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Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

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Page 1: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design
Page 2: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design
Page 3: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: Dept of Heavy Industries, India Electrical and Electronics

Manufacturer Association, NASSCOM, Aranca Research

Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Increasing industrialisation and economic

development to drive capital goods &

engineering market

Expansion in the electrical equipment

industry

Engineering research & design segment

revenues to increase fourfold by 2020

Capital goods & engineering turnover is

expected to reach USD125.4 billion by

2017 from USD57.6 billion in 2012

Electrical equipment market size expected

to reach to USD105 billion by 2022 from

USD24.2 billion in 2011

ER&D revenues projected to reach to

USD45 billion in 2020 from USD11.2

billion in 2012

57.6

125.4

2012 2017CG & Engineering turnover

CAGR: 16.8%

24.2

105

2011 2022

Electrical equipment market size

CAGR: 14.2%

11.2

45

2012 2020ER&D revenue

CAGR: 19.0%

Page 4: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: Booz & Company, Volvo India Ltd, Estimates,

Ministry of Heavy Industries and Public Enterprise, Aranca Research

Note: DHI - Dept. Of Heavy Industries, CPSE - Central Public Sector Enterprise

Indian construction equipment market to

grow sevenfold from 2012 to 2020

Indian telecom equipment market to more

than double by 2020

Increased production of Central Public

Sector Enterprise (CPSE)

Construction equipment market projected

to reach USD22.7 billion by 2020 from

USD3 billion in 2012

Telecom equipment market to reach

USD37 billion by 2020 from USD16 billion

in 2011

Production of CPSE under DHI to

aggregate USD10.7 billion by 2014 from

USD9.2 billion in 2011

3

22.7

2012 2020Construction equipment market revenue

CAGR: 28.8%

16

37

2011 2020

Telecom equipment market size

CAGR: 9.7%

9.2 10.7

2011 2014Production of CPSE's

CAGR: 5.4%

Page 5: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

• The engineering sector is delicensed; 100 per cent FDI is allowed in the sector

• Due to policy support, there was cumulative FDI of USD14.0 billion into the sector over April 2000 – February 2012, making up 8.6 per cent of total FDI into the country in that period

Growing demand

Source: Government of India, Ministry of Heavy Industries, Department of Industrial Policy & Promotion,

India Electrical and Electronics Manufacturer Association, Aranca Research

Notes: FDI - Foreign Direct Investment, FY - Indian Financial Year (April – March), USD - US dollar

Growing demand

• Capacity creation in sectors such as infrastructure, power, mining, oil & gas, refinery, steel, automotives, and consumer durables driving demand in the engineering sector

• Rising demand for electrical and construction equipment

Attractive opportunities

• Nuclear capacity expansion to provide significant business opportunities to the electrical machinery industry

• Rapid increase in infrastructure investment and industrial production to fuel further growth

Policy support

• De-licensed engineering sector; 100 per cent FDI permitted

• Cumulative FDI totalled USD19.9 billion over April 2000–April 2013 due to policy support

Higher investments

• Comparative advantage vis-à-vis peers in terms of manufacturing costs, market knowledge, technology and creativity

• Highly organised sector and dominated by large players employing over four million skilled and semi-skilled labour

Engineering

exports

from India:

USD56.7

billion

FY14E

Engineering

exports

target from

India:

USD125.0

billion

Advantage

India

FY13

Page 6: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Engineering

Heavy Engineering

Light Engineering

Heavy Electrical

Heavy Engineering and

Machine Tools

Automotive

Low Technology

Products

High Technology

Products

Page 7: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: Ministry of Heavy Industries and Public Enterprise Annual Report 2012-13, Aranca Research

Notes: MW - Mega Watt, KVA - KiloVolt - Ampere

Boilers

• The Indian boiler industry has the capability to manufacture boilers with super critical

parameters up to 1000 MW unit size

• The industry’s market size was USD5.1 billion in FY12 and is expected to reach USD11.7

billion in FY22

Turbines and generator

sets

• The industry manufactures various turbines in the range of 800–7000 MW per annum, and

generators ranging from 0.5 KVA to (ones even higher than) 250,00 KVA

• Total production of turbines and generators stood at US2.2 billion in FY12 and is

estimated to reachUSD6.7 billion by FY22

Transformers

• A whole range of power and distribution transformers, including special type of

transformers required for furnaces, electric tracts and rectifiers, are manufactured in the

country

• The transformers market in India was valued at USD2.7 billion in FY11 and is expected to

reach USD11.1 billion in FY22

Switchgear and control

gear

• About 32.6 million switchgears and control gears were produced during FY12

• The switchgear market size touched USD2.0 billion in FY12 and is projected to reach

