








150
CAGR: 16.8%
125.4
100
Increasing industrialisation and
economic development to drive
capital goods & engineering
market
57.6
50
0
2012
2017
2012
Capital goods & engineering
turnover expected to reach
USD125.4 billion by 2017 from
USD57.6 billion in 2012
2017
150
CAGR: 14.2%
100
50
Expansion in the electrical
equipment industry
105
24.2
0
2011
2011
60
2022
2022
CAGR: 19.0%
Electrical equipment market
size forecasted to reach
USD105 billion by 2022 from
USD24.2 billion in 2011
45
40
Engineering research & design
segment revenues to increase
fourfold by 2020
20
11.2
0
2012
2020
2012
ER&D revenues projected to
reach USD45 billion in 2020
from USD11.2 billion in 2012
2020
Source: Dept of Heavy Industries, India Electrical and Electronics Manufacturer Association, NASSCOM, Aranca Research
Notes: CG - Capital Goods, ER&D - Engineering Research & Design
30
22.7
CAGR: 28.8%
20
Indian construction equipment
market to grow sevenfold from
2012 to 2020
10
3
0
2012
2020
2012
40
Construction equipment market
projected to reach USD22.7
billion by 2020 from USD3
billion in 2012
2020
37
CAGR: 9.7%
30
20
Indian telecom equipment
market to more than double by
2020
16
10
0
2011
2020
2011
2020
10.7
11
10
Increased production of Central
Public Sector Enterprise
(CPSE)
Telecom equipment market to
reach USD37 billion by 2020
from USD16 billion in 2011
9.3
9
8
2013
2014
2013
Production of CPSE under DHI
to aggregate USD10.7 billion
by 2014 from USD9.3 billion in
2012-13
2014
Source: Booz & Company, Volvo India Ltd, Estimates, Ministry of Heavy Industries and Public Enterprise, Aranca Research
Notes: DHI - Dept. Of Heavy Industries, CPSE - Central Public Sector Enterprise
Attractive opportunities
Growingdemand
demand
Growing
FY13
•
Engineering
exports
from India:
USD56.7
billion
•
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
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
FY14
Engineering
exports
from India:
USD62.3
billion
Advantage
India
Policy support
Higher investments
•
•
Comparative advantage vis-à-vis
peers in terms of manufacturing
costs, market knowledge,
technology and creativity
Highly organised sector,
dominated by large players
employing over four million skilled
and semi-skilled labour
•
De-licensed engineering sector;
100 per cent FDI permitted
•
Cumulative FDI at USD19.4 billion
over April 2000–March 2014 due to
policy support
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
Heavy electrical
Heavy engineering
Heavy engineering and
machine tools
Automotive
Engineering
Low technology products
Light engineering
High technology
products
•
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 USD5.8
billion in FY17 and 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) 25,000 KVA
• Total production of turbines and generators stood at US2.2 billion in FY12 and is
estimated to reach USD6.6 billion by FY17 and USD13.4 billion by FY22
•
Transformers
Switchgear and control
gear
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 USD5.9 billion in FY17 and USD11.1 billion in FY22
•
•
About 32.6 million switchgears and control gears were produced in FY12
The switchgear market size touched USD2.0 billion in FY12 and is projected to reach
USD4.4 billion in FY17 and USD8.2 billion in FY22
Source: Ministry of Heavy Industries and Public Enterprise Annual Report 2012-13, Aranca Research
Notes: MW - Mega Watt, KVA - KiloVolt - Ampere
•
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
USD1.4 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 10,000 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 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
Source: Ministry of Heavy Industries and Public Enterprise Annual Report 2012-13,
Cabinet Committee on Infrastructure report, Aranca Research
Note: TPD - Tonnes Per Day
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
•
•
•
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
Process plant
equipment
•
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
Source: Ministry of Heavy Industries and Public
Enterprise Annual Report 2012-13, Aranca Research
•
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 threewheelers
• Total production in the automobiles sector stood at approximately 20.4 million units in
FY12 and 20.6 million units over FY13
• Total exports stood at 2.9 million units during FY12 and 2.9 million units over FY13
•
Auto components
The auto components industry has more than 500 companies in the organized sector and
about 10,000 entities in the unorganized sector
• The industry’s turnover expanded at a CAGR of 19 per cent to USD43.9 billion from
USD22.2 billion between FY08 and FY12 and is expected to reach USD145 billion in
2016.
