Market Research Report : Auto ancillary market in india 2014 - Sample

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Auto Ancillary Market – India

November 2014

2 AUTO ANCILLARY MARKET IN INDIA 2014.PPT

Executive Summary

Market

Drivers & Challenges

Competition

Auto ancillary market in India is expected to reach INR a9 bn in 20-----, growing at a CAGR of z2 % from INR a5 bn

in 20-----

Engine parts account for the largest share, representing b1% of the total auto component market

Trends

Diversification

Rising PE/VC Investments

Focus on Quality

Drivers:

- Growing Automotive Industry

- Healthy Economic Outlook

- Auto Aftermarket Demand

- Growing Investments

- Opportunity from New US IT Compliance Law

Government Initiatives

Union Budget 20-- - --

National Automotive Board

National Automotive Testing and R&D Infrastructure Project (NATRIP)

Export Incentives

ACMA Initiatives

Challenges:

- Exposed to Cyclical Downturns in the Automobile Industry

- Rising Labour Costs and Price of Raw Materials

- Counterfeit Market

- Technical Inefficiency

- Depreciating Currency

Market comprises of a large number of domestic players and steadily increasing participation from foreign players, mainly through mergers & acquisitions

Some of the major players in the market are Player 1, Player 2, Player 3, Player 4, Player 5, Player 6, Player 7, Player 8, and others

Adoption of Green Strategies

Increasing Foreign Presence

Changing Design

3

•Macro-Economic Indicators

•Market Overview

•Segments

• Major Segments

• Major Sub-Segments

•Opportunity Areas

•Export-Import

•Drivers & Challenges

•Government Initiatives

•Trends

•Competitive Landscape

•Strategic Recommendations

•Appendix

AUTO ANCILLARY MARKET IN INDIA 2014.PPT

4

SAMPLE


Indian auto ancillary market, exhibiting rapid development and is expected …

• Auto ancillary market is one of the fastest growing segment within the manufacturing sector in

India

Auto component market is expected to grow at a CAGR of z2 % to reach INR a9 bn in 20-- - -- from INR a5 bn

in 20-- - --

• India has the potential to become one of the top auto component economies by 20--

• There are ~x organized players contributing to y% of the total auto component output, while

the unorganized sector accounts for the rest

Unorganized auto component sector comprises of ~z players, mainly in the replacement market, or are Tier

p and Tier q manufacturers

Primarily, Type 1 dominate the Indian auto component market

• Indian auto ancillary sector has become a lucrative market for the global investors as the

country’s overall automobile industry is expected to witness a u-fold increase in demand by 20-

along with the business friendly environment, favorable policies and availability of skilled

manpower at a comparatively lower cost

Auto Ancillary Market – Overview

5

…to grow at a steady pace over the next five years

a11a10

a9a8

a7a6

a5a4

a3a2a1

0

1,000

2,000

3,000

4,000

INR Y

z2%

z1%

2016e 2015e 2014e 2013 2012 2011 2010 2009 2008 2017 2018

b4

b3b2

b1

0

500

1,000

1,500

2,000

2,500

Sales to OEMs Exports Aftermarket Imports

INR bn Market Segmentation – Sector-wise

Note: Figures for financial year – April to March

Auto Ancillary Market Size & Growth



Creating x to y mn additional jobs

Contribution to Employment Generation Contribution to GDP

Auto ancillary industry will generate employment opportunities and also contribute to country’s GDP

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

+z1%

2020e

a3 – a4

71%

29%

2009

a1

72%

28%

‘000 Person

a2

71%

29%

2015e

Direct Indirect

2015e

+z2%

%

2020e 2009


Auto ancillary market in India is expected to witness robust growth in terms of production, exports as well as imports

Auto Ancillary Market – Future Outlook

INR bn

+z%

2021e

a3

p3%

e3%

i3%

2016e

a2

p2%

e2%

i2%

2011

a1

p1%

e1% i1%

Domestic Production Exports Imports

8

SAMPLE


Value Chain Analysis

Raw Material 1, Raw Material 2, R Raw Material 3, Raw Material 4, Raw Material 5

Base Raw Material Producers

Semi Finished Material1, Semi Finished Material 2, Semi Finished Material 3

Semi Finished Material

Type 1

Tier p Manufacturers

Function 1

Type 2

Tier q Manufacturers

Auto part 1, Auto part 2, Auto part 3 etc.

