Machine Tools User Industry Updates Q2 2017...Piramal Enterprises has pumped in INR 275 crore in RSB Group and INR 290 crore in Indoshell Mould Limited RSB is into manufacturing of

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July, 2017

Machine Tools User Industry Updates – Q2 2017

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Key Sections

Section Page

Background 04

Updates – Machine Tools User Industry

Q2 2017 Update - Automobile & Auto Components

Q2 2017 Update - Defence and Aerospace

Q2 2017 Update - Mobile Handsets

Q2 2017 Update - Consumer Durables

Q2 2017 Update - Railways

Q2 2017 Update – Energy & Power

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Disclaimer

All Rights Reserved

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, IMTMA The information contained herein has been obtained from sources believed to be reliable. IMTMA, The Publisher and Feedback Business Consulting Services Private Limited, The Research Partner disclaims all warranties as to the accuracy, completeness or adequacy of such information. The Publisher and The Research Partner shall have no liability for errors, omissions or inadequacies in the information contained herein, or for interpretations thereof

For information regarding permission, write to:

Feedback Business Consulting Services Private Limited,

1st floor, Sumo Sapphire, #738, 15th Cross, J P Nagar 6th Phase,

Bangalore 560 008 | India

Phone: +91 80 4635 9721

Email: [email protected]

mailto:[email protected]




Background


Client Background and Engagement Background

Client background

Engagement background

IMTMA wishes to conduct regular tracking of select user industries throughout the year. In this context, the agency approached “Feedback” to accomplish the tracking of select user industries through a structured approach and methodology

The client, IMTMA, is the machine tools industry promotion agency in India repmember

resenting member companies. It wants to provide regular updates on key industries to all companies which route investment through this agency


Key Industries Covered

Automobile & Auto Components

Defence & Aerospace Energy & Power

Railways Consumer Durables

General Engineering**

Dies & Moulds Mobile Handsets

**General engineering industry: Major sub-sectors considered include textile machinery, rubber machinery, gears, pipes & tubes, transformers, compressors, pumps, motors and engines


Updates – Machine Tools User Industries


Q2 2017 Update – Automobile & Auto Components New Trends

News that Impact the Industry

Policies and their Impact

New Investments List


New Trends

New Trends Details

Auto comp sector to grow at 8-9% CAGR

We are projecting a 8-9 per cent growth in 2017/18 on better fiscal payouts and higher agri incomes

Safety norms will boost demand for safety equipment such as airbags, automatic brake systems(ABS), rear view sensors and speed warning systems. Growing electronic content – Emission norms and increasing focus on autonomous technologies is leading to higher electronic content

Green’ era-Growing concerns over environmental pollution and global warming is driving the market towards stricter norms and alternate fuel technologies

Stricter emission and safety norms are necessitating higher electronic content in the form of electronic control units, electronic braking and air suspension systems. On board diagnostics is necessitating the use of sensors and actuators. Strict emission norms will also necessitate use of low-weight components for better fuel economy leading to a direct impact on the engine & engine parts segment

Auto sector may contribute 12 per cent to India's GDP in next decade

India's automobile industry is likely to contribute 12% to the country's GDP over the coming decade, an increase from the current 7.1%

India's two-wheeler industry recently became the largest market in the world, replacing China. The government is also looking forward to adopting new and different ways to promote clean, safe, cheap and futuristic mobility services, which will help in creation of jobs in research, development and manufacturing sector

The government is promoting the use of electric vehicles under FAME India Scheme, as it would help reduce the dependency on oil imports

1/2


New Trends News trend Details

Digital to pave the way forward for marketing in automobile industry

India is at the brink of a digital revolution. However, the Indian auto manufacturing sector has been lagging behind and is yet to catch up with other industries

Indian auto OEMs must take cognizance of these changing customer behavioral patterns to remain competitive in the digital era. They need to allocate a greater proportion of spend to digital - a paradigm shift from their traditional investment mentality into offline and print advertising

Becoming truly digital, will also require building data and analytical capabilities to gather and analyze massive volumes of data from a large number of customer data points. This will enable them to have a single-view of the customer's persona, identify challenges and accurately target customers with personalized marketing content

India 2nd fastest growing market for passenger vehicles globally

India was the second fastest growth market for passenger vehicles among the top five nations globally, behind China, having expanded by 7% last year. In terms of size the country was, however, the fourth largest market behind Japan

According to global automobile industry body Organisation Internationale des Constructeurs d'Automobiles (OICA) data, passenger vehicle sales in India stood at 29,66,637 units last year as against 27,72,270 units in 2015

Car sales cross 3-million mark in 2016/17 despite demonetisation, ban on diesel cars

Despite demonetisation, ban on diesel cars in NCR and uncertainty over emission norms, India witnessed record car sales of 3,046,727 units in 2016/17. It is a consequence of a splendid 30 per cent growth of utility vehicles, largely led by new models such as Hyundai Creta, Maruti Brezza and Innova Crysta

Also, the clarity over BS-4 emission norms and GST implementation will pave the way for higher sales

2/2



News Impact

Auto component industry to invest INR 30,000 crore on new technology products

Auto component sector investing INR 30,000 crore to upgrade products to meet new industry regulations

SIAM had announced that the automotive industry would invest INR 1 lakh crore in new technologies for meeting BS-VI, fuel efficiency and safety regulations of which 30 to 40% will be invested in the auto components sector

Euro III to Euro IV was itself a big change and the shift from Euro IV to VI emission norms will be a huge change. Also the need for the Government to go slow on its Policy for Electric Vehicles by 2030 till the industry is ready for the transition