USD8.2 billion in FY22

Page 8: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: Ministry of Heavy Industries and Public Enterprise Annual Report 2012-13, Cabinet Committee on Infrastructure report, Aranca Research

Notes: TPD - Tonnes Per Day

Machine tools

• This segment churns out basic machinery for all major industries and determines

competitiveness in other sectors such as automobiles, heavy electrical and defence

• Nearly 200 machine tool manufacturers are operational in the organised sector along with 400

small-scale units

• Production of machine tools totalled USD900 million, while exports stood at USD288.7 million

in FY12

Textile machinery

• It comprises over 1,446 units involved in churning out machinery and components; another

600 units manufacture complete machinery

• The industry is de-licensed with FDI permitted up to 100 per cent

• The industry has an installed capacity of USD1.7 billion and produced goods worth USD1.1

billion in FY12

• In FY12, total exports from textile industries stood at USD368.8 million

Cement machinery

• Cement plants based on raw mill grinding, pre-processing and cement grinding process

technology (for capacities up to 10000 TPD) are being manufactured in India

• Currently,100 per cent FDI is allowed under the automatic route

• With an installed capacity of around USD125 million, the industry is capable of catering to the

domestic demand

Material handling

equipment

• With around 50 units in the organised sector, the material handling equipment industry is

engaged in the setting up of coal/ore/ash handling plants and manufacturing associated

equipment

• The sector’s total imports stood at USD331 million in FY12, while exports aggregated

USD31.9 million

Page 9: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: Ministry of Heavy Industries and Public

Enterprise Annual report 2012-13, Aranca Research

Plastic processing

machinery

• There are 11 major and nearly 200 small & medium manufacturers

• Domestic manufacturers cater to 95 per cent of the processing industry’s needs

• Total production stood at USD0.6 billion in FY12

• Exports increased 17.1 per cent to USD124.1 million in FY12

Dies, moulds & tools

industry

• It includes over 500 commercial tool manufacturers

• Nearly18 governments tool rooms as well as training centres are operating in the country

• Total production of dies, moulds & tools stood at USD2.8 billion

• Exports aggregated USD604.7 million in FY12

Process plant

equipment

• Over 200 manufacturers are engaged in the production of process plant machinery

• Nearly 65 per cent of the total manufacturers are small and medium enterprises

• Production and exports totalled USD4.1 billion and USD788.1 million, respectively, in

FY12

Earth moving and

mining equipment

• Currently, 20 large and global manufacturers, and 200 small & medium manufacturers

operate in the industry

• Production and exports totalled USD3.8 billion and USD274.9 million, respectively, in

FY12

Page 10: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: Ministry of Heavy Industries and Public Enterprise Annual Report 2012-13,

Cabinet Committee on Infrastructure report, Aranca Research

Note: * From April 2012 to November 2012, ** CAGR calculated on Indian rupee

Passenger and utility

vehicles

• Currently, there are 16 manufacturers of passenger cars and multi-utility vehicles, 13

manufacturers of commercial vehicles and 16 manufacturers of two-wheelers and three-

wheelers

• Total production in the automobiles sector stood at approximately 20.4 million units in

FY12 and 13.7 million units over FY13*

• Total exports stood at 2.9 million units during FY12 and 1.9 million units over FY13*

Auto components

• The auto components industry has more than 500 companies in the organised sector and

about 10,000 entities in the unorganised sector

• The industry’s turnover expanded at a CAGR of 19 per cent between FY08 and FY12 to

USD43.9 billion from USD22.2 billion

• During FY08-12, exports increased at a CAGR** of 22 per cent to reach at USD7.0 billion

Agriculture machinery

• The agriculture machinery sector is primarily dominated by agricultural tractors

• The Indian tractor industry is the world’s largest and accounts for one-third of the global

production

• More than 250,000 tractors are manufactured every year by 13 manufacturers

• Indian tractors are exported to the US, Malaysia, Turkey and Africa

Page 11: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: Ministry of Heavy Industries and Public Enterprise Annual Report 2012-13, IVG Research, Aranca Research

