: Customer Ownership Experience Requirement: Customers are proud to own the company’s product or service, and have a positive experience throughout the life of the product or service



Criterion 4: Customer Service Experience Requirement: Customer service is accessible, fast, stress-free, and of high quality

Criterion 5: Brand Equity Requirement: Customers have a positive view of the brand and exhibit high brand loyalty

Decision Support Matrix Once all companies have been evaluated according to the Decision Support Scorecard, analysts can then position the candidates on the matrix shown below, enabling them to visualize which companies are truly breakthrough and which ones are not yet operating at best-in-class levels.

High

Low

Low High

Cu

stom

er I

mp

act

Growth Performance

Himoinsa

Competitor 2 Competitor 3



The Intersection between 360-Degree Research and Best Practices Awards

Research Methodology Frost & Sullivan’s 360-degree research methodology represents the analytical rigor of our research process. It offers a 360-degree-view of industry challenges, trends, and issues by integrating all 7 of Frost & Sullivan's research methodologies. Too often, companies make important growth decisions based on a narrow understanding of their environment, leading to errors of both omission and commission. Successful growth strategies are founded on a thorough understanding of market, technical, economic, financial, customer, best practices, and demographic analyses. The integration of these research disciplines into the 360-degree research methodology provides an evaluation platform for benchmarking industry players and for identifying those performing at best-in-class levels.

About Frost & Sullivan Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best in class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best practice models to drive the generation, evaluation and implementation of powerful growth strategies. Frost & Sullivan leverages more than 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from 45 offices on six continents. To join our Growth Partnership, please visit http://www.frost.com.

360-DEGREE RESEARCH: SEEING ORDER IN THE CHAOS

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