Bosch to invest INR 1,000 crore on plant and machinery

Leading auto parts’ maker Bosch expects to invest around ₹1,000 crore on a yearly basis for the next few years on plant and machinery, including the transition from BS-IV to BS-VI emission standards. Production of some of the mechanical products will be reduced because of the transition

The government has announced its plans to skip BS-V norms and has asked the industry to comply with BS-VI emission norms by 2020

ISRO unveils solar hybrid electric car for Indian automobile industry

ISRO has developed a high energy lithium ion battery that will be used in spacecrafts and is ready for a technology transfer of this innovation to the automobile industry, especially for the manufacture of solar hybrid electric cars

Use of the lithium ion battery was demonstrated on a Maruti Suzuki Omni as to how it can not only cut down cost, but also be eco-friendly. This home-grown technology is expected to create ripples in automobile industry worldwide

1/3



News Impact

China-based SAIC Motor to set up its car manufacturing unit in India

SAIC Motor Corporation Ltd, one of the largest automotive companies in the world, has announced its plan to enter the Indian automobile market with a fully owned car manufacturing facility, to be set up in the country.

The $100 billion Chinese company, with core businesses spanning design, manufacturing and supply of components besides partnerships with global giants such as Volkswagen and General Motors, is expected to commence operations in India in 2019

SAIC will acquire General Motors' Halol plant in Gujarat as the American company is trying to sell its assets post its announced plans to exit the Indian market. The company will launch mobility solutions under the iconic MG (Morris Garages) brand

The company expects to invest over INR 2,000 crore in the next five years and begin production from 2019

Kia Motors signs MoU with AP govt for car manufacturing unit

The Seoul-based Kia Motors Corporation today signed a MoU with Andhra Pradesh government for setting up a car manufacturing plant in Anantapuramu district

The plant, to come up on a 600-acre site at Penukonda, about 75 km from Anantapuramu, will be the South Korean company's first unit in India and the seventh in the world. The new facility is being set up with an investment of $2 billion

The project is likely to commence work in the final quarter of 2017. The facility is expected to begin production in the second half of 2019 and produce upto approximately 300,000 units each year

2/3



News Impact

Volvo Cars to start assembly operations in India in 2017

Swedish luxury car maker Volvo Cars announced its plans to start vehicle assembly operations in India. The assembly operations will be located near Bengaluru and focus on models based on Volvo's SPA modular vehicle architecture

The company will make use of Volvo Group India's existing infrastructure and production licences near Bengaluru. It will work together with Volvo Group India -- the truck, bus, construction equipment and Penta engines manufacturer -- to set up its assembly operations in India

The first model to be assembled in India will be the company's premium SUV, XC90. Additional models slated for local assembly will be announced at a later stage

Piramal Finance invests INR 565 Cr in two auto component makers

Piramal Enterprises has pumped in INR 275 crore in RSB Group and INR 290 crore in Indoshell Mould Limited

RSB is into manufacturing of propeller shafts, gears, axles and machined products for engine components and construction equipment aggregates. It supplies to commercial vehicles, passenger cars, construction and farm equipment manufacturers. It has 11 manufacturing facilities spread across major auto clusters. Indoshell, focuses on two-wheeler segment supplying engine cylinder blocks to a well-diversified customer base

3/3


Policies and their Impact Policy Details

GST impact largely neutral on auto sector but bigger cars and SUVs to benefit

While the base GST rates for the automobile segment have been set at 28%, in addition to the base rate, the Government has also proposed to levy a cess on vehicles of different categories and sizes, the impact of which on the end prices of vehicles will vary accordingly

On small cars with petrol and diesel engines respectively, in addition to the base GST rate of 28%, a cess of 1% and 3% has been levied (existing rate 31.4% to 33.5%). Considering GST will subsume infrastructure-cess currently levied on domestic Passenger Vehicle industry, the proposed tax rate for small cars will either be price neutral or reduce marginally

The bigger sedans (engine size > 1,500cc and length >4,000 mm) and SUVs (engine size > 1,500cc and ground clearance > 170mm) will however see lower taxation (existing rate 46.6% to 55.3%) and eventually reduction in vehicle prices, despite 15% cess above the base GST rate of 28%

As for greener vehicles, despite the Government’s thrust on promoting them, the cess has been imposed at 15% above the base GST rate of 28%. This will increase the cost going forward (existing rate 30.3%). However within this segment, the small hybrid vehicles will not attract additional cess of 15%. Comparatively, electrically operated vehicle will be levied GST rate of 12%

As for commercial vehicles (existing rate 30.2%), and three wheelers (existing rate 29.1%) the impact of GST will largely be neutral. However the mini-bus segment will attract a cess of 15% in addition to the base GST rate of 28%

Two wheeler segment will attract base rate of 28% (existing tax 30%); However, motorcycles above 350cc segment will attract an additional cess of 3%, leading to an overall tax rate of 31%

The tractor segment will be taxed at 12% with provision to take input tax credit (ITC) – currently indirect taxes work upto 12 – 13% - hence the impact might be neutral

Auto-components The expected rate of GST on auto component is 18%. However, the current effective rate for Intra-state transactions is

approximately 27% and in case of Inter-state it is between 16%-21% (differs from state to state) thus the effective rate of tax applicable on auto components will be significantly reduced


New Investments List: Automobile

S No.