Notes: MMT - Million Metric Tonnes

Casting and forging

• The Indian casting industry produces 6 MMT of various grades of casting and ranks sixth

in the world

• The forging industry comprises around 10 organised players, with nearly 100 players in

the small and medium sector

• The industry exports a substantial part of its production apart from catering to the local

demand

Medical and surgical

equipment

• The medical and surgical equipment industry manufactures a wide range of medical

equipment such as ECG and X-ray scanners

• The industry is highly fragmented and dominated by small players

• The indigenous industry caters to 40 per cent of the demand and the remaining is met

through imports

Industrial fasteners

• The fastener industry in India can be classified into high tensile and mild steel fasteners

• Mild steel fasteners are primarily manufactured by the unorganised sector, while the high

tensile steel segment is dominated by the organised sector

• Total Industrial fasteners exports stood at USD621.9 million in FY13, a growth of 13.8 per

cent from FY12

Page 12: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: Reserve Bank of India, Engineering Export Promotion Council,

Ministry of Commerce & Industry Estimates, Aranca Research

Note: P - Data for FY12 is provisional,

R - Data for FY11 is revised

India’s engineering exports (USD billion) Indian engineering exports stood at USD56.7 billion in FY13

Over FY08–13, exports registered a CAGR of 12.6 per cent

Engineering exports include transport equipment, capital

goods, other machinery/equipment and light engineering

products such as castings, forgings and fasteners

Exports target for FY14 is estimated at USD125 billion

To boost engineering trade, “India Engineering Sourcing

Show 2013” was held by the Engineering Export Promotion

Council (EEPC) in March

64 countries participated in the show and there were

320 exhibitors including 60 overseas companies

418 business enquiries worth USD38.0 million

received by the respondents

31.3

45.3

38.3

58.1

67.1

56.7

FY08 FY09 FY10 FY11R FY12P FY13

CAGR: 12.6%

Page 13: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: Engineering Export Promotion Council, Aranca Research

Exports performance of principle commodities

(FY13)

Transport equipment is the leading contributor to

engineering exports. The segment accounted for 32.5 per

cent of the total engineering exports during FY13

Machinery and instruments is the other major contributor

with a share of 26.8 per cent

The engineering sector retained its 18 per cent share in

overall exports from the country which is the maximum in

terms of sectoral contribution

32.5%

26.8%

17.7%

9.0%

14.1% Transport equipment

Machinery andinstrument

Manufactures ofmetals

Primary and semifurnished iron & steel

Others

Page 14: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: Company Reports, News Article, Bloomberg, Aranca Research

Note: Financial Year Ending * 30 September 2012, ** 31 December 2012

Company Revenues (FY13) Products

Larsen & Toubro USD28.3 billion Engineering & Construction,

Cement, Electrical & Electronics

Bharat Heavy Electricals Ltd USD9.3 billion Power Generation, Transmission,

Transportation

Siemens India Ltd USD2.6 billion*

Power Generation and Distribution

Equipment, Transportation

Systems, Communication and

Healthcare Products

ABB Ltd USD1.4 billion**

Transformers, Switch Gears,

Control Gears

Crompton Greaves Ltd USD2.1 billion Power Generation and

Transmission Equipment

Page 15: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Company Revenues (FY13) Products

Engineers India USD0.5 billion

Highways & Bridges, Mass Rapid

Transport Systems Construction,

Specialist Materials Manufacturing

Kirloskar Oil Engines Ltd USD0.4 billion Engines, Engine Bearings & Valves,

Grey Iron Casting

Cummins India Ltd USD0.8 billion

Power Generation, Construction

and Mining Equipment, Fire Pumps

& Cranes, Compressors

Thermax USD1.0 billion Boilers and Heaters, Air Pollution

and Purification, Absorption Cooling

BGR Energy USD0.6 billion Boilers, Turbines, Generators

Source: Company Reports, News Article, Aranca Research

Page 16: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: Aranca Research

Note: BHEL - Bharat Heavy Electricals Ltd

Diversification

• Several companies in the engineering sector have diversified, either geographically