• During FY08–12, exports increased at a CAGR** of 22 per cent to USD7.0 billion
•
•
Agriculture machinery
Agricultural tractors dominate the agriculture machinery sector
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
Source: Ministry of Heavy Industries and Public Enterprise Annual Report 2012-13,
Cabinet Committee on Infrastructure report, Aranca Research
Notes: *From April 2012 to November 2012, **CAGR calculated on Indian Rupee
•
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 demand, while 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 exports of industrial fasteners stood at USD621.9 million in FY13, up 13.8 per cent
from FY12
Source: Ministry of Heavy Industries and Public Enterprise Annual Report 2012-13, IVG Research, Aranca Research
Note: MMT - Million Metric Tonnes
India’s engineering exports (USD billion)
Indian engineering exports stood at USD 62.3 billion in
FY14
70.0
Over FY08–14, exports registered a CAGR of 10.8 per cent
CAGR: 10.8%
60.0
58.6
56.8
62.3
FY13
FY14
49.8
Engineering exports include transport equipment, capital
goods, other machinery/equipment and light engineering
products such as castings, forgings and fasteners
50.0
40.5
40.0
33.7
32.6
30.0
To boost engineering trade, the Engineering Export
Promotion Council (EEPC) held “India Engineering
Sourcing Show 2013” in March
The show had participants from 64 countries, and 320
exhibitors, including 60 overseas companies
Respondents received 418 business enquiries worth
USD38.0 million
20.0
10.0
0.0
FY08
FY09
FY10
FY11
FY12
Source: Reserve Bank of India, Engineering Export Promotion Council,
Ministry of Commerce & Industry Estimates, Aranca Research
Transport equipment is the leading contributor to
engineering exports. The segment accounted for 32.5 per
cent of the total engineering exports in FY13
Exports performance of principle commodities
(FY13)
Machinery and instruments is the other major contributor,
with a share of 26.8 per cent
The metal manufactures retained its 18 per cent share in
overall exports from the country which is the maximum in
terms of sectoral contribution
Transport equipment
14.1%
32.5%
9.0%
Machinery and
instrument
Manufactures of
metals
Primary and semi
furnished iron & steel
17.7%
Others
26.8%
Source: Engineering Export Promotion Council, Aranca Research
Company
Revenues (FY14)
Products
Larsen & Toubro
USD14.2 billion
Engineering & construction, cement,
electrical & electronics
Bharat Heavy Electricals Ltd
USD6.3 billion
Power generation, transmission,
transportation
Siemens India Ltd
USD2.1 billion*
Power generation and distribution
equipment, transportation systems,
communication and healthcare
products
ABB India Ltd
USD1.3 billion**
Crompton Greaves Ltd
USD2.2 billion
Transformers, switch gears, control
gears
Power generation and transmission
equipment
Source: Company Reports, News Article, Bloomberg, Aranca Research
Notes: * Revenue for CY13, ** For year ended 2013
Company
Revenues (FY14)
Products
USD0.3 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
USD0.7 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
Engineers India
Source: Company Reports, News Article, Aranca Research;
Note: *FY13
•
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 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
Source: Aranca Research
Note: BHEL - Bharat Heavy Electricals Ltd
Competitive Rivalry
•
•
•
Competition is intense among major players
Companies basically compete on pricing, experience in a particular
field, product quality, and capability of handling projects
Small companies are also trying to revamp their scale and size
Threat of New Entrants
•
Threat is low considering the
capital intensive nature of the
industry
and
reputation
attached to the existing players
Bargaining Power of Suppliers
•
•
Bargaining power of suppliers
is low due to cut-throat
competition
Suppliers have a strong hand
in the high-end technology
segment
Threat of New
Entrants
(Low)
Substitute Products
•
•
Threat is low because of the
nature of the industry
Even if the buyer wants to
revamp or renovate its existing
stock, it is likely to go to the
same players
Bargaining Power of Customers
•
•
Bargaining power in techoriented segments is low
Competition
in
power
generation and T&D equipment
sector gives bargaining power
Bargaining
Power of
Customers
(Medium)
Competitive
Rivalry
(Medium)
Substitute
Products
(Low)
Bargaining
Power of
Suppliers
(Medium)
Source: Aranca Research
Leveraging Indian
operations
•
Bigger companies are currently focusing on process improvement and a smaller set of key
strategies
•