Company Name Project Name State Project Status Project

Investment (INR Crore)

Machine Tools

Potential (INR Crore)

Start Date Completion Date

1 Daimler India Commercial Vehicles Pvt. Ltd.

Chennai Truck Manufacturing Line Project

Tamil Nadu Announced NA NA Jun 2017 Sep 2017

2 Minda Industries Ltd. NCR Greenfield Automobile Paint Shop and Assembly Line Project

Delhi Announced NA NA Apr 2017 NA

3 Nissan Motor Co. Ltd. Chennai Design Centre Project Tamil Nadu Announced NA NA May 2017 May 2017

4 S A I C Motor Corpn. Ltd.

Halol Car Manufacturing Plant Project

NA Announced 2,000 360 Jun 2017 Dec 2019

5 Volvo Car India Pvt. Ltd. Hoskote Car Assembly Unit Project Delhi Announced NA NA May 2017 Dec 2017

6 Suzuki Motor Gujarat Pvt. Ltd.

Gujarat Production Plant & Engine Facility Expansion Project

Gandhinagar Announced 6,000 1,080 May 2017 NA

7 Honda Motorcycle & Scooter India Pvt. Ltd.

Narasapura Two-Wheeler Assembly Plant Project, Bangalore

Karnataka Announced 1,000 180 Apr 2017 NA

8 TVS Motor Hosur 300 CC Motorcycle Expansion Project

Karnataka Announced 350 63 Mar 2017 NA

9 Ashok Leyland Ltd Jharkhand Commercial Vehicle Assembling Plant Project

Jharkhand Announced 500 90 Mar 2017 NA


New Investments List: Automobile

S No.

Company Name Project Name State Project Status Project


Machine Tools


Start Date Completion Date

10 Hero Motocorp Ltd Multi Location Hero Plants Expansion Project

Multi Announced NA NA Mau 2017 NA

11 Ashok Leyland Ltd Andhra Pradesh Bus Manufacturing Plant Project

Andhra Pradesh

Announced NA NA Apr 2017 NA

12 Ashok Leyland Ltd Telangana Bus Manufacturing Plant Project

Telangana Announced NA NA Apr 2017 NA

13 JT Special Vehicles Pvt Ltd Coimbatore Tata Special Performance Vehicles Line Project

Tamil Nadu Announced NA NA Mar 2017 NA

14 Volvo India Pvt Ltd Odisha Car Assembly Unit Project Odisha Announced NA NA Mar 2017 NA


New Investments List: Auto Components

S No.

Company Name Project Name State Project Status

Project Investme

nt (INR Crore)

Machine Tools

Potential (INR

Crore)

Start Date

Completion Date

1 Freudenberg Regional Corporate Center India Pvt. Ltd

Chennai Sealing Solutions Manufacturing Facility Project

Bengaluru Announced 111 60 May 2017 NA

2 Government Of Bihar Bihta Ancillary Park Project Bihar Announced NA NA Jun 2017 NA

3 Government Of Jharkhand

Damoderpur (Bokaro) Rail Wheel Factory Project

Jharkhand Announced

NA NA May 2017 NA

4 Mahindra & Mahindra Ltd

Bangalore Battery Packs Capacity Expansion Project

Maharashtra Announced NA NA May 2017 Aug 2017

5 Mahindra & Mahindra Ltd

Chakan Battery Packs Manufacturing Facility Project

Maharashtra

Announced NA NA May 2017 Dec 2019

6 Toyoda Gosei Minda India Pvt. Ltd

Mandal-Becharaji SIR Airbags & Weather Strips Manufacturing Plant Project

Rajasthan Announced 73 40 May 2017 Mar 2018

7 Minda Industries Ltd Delhi NCR Greenfield Automobile Paint Shop & Assembly Line Project

New Delhi Announced NA NA Apr 2017 NA


Q2 2017 Update – Defense & Aerospace News Trend




News Trend 1/2 News Details

New policy to help Indian defence manufacturing firms gain cutting-edge capabilities -

The approval to the strategic partnership policy comes as a major boost to the private defence manufacturing sector - the defence ministry’s decision to allow private companies to build fighter jets, submarines, armoured vehicles is likely to help defence manufacturing firms

Larsen and Toubro Ltd, Ashok Leyland Ltd, Mahindra and Mahindra Ltd, Reliance Infrastructure Ltd, Tata Group, Punj Lloyd, Adani Group and Bharat Forge Ltd, which have existing defence businesses, are likely to benefit and would be eligible for deals worth more than $20 billion on offer over the next year

While Tata and Reliance Infra have taken steps to build aircraft, Larsen and Toubro could enter the submarine space while armoured vehicles could be an area of interest for Bharat Forge, Mahindra and Tata

Israel aerospace industries signs $630 million deal with India

State-owned Israel Aerospace Industries (IAI) has closed another major deal worth $630 million with India to supply advanced long range air and missile defence systems for four ships of the Indian Navy

The deal, a major boost to the ‘Make in India’ campaign, will be jointly executed with the Indian government’s Bharat Electronics Limited (BEL), and comes close on the heels of Israel’s largest defence contract ever worth $2 billion to supply the Indian Army and Navy with missile defence systems

Rolls-Royce to ramp up defence manufacturing facilities in India

Rolls-Royce is looking to ramp up its newly established engineering centre in Pune. The engineering centre supports the company’s marine and power systems business. The engine test bed located at Pune site provides engineers to conduct performance testing on new engines designed at the centre

The company has teamed up with Garden Reach Shipbuilders and Engineers (GRSE), a defence shipyard associated with the Indian Navy, to help assemble naval engines in the country. The MTU Series 4000 engines from Rolls-Royce will be assembled at GRSE’s plant in Ranchi


News Details

India’s private aerospace firms status

The emphasis on “Make in India”, centred on indigenous aerospace and defence production, has focused the limelight on private-sector companies. Unlike the public-sector companies, these are much smaller, often family-owned, and are fairly recent entrants

Adani Aerospace & Defence is setting up a modern aerospace “ecosystem” at Mundra. It includes a well-equipped airfield with night-landing facilities and hangars for manufacturing work. Main products are landing gear components for Safran, to equip the new Airbus A350