(mainly to Middle Eastern countries) or sector-wise

• BHEL plans to foray into Ukraine

• Simplex Infra has moved to the Middle East

• Larsen & Toubro (L&T) has diversified into power equipment manufacturing

• Thermax entered the power utility segment

Shift to value-added

products

• Rising competition is driving domestic players to focus on improving their capabilities,

become more quality conscious, and upgrade their technology base in line with global

requirements

• More than 2,500 firms in the engineering sector have ISO 9000 accreditation

• Companies are now increasingly focusing on R&D and product development

Entry of international

companies

• With 100 per cent FDI allowed through the automatic route, major international players

such as Cummins, ABB and Alfa Laval have entered the Indian engineering sector due to

growth opportunities

• Entry of new players has raised the industry’s competitiveness

Page 17: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Growth drivers

Demand-side drivers

Investment Policy

• De-licensing

• Reduction in tariff and

customs

• Supportive government

policies leading to

higher investments

• Increasing FDI inflows

• Higher M&A

• Easy credit facilities for

manufacturing

companies

• Capacity addition for

power generation

• Increase in

infrastructure spending

• Rise in exports

Page 18: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Energy requirement (‘000’ MU) India’s energy requirement increased at a CAGR of 6.7 per

cent over FY06–13 to 995.5 billion units

Demand for energy grew 6.2 per cent during FY13 vis-à-vis

the previous year

Higher demand for energy has led to increasing capacity

additions for power generation that, in turn, boosted

demand for power generation and transmission equipment

Source: Ministry of Power, Annual report 2012-13,

Load Generation Balance Report 2012-13, Aranca Research

Note: MU - Million Unit

632 691

739 777 831 862

937 996

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

CAGR: 6.7%

Page 19: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Addition in generating capacity (‘000’ MW) Investments to increase capacity have led to rising demand

for power generation and transmission equipment

Capacity increased to 20600 MW during FY13 compared to

20500 MW in FY12

Source: Ministry of Power, Annual report 2012-13, Aranca Research

Note : MW - Mega watt

8.1

12.1

17.1

22.3

32.9

20.5 20.6

FY90 FY97 FY02 FY07 FY11 FY12 FY13

Page 20: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Infrastructure index and growth rate The Infrastructure Index (part of the wider Index of Industrial

Production) comprises eight core industries: coal, crude oil,

natural gas, petroleum refinery products, fertilisers, steel,

cement and electricity

The index rose to 144.4 in FY12, implying a CAGR of 5.1

per cent since FY07

The infrastructure index rose to 145.1 over April–December

2012

Source: Reserve Bank of India, Aranca Research

Notes: The base year for Infrastructure index has been changed

from 1993-94 to 2004-05

* - April 2012-December 2012

112.6 118.5 121.8

129.9 138.4 144.4 145.1

0

1

2

3

4

5

6

7

8

9

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

FY07 FY08 FY09 FY10 FY11 FY12 FY13*

Page 21: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Total highway length added during Five-Year Plans (KM)

India has one of the largest road networks (4.7 million km), consisting of national highways, expressways, state highways,

districts and village roads

The length of the highways added during the 11th Five-Year Plan was 9,044 km (as of 2011)

During the 11th Five-Year Plan, of the total USD 456.9 billion investments in infrastructure, development of roads and

bridges accounted for 15.3 per cent

Owing to large-scale public and private investments in roads, demand for related machinery has increased significantly

Share in roads network (FY13)

3.3 1.7

95

State highway

National highway

Districts and ruralroads

23,814

7,091 9,044

9th Plan 10th Plan 11th Plan*

Source: National Highway Authority of India, Ministry of Road Transport and Highways, Aranca Research

Notes: * - Physical Achievements under National Highways Development Project during 11th Five Year Plan upto Sept, 2011

Page 22: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: DHI Annual report 2010-11, Ministry of Power Annual Report, Aranca Research

Notes: GW - Giga Watt

De-licensing

• The engineering industry has been de-licensed and 100 per cent FDI has been permitted

in the sector

• Foreign technology agreements are allowed permitted under the automatic route

Tariffs and custom

duties • The government has eliminated tariff protection on capital goods

• It has reduced custom duties on a range of engineering equipment

Initiatives focussed on

power generation and

infrastructure

development

• The government has an ambitious mission of ‘Power for all by 2012’ and has planned

capacity additions of 120 GW in the 12th Five-Year Plan

• Governmental infrastructure projects such as Golden Quadrilateral and the North-South

and East-West corridors fuelled growth in the engineering sector

Special Economic

Zones (SEZs)