ABB has set up global R&D centre in Bengaluru, and is also aiming at making India as
production hub for markets worldwide due to its labour cost advantage
•
Cummins has also opened R&D centre in Pune, for providing designing and technical abilities
worldwide
•
Companies are understanding the need of operations management following the crisis period
•
Good set of operational structure in place helps them target future business opportunities with
better precision
•
There is emphasis on human resource management, automation and higher labour
productivity
•
Most Indian companies are increasing their global footprints
•
Cheap cost of labour in India is giving them an edge over companies in higher wage
economies
•
Besides targeting the developed economies of Europe and US, Indian companies are
currently diversifying in the developing markets of Africa, South America and the Middle East
•
Most of the companies are targeting R&D to increase scope for growth
•
Competitors from China and South Korea are competing with those in India, making R&D one
of the key areas to focus on to develop cheap products without compromising quality
Operational efficiency
Geographical expansion
Enhancing R&D
ecosystem
Source: Aranca Research
Note: KPMG report on Engineering sector
•
Demand-side
drivers
•
•
Capacity addition for
power generation
Increase in
infrastructure spending
Rise in exports
Growth
drivers
•
•
•
De-licensing
Reduction in tariff and
customs
Supportive government
policies leading to
higher investments
•
Policy
Investment
•
•
Increasing FDI inflows
Higher M&A
Easy credit facilities for
manufacturing
companies
India’s energy requirement increased at a CAGR of 6.5 per
cent to 1,048.5 billion units over FY06–14
Energy requirement (BU)
1200.00
Demand for energy grew 5.1 per cent during FY14 vis-à-vis
the previous year
CAGR: 6.5%
1000.00
739
800.00
Higher demand for energy has led to increasing capacity
additions for power generation that, in turn, boosted
demand for power generation and transmission equipment
632
777
831
937
998
1,049
862
691
600.00
400.00
200.00
0.00
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
Source: Ministry of Power, Annual report 2012-13,
Load Generation Balance Report 2014-15, Aranca Research
Note: BU - Billion Unit
Addition in generating capacity (‘000’ MW)
Investments to increase capacity have led to rising demand
for power generation and transmission equipment
32.9
35.00
Capacity increased by 23,467 MW in FY13 from 20500 MW
in FY12
30.00
23.5
25.00
22.3
20.5
20.00
17.1
15.00
8.1
12.1
10.00
5.00
0.00
FY90
FY97
FY02
FY07
FY11
FY12
FY13
Source: Ministry of Power, Annual report 2012-13, Aranca Research
Note: MW - Mega watt
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
Infrastructure index and growth rate
180
150.7
160
129.9
140
The index rose to 145.3 in FY12, implying a CAGR of 5.2
per cent since FY07
The infrastructure index rose to 150.7 in FY13, implying a
growth rate of 3.6 per cent
120
112.6
118.5
138.4
9
8
145.3
7
121.8
6
100
5
80
4
60
3
40
2
20
1
0
0
FY07
FY08
FY09
FY10
FY11
FY12
FY13*
Source: Reserve Bank of India, Aranca Research
Notes: The base year for Infrastructure index has been changed
from 1993-94 to 2004-05
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 is expected to reach 85,000 km during the 12th Five-Year Plan
During the 11th Five-Year Plan, development of roads and bridges accounted for 15.3 per cent of the total USD456.9 billion
investments in infrastructure
Demand for related machinery has increased significantly due to large-scale public and private investments in roads
Share in roads network (FY13)
3.3
Total highway length added during Five-Year Plans (KM)
40000
1.7
36,500
35000
30000
State highway
National highway
25000
23,814
20000
15000
Districts and rural
roads
10000
7,091
9,044
10th Plan
11th Plan
5000
0
95
9th Plan
12th Plan*
Source: National Highway Authority of India, Ministry of Road Transport and Highways, Aranca Research
Notes: * - Physical Achievements under National Highways Development Project during 11 th Five Year Plan up to Sept, 2011
•
De-licensing
Tariffs and custom
duties
Focus on power
generation and
infrastructure
The engineering industry has been de-licensed and 100 per cent FDI has been permitted
in the sector
• Foreign technology agreements are allowed under the automatic route
•
•
The government has eliminated tariff protection on capital goods
It has reduced custom duties on a range of engineering equipment
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)
National Manufacturing
Policy (2011)
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; it is