Russell Techsys, after setting up an 87,000 sq ft engineering facility at Whitefield, are now constructing a 200,000 sq ft plant at the Devanahalli Aerospace Park

Airbus has formed a partnership with Tata Advanced Systems Ltd. (TASL) for the final assembly of the C295W military transport in India, should it be ordered. Similarly, Airbus has set up a partnership with Mahindra Defence for the production in India of a number of Airbus military helicopters. Should India order the AS565 Panther helicopter (above), Airbus will not only set up a final assembly line, but will also make India a global hub for it

Larsen & Toubro have teamed up with European missile manufacturer MBDA. They initially plan to develop and manufacture a fifth-generation anti-tank guided missile. If selected, it would be the most advanced such weapon in India’s armoury

Israel Aerospace Industries (IAI) and Kalyani Strategic Systems have formed a joint venture to manufacture and market the former’s air defence systems as well as special-purpose munitions

No Indian private company is able to currently manufacture complete military aircraft of its own design. It would need capabilities like prime contractorship and systems integration to do that

News Trends 2/2



Policy Impact

Haryana’s draft Defence & Aerospace policy aims to make state thriving manufacturing hub, promote MSMEs

The draft policy aims creating an enabling business eco-system for investors in the state and also promote new MSMEs in the Defence & Aerospace sectors

The government also wants to portray the state as a preferred Maintenance, Repair and Overhaul (MRO) and Fixed Base Operator (FBO) destination in the Asian region

The draft policy aims at attracting investment worth INR 25,000 crore and creating direct employment for 32,000 people by 2020

It also aims to attract 50% by value of MRO activities, the market size of which in India is estimated to be around USD 700 million

Tamil Nadu to draft aerospace and defence policy

Tamil Nadu would soon come out with a aerospace and defence policy aimed at benefitting companies planning to invest in these two sector

the state Government, along with Tamil Nadu Industrial Development Corporation, is engaged in setting up an aerospace park on 267 acre land in Sriperumbudur


New Investments List: Defense & Aerospace

S No.

Company Name Project Name State Project Status

Project Investment (INR Crore)

Machine Tools


Start Date

Completion Date

1 Embraer S A Begumpet Airport Maintenance, Repair & Overhaul Project

NA

Announced

NA NA Apr 2017 NA

2 Pratt & Whitney (USA) Haryana R&D Facility (Aviation) Project

NA Announced 400 80 May 2017 NA

3 Israel Military Industries Ltd, Punj Lloyd Ltd (JV)

Malanpur Weapons Manufacturing Facility Project

Gwalior Announced NA NA May 2017 NA

4 Air India Ltd. Secunderabad MRO Facility Project

Andhra Pradesh

Announced NA NA Apr 2017 NA

5 Government of Rajasthan

Jhalawar Aircraft Maintenance Repairing & Overhaul (MRO) Facility Project

Rajasthan Announced 2,000 400 Apr 2017 NA

6 Ramkrishna Forgings Ltd

Jharkhand Aeronautics & Space Applications Parts Plant Project

Jharkhand Announced 1,000 200 Feb 2017 NA

7 Defence Research & Development Organisation

Morena Defence Unit Project Madhya Pradesh

Announced 1500 300 Jan 2017 NA

8 Rolls-Royce Motor Cars Ltd

Bengaluru Aircraft Engine Facility & MRO Centre

Karnataka Announced NA NA Apr 2017 NA


Q2 2017 Update: Mobile Handsets News Trend




News Trend

News Details

Phone vendors to absorb the impact of new GST regime on Mobile Handsets

Top smartphone vendors Samsung, Xiaomi, Oppo, Gionee, Intex and Lava have assured the smartphones' pricing will not be impacted once the Goods and Service Tax (GST) rolls out in the country

The introduction of GST is said to have its impact on smartphone pricing along with various consumer-facing sectors, but smartphone makers, have confirmed that “they plan to absorb the impact from the new tax system

However, new phones models may increase by 4-5% after the GST rate was fixed at 12%

The Nokia 6 and the Nokia 5 prices already take into account the GST tax rates. However, scheduled to be launched in July 1st week, might be delayed as retailers are hesitant to stock up new products due to initial market fluctuations that GST would cause

Tech giant Apple has slashed prices of products, including iPhone, iPad and Mac, India from July 1, as it looks to pass on the benefits accrued from the recently rolled out GST to customers

Average selling price of smartphones has increased during Quarter 1, 2017 and tech advances

Average selling price of smartphones has increased from $131 in Q1 2016 to $155 in Q1 2017

The mass segment, which was earlier below $100 has now moved to the range of $100-$200 in India. Nearly half of the smartphone shipments in Q1, 2017 were from this price range

With most networks moving to 4G, 94.5% of smartphones shipped were 4G-enabled, with Chinese smartphones leading the race

Camera quality in most phones has also increased over time. As per the IDC report, five out of 10 smartphones shipped had a rear camera with 13 megapixel or more

1/4


News Trend 2/4 News Details

Make in India: Govt aims to push mobile

manufacturing with new policy

The government is now gearing up to make India a manufacturing hub for electronics and especially mobile phones. Under the ’Phased Manufacturing Program’ (PMP) developed by the Ministry of Electronics and Information Technology (MeitY), the government wants to jump start the large scale manufacturing of one the largest selling consumer goods in the country — mobile phones

The panel set up under the MeitY has set target of 500 million handset production by 2019 and export target of 120 million mobile phones by 2019-20, taking annual manufacturing output in the range of INR 1.5-3 lakh crores