• The government approved a significant number of SEZs across the country for the

engineering sector

• Delhi Mumbai Industrial Corridor (DMIC) is being developed across seven states that is

expected to bolster the sector

National Manufacturing

Policy (2011)

• Government of India launched the National Manufacturing Policy with the aim of

enhancing the sector’s share in GDP to 25 per cent within a decade and creating 100

million jobs by 2022

Page 23: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: Union Budget FY14

Note: Capex - Capital Expenditure

JNNURM - Jawaharlal Nehru National Urban Renewal Mission

15 per cent investment

allowance to boost

capex

• The government would provide 15 per cent exemption on tax to manufacturing companies

that invest more than USD18.4 million in plant and machinery over FY14–15

Cut in excise duty to aid

the auto industry

• A cut in excise duty on truck chassis from 14 per cent to 13 per cent would increase profit

margins for major automobile companies such as Ashok Leyland and Eicher Motors

Increase in allocation to

JNNURM to aid

infrastructure and

capital goods

• The government has increased the allocation to JNNURM from USD1.3 billion in FY13 to

USD2.6 billion in FY14; this is expected to benefit companies in capital goods,

infrastructure and automobile sectors

Higher allocation to the

defence sector

• Allocation to the defence sector was raised to USD37.5 billion, which includes USD16

billion for modernisation-related expenditure. This could further increase investments in

the defence equipment industry

Page 24: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: SEZ India, Aranca Research

Developer Location Product

Andhra Pradesh Industrial Infrastructure Corporation

Limited (APIIC) Ranga Reddy, Andhra Pradesh Aerospace and precision engineering

Deccan Infrastructure and Land Holdings Ltd Nalgonda, Andhra Pradesh Light engineering

M/s Essar Hazira SEZ Hazira, Gujarat Engineering

Gujarat Industrial Development Corporation Ltd (GIDC) Gandhinagar, Gujarat Electronic products

N.G. Realty Pvt Ltd Ahmedabad, Gujarat Engineering

M/s Synefra Engineering and Construction Ltd Vadodara, Gujarat High-tech engineering and related

products

E. Complex Pvt Ltd Amreli, Gujarat Engineering

Dishman Infrastructure Ltd Ahmedabad, Gujarat Engineering

Ansal Properties and Infrastructure Ltd Sonepat, Haryana Engineering

Raheja Haryana SEZ Developers Pvt Ltd Gurgaon, Haryana Engineering

Ansal Kamdhenu Engineering SEZ Ltd Sonepat, Haryana Engineering

Karnataka Industrial Areas Development Board Shimoga, Karnataka Engineering

Suzlon Infrastructure Ltd Mangalore, Karnataka Port-based for high-tech engineering

products

Page 25: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Developer Location Product

Quest Machining and Manufacturing Pvt Ltd Belgaum, Karnataka Auto, aerospace and industrial

engineering

Viraj Profiles Ltd Thane, Maharashtra Stainless steel engineering products

Navi Mumbai SEZ Pvt Ltd Navi Mumbai,

Maharashtra Light engineering

Maharashtra Industrial Development Corporation (MIDC) Satara, Maharashtra Engineering

Township Developers India Pvt Ltd Pune, Maharashtra Engineering

Maharashtra Industrial Development Corporation (MIDC) Aurangabad, Maharashtra Engineering & Electronics

Orissa Industrial Infrastructure Development Corporation

(IDCO) Jajpur, Orissa Metallurgical engineering

Vividha Infrastructure Pvt Ltd Patiala, Punjab Engineering

Mahindra Worldcity (Jaipur) Ltd Jaipur, Rajasthan Light engineering

New Chennai Township Pvt Ltd Kanchipuram, Tamil Nadu Engineering

Perundurai Engineering SEZ by SIPCOT Erode, Tamil Nadu Engineering

Uttar Pradesh State Industrial Development Corporation

(UPSIDC) Kanpur, Uttar Pradesh Engineering

Source: SEZ India, Aranca Research

Page 26: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: Department of Industrial Policy & Promotion, Aranca Research