Type 3

Tier r Manufacturers

Function 3, Function 4, Function 5, Function 6, Function 7, Function 8,

Function 9

Market 1 Type 4/ Type 5 Market

Market 2

Intermediaries

End Users

9

SAMPLE


Opportunities differ across manufacturers positioned at various levels within the auto ancillary sector

Small Local Entrepreneur

Domestic Tier 2/3 Supplier

Domestic Tier 1 Supplier

India-based global supplier

Opportunity 1

Opportunity 2

Opportunity 3

Opportunity 4

10

SAMPLE


Auto Ancillary Market – Segments (1/3)

Auto Ancillary Market – Segmentation (2010-11)

• Auto components industry has been classified into six broad segments:

• Segment 1 represent the largest segment with b1% share of auto component market

• This is followed by segment 2 with b2% share

• Segment 3 and Segment 4 account for b3% share each in the entire product range

• Segment 5 and Segment 6 represent b5% and b6% respectively

b1%

b7%

b6%

b5%

b4%

b3%

Segment 2

Segment 1

Other

Segment 6

Segment 5

Segment 4

Segment 3

11

SAMPLE


Segment 1 Segment 2

• Finding 1

• Finding 2

• Finding 3

• Finding 4

• These fall into three broad categories: Category 1

Category 2

Others

• Major parts include: Part 1, Part 2, Part 3, Part 4, Part 5, etc.

Outlook

• Finding 1

• Finding 2

• Finding 3

• Finding 4

• Major parts include: Part 6, Part 7, Part 8 and Part 9, Part 10,

etc.

Sub-segments

Auto Ancillary Market – Segments (2/3)

12

SAMPLE


Segment 1

•Sub-segment 1

•Sub-segment 2

•Sub-segment 3

•Sub-segment 4

•Sub-segment 5

•Sub-segment 6

13

SAMPLE


Sub-segment 1 (1/2)

Major Players & Strategic Alliances

Product Variation

Sub-segment 1 – Demand

Company Collaboration

Player 1 Player 7, Country 1

Player 2

Player 8, Country 2;

Player 10, Country 3;

Player 11, Country 4




Player 6

+z%

2020e 2015e 2014e 2013e 2012 2011

mn units

b8%

b1%

b7% b6%

b4%

b3%

Type 8

Type 3

Type 2

Type 1

Type 7

Type 6

Type 5

Type 4

14

SAMPLE


Sub-segment 1 (2/2)

Market Segmentation

Region-wise Sector-wise

c4%

c3%

c1%

East West North South

d3%

d1%

Export OE Replacement

15

SAMPLE


Opportunity Areas – Summary

Automobile Production Hubs

in India

Opportunity Area for the auto ancillary manufacturers

State 1

State 2 and Surrounding

State 3

State 4 and Surrounding

State 5

Auto ancillary manufacturing plants should be built near the major automobile production or assembly facilities to capitalize on the growing opportunities provided by the

existing as well as the emerging auto hubs in India

16

SAMPLE


State 1 – Opportunity Areas

Place 3

Place 5 Place 4

Place 2

Place 6

Place 1

•Company 1

•Company 2

•Company 3

•Company 4

Major Auto Hubs Major Auto ancillary Hubs Emerging Auto ancillary Hubs

State 1 – Auto Hub

Auto ancillary units in Place 2, Place 5 and Place 6 play a

significant role in supporting the development of State 1 as

an auto hub

State 1


Auto majors establishing manufacturing plants in State 1, resulting in a higher demand for auto ancillary units

State 1 – Auto Industry Scenario

• Finding 1

Sub-finding 1

Sub-finding 2

• Finding 3

• Finding 4

Sub-finding 3

Sub-finding 4

• Finding 5

Sub-finding 5

• Finding 6

18

SAMPLE


State 1 is likely to attract investment owing to its favourable environment

`

• Finding 1 • Finding 2


State 1 – Growth Drivers

• Finding 1 Sub-finding 1

• Finding 2


Government Support

Location Advantage

Human Resource Development

Availability of Land


Growth of exports have been hampered by the turbulent global economic scenario

• Finding 1

Sub-finding 1

Sub-finding 2

• Finding 3

Sub-finding 3

Sub-finding 4

• Finding 5

Exports (Value)

Export Destinations 20--

Exports – Overview

b2%

b6% b5%

b4%

b3%

b1%

Region 6

Region 5

Region 4

Region 3

Region 2

Region 1

INR bn

+z%

2021e 2008 2010 2009 2016e 2012 2011


Drivers & Challenges – Summary

Drivers

Growing Automotive Industry

Healthy Economic Outlook

Auto Aftermarket Demand

Growing Investments

Opportunity from New US IT Compliance Law

Challenges

Exposed to Cyclical Downturns in the Automobile Industry

Rising Labour Costs and Price of Raw Materials

Counterfeit Market

Technical Inefficiency

Depreciating Currency


Impact

Growing Automotive Industry Turnover Rising Passenger Vehicle Production

Growth in the automobile industry is expected to generate huge order…

Growing Automotive Industry (1/3)