This will include mechanics, microphone and receiver, keypad and USB cables in 2017-18; printed circuit boards, camera modules and connectors in 2018-19; and display assembly, touch panels, vibrator motor and ringer in 2019-20

Mobile phone makers will get tax benefits and incentives to promote the sub-assembly of various mobile parts on a phased manner

PMP will run alongside a major scheme supporting electronics manufacturing clusters under which 8,000 acres of land will be developed across the country over the next three years

Samsung leads India's smartphone

market, followed by Xiaomi

Smartphone shipments in India grew 15 per cent to 29 million units in March quarter compared to the year-ago period, with top five brands capturing almost 70% of total segment

During the said quarter, Samsung continued to lead the market with 26%, followed by Chinese players Xiaomi (13%), Vivo (12%), Oppo (10%) and Lenovo (8%)


News Trend 3/4

News Details

Chinese Treble India Smartphone Market Share; Squeeze Out Indian Players

Chinese mobile phone manufacturers saw 3.4x growth in market share to 51% in Q1CY17 with samsung retaining its market leader position

The share of Indian vendors downsized to a mere 14% in Q1. Micromax Informatics, Lava International Ltd. and Karbonn Mobiles Pvt Ltd were replaced by Xiaomi Inc., Vivo Mobile India Pvt Ltd. and Oppo Mobiles India Pvt Ltd.

Success of Chinese players can be attributed to their strong brand through substantial advertising expenditure and sales channel Chinese smartphone makers enjoy a debt-light capital structure and healthy liquidity due to the long payable period extended by their suppliers

Better technological capabilities of the Chinese players leading to superior product offerings have also contributed to its success

Furthermore, large investments by Chinese players towards brand building and manufacturing facilities in India depict their long term strategic intent

Samsung To Double Mobile Phone Production Capacity At New Delhi Factory

Samsung Electronics plans to double the production capacity for mobile phones and fridges at its main factory in India, expanding in a country where US rival Apple Inc. has started assembling phones

The South Korean company said in a statement on Wednesday it would spend INR49 billion ($764 million) over three years to expand the factory on an additional 35 acres at the site on the outskirts of New Delhi. Samsung would want to reduce their dependence on manufacturing in Vietnam and shift more operations to India


News Trend 4/4

News Details

Mobile phones to attract 12% GST; most phones to get costlier unless Government restores local manufacturing sops by July 1

Most mobile phones may get costlier by 4-5% with the government imposing a goods and services tax (GST) of 12%, tak ing away the benefit under duty differential that was being offered to local manufacturers

For mobile phones imported and sold in India, duty was from 17% going upto 27%, which now comes down to 12%, giving imports a leg up. And those made in lower VAT states would be priced higher to match up to 12% GST

Government will have to come up with incentives by July 1 to ensure that Make in India remains an attractive proposition for contract manufacturers like Foxconn

Under the government's ’Make in India’ push, around 80% of 59 million phones sold in India in the January-March quarter were made locally, up from 65% in 2016, according to research study. Some 40 odd phone manufacturing plants have come up since, including 15 component making units, including Flex, Wistron and Foxconn

Apple starts iPhone SE manufacturing in India

A Taiwanese contract manufacturer, Wistron has already completed assembling small numbers of iPhone SEs as a trail run in the Karnataka production facility. The manufacturers started shipping these iPhone SEs to the domestic customers

However, full-scale production is not yet started. Apple will start manufacturing iPhone SE on a larger scale in India as a part of Make-in-India, later this year, at their Karnataka production unit


Policies and their Impact Policy Impact

Domestic smartphone players hailed the government's decision to impose 10% basic customs duty (BCD) on cellular mobile phones and specified parts

Government has imposed 10% basic customs duty on cellular mobile phones and specified parts like charger, battery, wire headset, microphone and receiver, keypad and USB cable to protect local manufacturers. However, specified parts of mobiles, such as, printed circuit board assembly (PCBA), camera module, connectors display assembly, touch panel/cover glass assembly, vibrator moto/ringer will be exempted from this duty

With the custom duty increase on the completely built unit (CBU) imports of mobile handsets, the government has shown its intent to support the ‘Make in India’ initiative


New Investments List: Mobile Handsets

S No. Company Name Project Name State Project Status


Machine Tools


Start Date Completion

Date

1 Sun Airvoice Noida (Ziox Mobiles) Handsets Manufacturing Plant Project

Delhi Announced 100 30 Jun 2017 NA

2 Vivo Mobile India Greater Noida Mobile Phones Assembly Plant Capacity Expansion Project

Haryana Announced NA NA Apr 2017 NA

3 Vivo Mobile India Vivo Industry Zone Project Haryana Announced 400 120 Apr 2017 NA

4 Smartron India Hyderabad Smartphones Manufacturing Facility Project

Hyderabad Announced 500 150 Apr 2017 NA

5 Ivoomi Innovation Mobile Manufacturing Facility Project - smartphone assembly and product development

NA Announced 250 75 Apr 2017 NA

6 Samsung Electronics Double Mobile Phone Production Capacity

Delhi Announced 4,915 1475 Jun 2017 NA

7 Gionee New manufacturing unit will be set up in Haryana

Haryana Announced 500 150 Mar 2017 NA

8 Intex Technologies Expand capacity in Greater Noida, UP (1st Phase INR 650 crore)

Greater Noida

Announced 1500 450 Apr 2017 NA


Q2 2017 Update – Consumer Durables New Trends





New Trends

New trends Details

Consumer durables firms anticipate July-Aug sales dip on GST

Consumer durables makers expect sales of TVs, refrigerators and ACs to be impacted in July- August as prices would go up 4-5 per cent under the GST regime, but hope to make good from big volumes during festive sales