Note: FY10 - Cumulative from April 2000 to March 2010 and so on

FDI inflows includes Automobile industry, Electrical equipment, Miscellaneous

mechanical and engineering industry, Industrial machinery, Machine tools,

Agriculture machinery, Earth-moving machinery and Industrial instrument

Cumulative FDI inflows in Engineering sector

(USD billion)

Cumulative FDI inflows increased to USD17.3 billion in

FY13 from USD8.9 billion in FY10

With the increasing focus by government to attract foreign

investors in manufacturing and infrastructure, FDI in the

sector is set to rise

8.9

11.1

14.7

17.3

FY10 FY11 FY12 FY13

Page 27: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: Grant Thornton, Aranca Research

Note - * - Acquired by its German subsidiary- Geometric Europe GmbH

M&A deals

Acquirer Target Type Acquisition date

Geometric * 3Cap Technologies GmbH Acquisition January, 2013

Simplex Infrastructures Ltd Joy Mining Services India Pvt Ltd Acquisition May, 2012

Larsen & Toubro Ltd Thalest Ltd Acquisition April, 2012

Titagarh Wagons Ltd Titagarh Marine Ltd Acquisition March, 2013

JBM Cadmium Pvt Ltd Tesco GO Acquisition January, 2012

Diamond Power Infrastructure Ltd Utkal Galvanizers Ltd Acquisition April, 2011

Yash Birla Group Aircon Engineering Services Majority stake May, 2011

Gaji Mercantile Bharat Wire Ropes Ltd Acquisition July, 2010

HBL Power Systems Igarashi Group-Agile Electric Drives

Technologies and Holdings Majority stake December, 2010

Page 28: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: Company Reports, Indian Express, Aranca Research

Note: ‘Navratna’ is the title given to nine Public Sector Enterprises (by

the Government of India) having distinct comparative advantages

Net sales (USD billion)

3.0 3.9 4.5

5.8

7.1

9.0

10.4 9.2

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

Salient features

• One of the largest engineering and manufacturing

companies with ‘Navratna’ status

• One of the major integrated power plant equipment

(IPPE) manufacturers in the world

• Profit-making company since 1971–72

• Installed base of more than 120,000 MW

• Fifteen manufacturing units, two subsidiaries and

seven joint ventures

• Accounted for over 59 per cent of the total generating

capacity in FY12

Page 29: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Key success factors

Boiler efficiency

Lower design heat

rate

Better PLF Lower

lifecycle cost

Lower auxiliary power

consumption

Recent Awards and Recognitions

• Golden Peacock Award 2011 for Occupational Health

and Safety(2011)

• SCOPE Meritorious Award 2010-11 for Best Practices

in Human Resource Management

• Intellectual Property Award from the Government of

India(2011)

• Essar Steel Infrastructure Excellence Award (2011)

• DSIJ Gentle Giant Award from the Government of

India (2011)

• CII-Thompson Reuters Innovation Award (2010)

Page 30: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

1960 1970 1980 1986 1990 1996 2000 2004 2005 2006 2007 2008 2011 2012

ISO accreditations

Open Die Forging

Closed Die Forging

Crank Shaft

Front Axle Beams

Hubs

Transmission Parts

Organic growth &

integration

Entry into new

markets such as

US and Greece

Acquisitions in

various countries FY13

USD1050

million

turnover

FY05

USD245

million

turnover

Joint ventures

and technical

partnerships

Source: Company Reports, Aranca Research

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Source: Company Reports, Aranca Research

Note: ‘Navratna’ is the title given to nine Public Sector Enterprises (by

the Government of India) having distinct comparative advantages,

HAL- Hindustan Aeronautics Limited

Net sales (USD billion)

2.1

2.3 2.4

2.9 3.0

2.6

FY08 FY09 FY10 FY11 FY12 FY13

Salient features

• One of Asia’s largest aerospace companies with

‘Navratna’ status

• Produced over 3,700 aircraft including 15 types of

indigenous designs and over 4,300 engines

• Nineteen production units and 10 research & design

centres across eight locations in India

• Promoted and established 11 joint venture companies

in collaboration with leading international and Indian

aviation organisations

• Offers services for the aircraft accessories, foundry

and forge, engine, helicopter, industrial & marine gas

turbine division and transport aircraft division

Page 32: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: Aranca Research

Notes: GW - Giga Watt, SME - Small and Medium Enterprises

Defence

• Budget for the defence sector is expected to grow 8 per cent until 2014; of this, 54 per

cent would be earmarked for procuring manufactured items which is likely to translate into

a market opportunity of USD91 billion over 2010–2014

• Government initiatives, such as allowing private sector participation, have been reinforced

by opening up the sector to 26 per cent FDI, and its offset policy is expected to enhance

private sector (including SME) participation

Civil nuclear sector

• India‘s nuclear capacity is expected to be strengthened by 3.8 GW by 2012; an additional