• Finding 1

Sub-finding 1

• Finding 2

Sub-finding 2

• Finding 3

INR tr

2011

+z1%

2016e

‘000 units

+z2%

2021e 2016e 2012 2011 2010 2009

22

SAMPLE


Union Budget 2012-13 has hit the auto ancillary industry in both advantageous as well as disadvantageous ways

Union Budget 2012-13

• Finding 1

• Finding 2

• Finding 3

Negative Impact

• Impact 1

• Impact 2

• Impact 3

• Impact 4

Positive Impact

• Impact 1

• Impact 2

• Impact 3

23

SAMPLE


`

Diversification

Focus on Quality

Changing Design

Increasing Foreign Presence

Adoption of Green Strategies

Key Trends

Trends – Summary

Rising PE/VC Investments

24

SAMPLE


Public: Domestic Company – Company 1(1/4)

Key People

Products and Services

Company Information Offices and Centres – India

Corporate Address Address 1

Tel No. +91-xx- yyyyyyyyy

Fax No. +91-ww-zzzzzzzz

Website www.xxx.com

Year of Incorporation -

Ticker Symbol -

Stock Exchange Bombay Stock Exchange (BSE)

Products

Product 1, Product 2, Product 3, Product 4, Product 5, Product 6, Product 7, Product 8, Product 9, Product 10, Product 11, Product 12, Product 13, Product 14, Product 15, Product 16, Product 17, Product 18, Product 19, Product 20, Product 21, Product 22, Product 23, Product 24, Product 25 and Product 26

Name Designation

Person 1 MD and Executive Director

Person 2 VP of Finance and Accounts

Person 3 CEO of Subsidiary 1

Person 4 MD of Subsidiary 2

New Delhi

Head Office

25

SAMPLE


Financial Snapshot Key Ratios

Financial Summary

• The company incurred a net profit of INR a4 mn in FY 2011, as compared to net profit of INR a3 mn in FY 2010

• The company reported total income of INR b4 mn in FY 2011, registering an increase of x% over FY 2010

• The company earned an operating margin of p% in FY 2011, an increase of q percentage points over FY 2010

• The company reported debt to equity ratio of r in FY 2011, an increase of z% over FY 2010

Key Financial Performance Indicators

Indicators Value (--/07/2012) Market Capitalization (INR mn) x1

Total Enterprise Value (INR mn) x2

EPS (INR) x3

PE Ratio (Abs) (--/07/2012) x4

Particulars y-o-y change

(2011-10) 2011 2010 2009 2008

Profitability Ratios Operating Margin - - - - -

Net Margin - - - - -

Profit Before Tax Margin - - - - -

Return on Equity - - - - -

Return on Capital Employed - - - - -

Return on Working Capital - - - - -

Return on Assets - - - - -

Return on Fixed Assets - - - - -

Cost Ratios Operating costs (% of Sales) - - - - -

Administration costs (% of Sales)

- - - - -

Interest costs (% of Sales) - - - - -

Liquidity Ratios Current Ratio - - - - -

Cash Ratio - - - - -

Leverage Ratios Debt to Equity Ratio - - - - -

Debt to Capital Ratio - - - - -

Interest Coverage Ratio - - - - -

Efficiency Ratios Fixed Asset Turnover - - - - -

Asset Turnover - - - - -

Current Asset Turnover - - - - -

Working Capital Turnover - - - - -

Capital Employed Turnover - - - - -


Improved Decline

Net Profit/Loss Total Income

2011 2009

b3

INR mn INR mn

b1 b4

2008 2010

b2

26

SAMPLE


Key Business Segments Key Geographic Segments

Business Highlights (1/2)


Description News

Overview

• Company is engaged in manufacturing and sales of integrated automotive components

primarily in Country 1, Country 2 and Country 3 It produces parts for segment 1, part 1, part 2 and part 3 for segment 2,segment 3, and segment 4

and segment 5

Also, it manufactures components for various sectors, such as the sector 1, sector 2, sector 3, sector

4, sector 5, sector 6 and sector 7

Fund Raising

• In Mar 201--, company had raised ~INR x bn via issuance of foreign currency convertible

bonds to fund acquisitions and other capital investments Previously, in Jan 20--, company’s board was allowed to raise ~INR y bn via foreign debt instruments,

such as GDRs, ADRs, FCCBs or other securities convertible into equity

0%

50%

100%

2011

x2%

India

Finding 2

0%

50%

100%

2011

x1%

Automotive Components

Finding 1

27

SAMPLE


`

Recommendation 1

Recommendation 2

Recommendation 5

Recommendation 4

Recommendation 3 Key

Recommendations

Strategic Recommendations – Summary

28

Thank you for the attention

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