The festival season that begins in August will more than offset the slow down in in the Consumer Durable sales post the GST implementation beginning July 1st 2017

Focus on energy efficient and environment-friendly products

Companies also plan to increase the use of environment-friendly components & reduce e-waste by promoting product recycling. India has made it mandatory for manufacturing companies to control emissions from climate damaging refrigerants

LG electronics. Last year announced that the company will focus on premium inverter split air-conditioners that are more energy efficient & would discontinue its regular split air-conditioners, which account for almost 80 per cent of the Indian market. In February 2017, Panasonic launched Sky Series air conditioners with the radiant technology

Increase in personal loan driven by increasing demand for Consumer Durables

As Per Latest Data by RBI found growth in consumer durables improved by 46.8% (32.8% in the year-ago period) compared to and other personal loans at 16.2%

In festive season and New year all banks enjoys huge demands for personal loans from every where in India, especially driven by shopping for consumer durables



News Impact

Voltas, Turkish co in $100-m venture for consumer durables

Tata Group company Voltas and Turkey’s Ardutch (a subsidiary of Arçelik) have forged an equal joint venture company in India with an equity capital of $100 million

Through this JV, Voltas will make an entry into the consumer durable sector. Tata Investment Corporation Ltd (TICL) and Koç Holding (KOÇ) will also hold 1% equity stake each, in the new JV company

The joint venture will leverage the brand presence and sales and distribution network of Voltas, while Arçelik will provide its R&D and manufacturing facilities, in addition to a wide product range and global sourcing capabilities

It will launch refrigerators, washing machines, microwaves and other white goods and appliances in India with a manufacturing base in the country

Chinese company Midea to invest INR 800 crore for Pune plant

Chinese appliance manufacturer Midea has announced its plan to invest INR 800 Crore to set up a manufacturing facility in Pune

The unit will have a production line for appliances such as refrigerators, washing machines and water appliance products. Spread over 43 acres in Pune, the facility will employ 500 people and be operational by 2018-end

The new facility will also provide export opportunity to the company, besides meeting domestic demand. It will have capacity to manufacture 5 lakh refrigerators, 6 lakh washing machines and 10 lakh water appliances

Midea group's part and component divisions GMCC and Welling will be setting up a manufacturing unit for compressors and motors for appliances

1/3



News Impact

Panasonic to set up India Innovation Centre in Bengaluru

Home appliances and consumer durables major Panasonic India announced that it will set up its first India Innovation Centre in Bengaluru

The company is expected to invest INR 240 crore in the facility over the next five years. Panasonic will set up this centre of excellence (CoE) in collaboration with TCS. The centre will focus on five key domains of connected community, mobility, energy storage, industrial and financial solutions

Apart from foraying into local manufacturing and development of appliances, the company is also exporting goods from India to 16 countries across the ISAMEA region

Last December, Panasonic had invested INR 115 crore to set up a refrigerator manufacturing plant in Jhajjar, Haryana. The factory will have annual production capacity of 5 lakh units and will be operational in November 2017

Havells India acquires consumer durable business of Lloyd

Havells India Limited, a leading fast moving electrical goods company on Monday informed of successfully completing the acquisition of consumer durable business division of Lloyd Electric and Engineering Limited.

The company has carried out the acquisition at an enterprise value of INR 1600 crores on a debt free, cash free basis, as per BSE filing

Investing in Lloyd’s brand was because there is an expectation of a good traction in the consumer durable space, which has a potential to grow

2/3



Policy Impact

GST Impact: Consumer Durables Firms Anticipate Sales Dip In July-August

The GST Council has finalised tax rates under the new regime set to kick in from July 1, earmarking a 28% rate for TV, refrigerators and air-conditioners

Under the new GST tax slab, a price rise of 4% and upwards can be expected for consumer durables. This price is expected to get neutralised in a couple of months. The trade partners though might have a slight impact due to input tax but they can recover by increasing selling price

According to Consumer Electronics and Appliances Manufacturers Association (CEAMA), such a decline would be offset with the festive sales that would start from August this year

At present, there is no clarity on how the present excise exemption will work, post GST. In addition, there are going to be multiple costs associated with old stocks, compliances and increased cash flow requirements

3/3


New Investments List: Consumer Durables



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Date

1 Midea Group Pune Consumer Electronics Plant Project

Maharashtra

Announced 800 240 Jun 2017 Dec 2018

2 Panasonic India Bengaluru (TCS campus) First India Innovation Centre Project

Haryana Announced 240 72 May 2017 NA

3 Intex Technologies Expanding capacity in Greater Noida, UP

UP Announced 200 60 Apr 2017 NA

4 Tata Group company Voltas and Turkey’s Ardutch equal JV

New company to manufacture consumer durables

NA Announced 650 195 July 2017 NA


Q2 2017 Update – Railways News that Impact the Industry




News Impact

Mandatory for the metro rail companies to procure 75% of train cars and 25% of critical equipment from within the country, under 'Make in India' campaign

Minimum 75% of the tendered quantity of metro cars should be manufactured indigenously for which the suppliers may either establish independent manufacturing facility in India or partner with Indian manufacturers, provided the procurement is more than 100 cars, as per the new tender document

The requirement of metro cars at the state level will be clubbed to enable applicability of local procurement norms

It is also mandatory for the metro companies to purchase 25% of the "critical equipment and sub- systems" from within the country

It has also been made mandatory for the companies with large size fleet to undertake in-house maintenance. The ministry has also standardised norms for rolling stock (coaches) and signalling equipment norms, covering 90% of the imports. This will incentivise setting up of manufacturing facilities in the country due to increase in orders

Increase in demand for metro coaches as the Ministry makes it mandatory for Metro Rail companies to procure 75% of their requirement from the domestic market