12,000 MW has been planned under the 12th Five-Year Plan (2012–17)

• It represents a total business opportunity worth USD312 million for the manufacturing

industry, which is likely to garner 61 per cent

Auto components

• Global auto majors are rapidly ramping up the value of components they source from

India, steered by the country’s advanced engineering skills, established production lines, a

thriving domestic automobile industry and competitive costs

• Industry sales are expected to increase to USD40 billion by 2016, with about USD20

billion generated from exports

Page 33: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: Aranca Research

Power transmission and

distribution (T&D)

• T&D expenditure is set to increase as a result of growth in power generation and

privatisation of distribution

• By the end of 2012, the transmission network was expected to be about 60,000 circuit km,

with a potential demand for 630,000 transformers

Material handling

equipment

• The material handling equipment sector is expected to gain from robust demand from

steel, power, mineral and other infrastructure industries

• Market demand for material handling equipment is estimated at USD30 billion over 2007–

14

Machine tools

• Demand for machine tools from the capital goods sector (especially automobile and textile

industries) is projected to remain high

• Considering the industry's demand for higher productivity, superior precision and

accuracy, as well as low-cost manufacturing solutions, computer numerically controlled

(CNC) machine tools are set to be in greater demand

Page 34: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Source: Booz Allen Hamilton, Nasscom, Aranca Research

Notes: ESO is Engineering Services Outsourcing

India Competing countriesIndia Competing countries

~ 20%

25-30%

Total Spend ~ USD850

billion

Projected Spend USD1100 billion

Offshore Expenditure Onshore Expenditure

~4.5% 15-20%

2009 2020

By 2020, the ESO market in India is expected to reach

USD40–50 billion, propelled by increasing onshore to

offshore movement of services

2009

• The global engineering services spending is

estimated to be around USD850 billion

• About USD40 billion is expected to flow through the

outsourcing channel into vendor countries

• India accounts for about 20 per cent of the

outsourced market

2020

• The global engineering services spending is

projected to reach USD1100 billion

• About USD180 billion is estimated to flow through the

outsourcing channel into vendor countries

• India can account for about 25–30 per cent of this

outsourced revenue

Page 35: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Growth in industry size of major electrical equipment

(USD billion)

India‘s electrical equipment industry has witnessed

significant growth in the last few years

Major electrical equipment registered a CAGR of 21.8 per

cent from a small base of USD11.4 billion to USD25 billion

between FY08 and FY12

Major electrical equipment manufactured include capacitors,

energy meters rotating machines, transformers, cables,

switchgears, transmission line towers and conductors

Based on the expected capacity and investments, domestic

demand for electrical equipment is targeted to be USD100

billion by FY22

Demand for T&D equipment is expected to reach USD13.9

billion in FY22 from USD3.4 billion in FY11

11.4 10.2 11.0 13.2

25.0

FY08 FY09 FY10 FY11 FY12

T & D equipment-wise demand projection (USD billion)

3.4

7.4

13.9

FY11 FY17 FY22

CAGR: 21.8%

Source: Indian Electrical and Electronics Manufacturers Association, Department of Heavy Industries

Note: T&D - Transmission and Distribution, BTG - Boilers, Turbine, Generator

Page 36: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

The generation equipment (BTG) segment is projected to increase to USD25 billion

Production of generation equipment (boilers, turbines and generators) in India is estimated at around USD5.7 billion by 2022

Demand for generation equipment is projected to rise to USD25.1 billion in FY22 from USD6 billion in FY11

Cables contribute 27.3 per cent to the electrical equipment market followed by transmission lines (23.4 per cent), transformers

(19.3 per cent) and switchgear (15.2 per cent)

Market share of electrical equipment (FY13) Generation equipment-wise demand projection

(USD billion)