As many as 1,912 metro coaches are operational in the country at present and there is an immediate requirement of 1,420 cars

Over the next three years, more than 1,600 metro cars would be required and each coach is estimated to cost about INR 10 crore

News that Impact the Industry 1/4



News Impact

Railways to induct 40,000 refurbished coaches

The Indian Railways is planning to induct about 40,000 coaches with improved interiors and upgraded facilities at an estimated cost of INR 8,000 crore to provide better comfort to passengers

Besides, the state-run transporter will strengthen safety features in all existing conventional coaches equipping them with strong couplers to prevent capsizing during accidents

According to the plan, coaches will be retrofitted with refurbished interiors, improved seating arrangement and newly designed bio-toilets among other facilities. The retrofitting would cost about INR 30 lakh per coach

The target is to complete the process of refurbishing of coaches with improved interiors and 2023 in the next five years Railways also expect to manufacture 15,000 new coaches with modern features during 2018-19 and 2022-23 periods

Alstom, Bombardier Tap India as Urban Rail Export Center

The French and Canadian multinationals set up manufacturing and engineering operations between 2008 and 2010 will now export to Australia, the Middle East and Asia from these facilities

Alstom will fill the Sydney metro orders from its manufacturing units in south India and is looking at the Middle East and Southeast Asia

Bombardier has invested about 33 million euros in its Indian manufacturing facility and has orders to export 450 metro rail coaches to Australia and components to Brazil, Australia and Saudi Arabia

2/4



News Impact

Railways to invite bids for manufacturing modern coaches

The Railways will invite bids this month from top foreign and domestic vendors for a INR 20,000 crore JV project to manufacture around 5,000 electric coaches that will have modern facilities and run faster than existing ones at the Kanchrapara rail factory in West Bengal

The stainless steel AC and non AC coaches will be equipped with automatic doors, forced ventilation system, bio-toilets, and a regenerative braking system that saves power, besides boasting of better interior design

Vendors like Bombardier (Canada), Siemens consortium (Germany), Alstom 4.8% (France), CRRC Corporation consortium (China), Stadler (Switzerland), Medha Consortium (India),and BHEL, an Indian PSU, have made the cut to qualify for the bidding process

The public transporter will have a 26% stake in the joint venture project.

Production of train coaches increased by 13.57% in 2016-17

The Integral Coach Factory surpassed the prescribed target of 2,178 coaches and produced a record turnout of 2,277 coaches in 2016-17. This is the highest ever production, increase by 13.6% from last year

Of 2,277 coaches that were produced, 1162 are stainless steel coaches with life of 35 years against the 25 years of ICF conventional coaches. Stainless steel constitutes 51% of the total turnout.

The factory also manufactured 852 self-propelled coaches of various types which is 37% of the total churn out. The production of LHB (Linke Hofmann Busch) coaches also increased by 74% than previous year

3/4


News Impact

Integral Coach Factory (ICF) is eyeing the growing Metro train market in India

ICF manufactures coaches for the Kolkata Metro and wants to cater to other Metro’s as well. Order for 24 trains for Kolkata Metro is expected to be delivered by March 2019

The Integral Coach Factory (ICF) is likely to bag the order for manufacturing world class coaches for the Chennai Metro Rail Ltd. as well - A train comprising eight coaches costs INR 40 crore

ICF was also focussing on high speed train, called Train 18 which could clock 160 kmph, and is likely to be rolled out next March. Further, ICF also has export orders for Sri Lanka for 13 trains and the first train was expected to be handed over by the end of this financial year

Alstom to manufacture 800 super high-power locomotives for transport sector in India

Awarded a contract to manufacture 800 electric locomotives for Indian Railways, Alstom, a world leader in rail transport business, has decided to produce them in India at a factory in Madhepura in Bihar

The factory will produce 800 locomotives of 12,000 horsepower each. The first phase of the factory should get over in September and the first locomotive will roll out from that plant in February 2018

The company would be importing some initial parts

News that Impact the Industry 4/4


Policies and their Impact Policy GST Impact on Railways coach building & parts

Description Rate (%)

Rail locomotives powered from an external source of electricity or by electric accumulators 5

Other rail locomotives; locomotive tenders; such as Diesel-electric locomotives, Steam locomotives and tenders thereof 5

Self-propelled railway or tramway coaches, vans and trucks, other than those of heading 8604 5

Railway or tramway maintenance or service vehicles, whether or not self-propelled (for example, workshops, cranes, ballast tampers, trackliners, testing coaches and track inspection vehicles)

5

Railway or tramway passenger coaches, not self-propelled; luggage vans, post office coaches and other special purpose railway or tramway coaches, not self-propelled (excluding those of heading 8604)

5

Railway or tramway goods vans and wagons, not self-propelled 5

Parts of railway or tramway locomotives or rolling-stock; such as Bogies, bissel-bogies, axles and wheels, and parts thereof

5

Railway or tramway track fixtures and fittings; mechanical (including electro-mechanical) signalling, safety or traffic control equipment for railways, tramways, roads, inland waterways, parking facilities, port installations or airfields; parts of the foregoing

5

Containers (including containers for the transport of fluids) specially designed and equipped for carriage by one or more modes of transport [including refrigerated containers]

18


New Investments List: Railways

S No. Company Name Project Name State Project Status Project


Machine Tools


Start Date

Completion Date

No new projects announced during this quarter


Q2 2017 Update – Energy & Power News Trend




News Trend 1/3

News Details

BHEL commissions new 660MW thermal power plant in UP, India

India’s Bharat Heavy Electricals (BHEL) has commissioned a third 660MW Prayagraj Super Thermal Power Project (PSTPP) in Allahabad, Uttar Pradesh (UP)

The commissioning marks the successful execution of the 1,980MW project and follows completion of the first two units, which were also commissioned by BHEL and are now under commercial operation

BHEL has designed, engineered, and manufactured the boiler and turbine-generator (BTG) package of PSTPP. The key equipment for the project was manufactured by BHEL at its Haridwar, Trichy, Hyderabad, Ranipet and Bengaluru works while the construction of the plant was undertaken by the company's Power Sector-Northern Region unit

Recently, BHEL secured an order worth INR2.33bn ($35.9m) from Ramagundam Fertilizers and Chemicals (RFCL) to provide a steam and power generation package

The order included the design, engineering, manufacture, supply, erection, testing, and commissioning of a 32.5MW gas turbine, 125TPH heat recovery steam generators, a 85TPH utility boiler, and a balance-of-plant package along with associated auxiliaries

BHEL has commissioned the 500 megawatts (MW) of NTPC Feroze Gandhi Unchahar thermal power plant (FGUTPP) in Uttar Pradesh

Bhel was awarded the contract for the manufacture, supply, erection and commissioning of boiler, turbine, generator, & associated auxiliaries, electrical switchyard and station controls & instrumentation.

The major equipment for the project has been manufactured by Bhel at its Haridwar, Trichy, Hyderabad, Bhopal, Ranipet and Bengaluru works, while the construction of the plant was undertaken by the company's power sector - Northern Region


News Trend 2/3

News Details

CEA advisory with regard to indigenous manufacturing of supercritical equipment and doing away of the deed of joint undertaking (DJU) in case certain conditions are met is positive for the domestic Boiler-Turbine-Generator (BTG) manufacturer

The effect of the advisory will have a trickle down benefit on the profitability of the BTG manufacturers with a lag of around 1.5-2.5 years, as the order execution cycle for Bharat Heavy Electricals Limited is 36-48 months

The advisory is positive for BTG manufacturers in two aspects. First, CEA has extended the advisory dated February 2, 2010 for three years to October 2018 from October 2015

The earlier advisory had asked the BTG procurers (central and state power generating entities) to incorporate the condition of setting up of phased indigenous manufacturing facilities in the bids to be invited for supercritical projects

The advisory is only applicable to the central and state utilities and is only an advisory which cannot be enforced on the procurers. However, most central and state utilities tend to fall in line with the advisory. The private sector is free to choose the BTG supplier

CEA has also advised that in the event a BTG manufacturer meets three conditions then there will be no need to furnish a DJU

The three conditions that need to be fulfilled include eight supercritical boilers manufactured/supplied in India by the company have achieved commercial operation; four such boilers should have achieved commercial operation for a duration of at least one year; and performance guarantee tests have been successfully completed by any two boilers

Under the DJU clause, the domestic manufacturer has to furnish a guarantee from one of the collaborators, a large international technology company such as Siemens AG/Alstom


News Trend 3/3

News Details

India’s Thermax wins $157 million boiler contract in Nigeria

Thermax, India-based energy and environmental engineering solutions company has won export contracts from an undisclosed leading African company to supply four utility boilers, eight heat recovery steam generators and two flue gas steam generators to its upcoming refinery and petrochemicals project in Nigeria

The supply contract includes, manufacturing, procurement, design, engineering, testing, and supervision of the commissioning of the equipment at the site

BHEL unveils 270 MW thermal unit in Maharashtra

BHEL has successfully commissioned another 270 MW thermal unit at RattanIndia Nasik Power Limited’s 5x270 MW thermal power project at Sinnar (Nasik) in Maharashtra. This is the fourth unit to be commissioned in this project

BHEL’s scope of work in the project envisaged design, engineering, manufacture, supply, erection and commissioning of steam turbines, generators, boilers, associated auxiliaries and electricals, besides state-of-the-art controls & instrumentation (C&I) and electrostatic precipitators (ESPs)

Brazil's WEG to make wind turbines in India

Brazilian electrical equipment manufacturer WEG SA announced today that it plans to enter the Indian wind turbine production market

The company intends to upgrade its existing electric motors and generator factory near Bangalore in Tamil Nadu state in order to prepare it for the production of 2.1-MW wind turbines. Following the upgrade, the factory will have an annual wind turbine production capacity of up to 250 MW and the capability to produce

nacelles, generators and hubs. It will be able to supply the first wind turbines next year



Policy Impact

GST rate for Boiler, turbine and generator equipment for thermal power projects

Domestic equipment: GST would be applicable at the rate of 18%

Imported component: BCD rate would continue. Additionally, GST would be applicable at 18% (Imported BTG equipment – 23%)

Impact – Marginally Negative

Would vary depending on the VAT rate applicable in a state and mix of imported equipment

Overall impact including for balance of plant equipment and GST on service component is estimated to increase the capital cost for imported BTG based projects by ~2%

Wind operated electricity generator, its components and parts thereof including rotor and wind turbine controller

Domestic equipment: GST would be applicable at 5%

Imported equipment: BCD rate would continue. Additionally, GST would be applicable at 5%

Impact – Marginally Negative

Would vary depending on the VAT rate applicable in a state and mix of imported equipment

Overall impact including for balance of plant equipment and GST on service component is estimated to increase the capital cost for new projects by ~4%, assuming 30% imported components

3/3


New Investments List: Energy & Power



Machine Tools



Date

1 Weg Industries (India) Pvt Ltd

Hosur Wind Turbine Plant Project Tamil Nadu Announced NA NA May 2017 NA

2 Archimedes Green Energys Pvt Ltd

Medchal Rooftop Wind Turbine Manufacturing Unit Project

Telangana Announced 60 6 Apr 2017 NA

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