3.8 5.8

11.7 1.6

3.3

6.7

0.6

3.3

6.7

FY11 FY17 FY22

Boiler Turbine Generator

10.0%

15.2%

27.3% 19.3%

0.9% 3.9%

23.4%

Rotating Machines

Switchgear

Cables

Transformers

Capacitors

Energy Meters

Transmission Lines

Source: Indian Electrical and Electronics Manufacturers Association

Notes: BTG - Boiler, Transmission and Generation

Page 37: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

India’s earthmoving and construction equipment (ECE) industry has enjoyed strong growth over the last seven years due to

rapid economic development

The organised construction sector in India (for example, roads, urban infrastructure) accounts for approximately 55 per cent of

the ECE industry. Mining, irrigation and other infrastructure segments (power, railways) account for the remaining

During FY10–14, sales of construction equipment is expected to increase at a CAGR of 10.6 per cent and reach USD6.5 billion

Earthmoving sector is continuing to make headways and could command a share of 56.2 per cent followed by concrete

equipment and material handling equipment

Product segment-wise CE market by 2014

56.2%

8.5%

19.0%

13.2%

3.0%

Earth moving

Road construtionequipment

Concrete equipment

Material handling

Material processing

Expected unit sales by 2014

Equipment Sold in 2010 Forecast 2014

Excavators 10500 14000

Backhoes 23000 32000

Loaders 2500 4500

Asphalt pavers 1150 1650

Mobile cranes 8000 11750

Tower cranes 200 700

Transit mixers 3800 9000 Source: Indian Construction Equipment Manufacturer’s Association, NBM media

Notes: CE - Construction Equipment, ECE - Electrical and Construction Equipment

Page 38: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

National Automotive Testing and R&D Infrastructure Project (NATRiP) NBCC Place, South Tower,

3rd Floor,Bhishma Pitamah Marg,

Pragati Vihar,Lodhi Road,

New Delhi - 110003

Tel : + 91-11-49215555

Fax : +91-11-24369333

E-mail : [email protected]

The Automotive Research Association of India Survey No 102, Vetal Hill, Off Paud Road,

Kothrud, Pune - 411 038

P.B. No 832, Pune - 411 004

Tel. No : +91-020-30231111

Fax No : +91-020-25434190

Email Id: [email protected]

Page 39: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Fluid Control Research Institute Kanjikode West,

Palakkad - 678623.

Phone : 91-491-2566120/2566206

Fax : 0491-2566326

E-mail : [email protected]

Engineering Export Promotion Council (EEPC) ‘Vanijya Bhawan’, 1st Floor

International Trade Facilitation Centre

1/1, Wood Street

Kolkata, West Bengal–700016

Phone: 91-33-22890651, 22890652

Fax: 91-33-22890654

E-mail: [email protected]

Page 40: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

BTG : Boilers, Turbines, Generators

BHEL: Bharat Heavy Electricals Limited

MHI: Mitsubishi heavy industries

DHI : Department of Heavy industries

BHEL: Bharat Heavy Electricals Ltd

ICEMA: Indian Construction Equipment Manufacturer’s Association

HAL: Hindustan Aeronautics Limited

IEEMA: Indian Electrical and Electronics Manufacturers Association

EEPC: Engineering Export Promotion Council

TPD: Tonnes Per Day

NHAI: National Highway Authority of India

Page 41: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

MORTH: Ministry of Road Transport and Highways

CEA: Central Electrical Authority

HVDC: High Voltage Direct Current

USD: US Dollar

FY: Indian Financial Year (April to March)

Wherever applicable, numbers have been rounded off to one decimal

Page 42: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

Year INR equivalent of one US$

2004-05 44.95

2005-06 44.28

2006-07 45.28

2007-08 40.24

2008-09 45.91

2009-10 47.41

2010-11 45.57

2011-12 47.94

2012-13 54.31

Exchange Rates (Fiscal Year)

Year INR equivalent of one US$

2005 45.55

2006 44.34

2007 39.45

2008 49.21

2009 46.76

2010 45.32

2011 45.64

2012 54.69

2013 54.45

Exchange Rates (Calendar Year)

Average for the year

Page 43: Manufacturer Association, NASSCOM, Aranca Research · 2016-02-22 · Manufacturer Association, NASSCOM, Aranca Research Notes: CG - Capital Goods, ER&D - Engineering Research & Design

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