expected to bolster the sector
•
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
Source: DHI Annual report 2010-11, Ministry of Power Annual Report, Aranca Research
Note: GW - Giga Watt
15 per cent investment
allowance to boost
capex
Cut in excise duty to aid
the auto industry
Increase in allocation to
JNNURM to aid
infrastructure and
capital goods
Higher allocation to the
defence sector
Budgetary support
•
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
•
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
•
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
•
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
•
In the interim budget FY14-15, custom duty on a range of capital goods was slashed from
12 to 10 per cent, to support the sector
Source: Interim Union Budget FY14-15
Notes: Capex - Capital Expenditure,
JNNURM - Jawaharlal Nehru National Urban Renewal Mission
Developer
Location
Product
Ranga Reddy, Andhra Pradesh
Aerospace and precision engineering
Nalgonda, Andhra Pradesh
Light engineering
Hazira, Gujarat
Engineering
Gujarat Industrial Development Corporation Ltd (GIDC)
Gandhinagar, Gujarat
Electronic products
N.G. Realty Pvt Ltd
Ahmedabad, Gujarat
Engineering
Vadodara, Gujarat
High-tech engineering and related
products
Amreli, Gujarat
Engineering
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
Shimoga, Karnataka
Engineering
Mangalore, Karnataka
Port-based for high-tech engineering
products
Andhra Pradesh Industrial Infrastructure Corporation
Limited (APIIC)
Deccan Infrastructure and Land Holdings Ltd
M/s Essar Hazira SEZ
M/s Synefra Engineering and Construction Ltd
E. Complex Pvt Ltd
Dishman Infrastructure Ltd
Karnataka Industrial Areas Development Board
Suzlon Infrastructure Ltd
Source: SEZ India, Aranca Research
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,
Maharashtra
Light engineering
Satara, Maharashtra
Engineering
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
Erode, Tamil Nadu
Engineering
Kanpur, Uttar Pradesh
Engineering
Navi Mumbai SEZ Pvt Ltd
Maharashtra Industrial Development Corporation (MIDC)
Township Developers India Pvt Ltd
Perundurai Engineering SEZ by SIPCOT
Uttar Pradesh State Industrial Development Corporation
(UPSIDC)
Source: SEZ India, Aranca Research
Cumulative FDI inflows in engineering sector
(USD billion)*
Cumulative FDI inflows increased to USD19.4 billion in
FY14 from USD8.9 billion in FY10
The government’s increasing focus on attracting foreign
investors in manufacturing and infrastructure is likely to
boost FDI in the sector
25.0
19.4
20.0
18.5
14.7
15.0
10.0
8.9
11.1
5.0
0.0
FY10
FY11
FY12
FY13
FY14
Source: Department of Industrial Policy & Promotion, Aranca Research
Notes: * - Cumulative from April 2000 to March 2014 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
M&A deals
Acquirer
Target
Type
Acquisition date
Caterpillar Global Mining LLC
Acquisition
February 2014
3Cap Technologies GmbH
Acquisition
January 2013
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
Utkal Galvanizers Ltd
Acquisition
April 2011
Aircon Engineering Services
Majority stake
May 2011
Bharat Wire Ropes Ltd
Acquisition
July 2010
Igarashi Group-Agile Electric Drives
Technologies and Holdings
Majority stake
December 2010
Tractors India Pvt Ltd
Geometric *
Simplex Infrastructures Ltd
Diamond Power Infrastructure Ltd
Yash Birla Group
Gaji Mercantile
HBL Power Systems
Source: Grant Thornton, Aranca Research, Thomson Banker
Note: * - Acquired by its German subsidiary- Geometric Europe GmbH
•
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
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 business opportunity worth USD312 million for the manufacturing industry,
which is likely to garner 61 per cent
•
Civil nuclear sector
•
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
Source: Aranca Research
Notes: GW - Giga Watt, SME - Small and Medium Enterprises
•
Power Transmission
and Distribution (T&D)
T&D expenditure is set to increase on 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
Source: Aranca Research
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
Total Spend
~ USD850
billion
2009
• The
global engineering services spending
estimated to be around USD850 billion
is
• About USD40 billion is expected to flow through the
outsourcing channel into vendor countries
Projected Spend
USD1100 billion
~4.5%
15-20%
Offshore Expenditure
Onshore Expenditure
• India
accounts for about 20 per cent of the
outsourced market
~ 20%
25-30%
2020
• The
global engineering services
projected to reach USD1100 billion
spending
is
• 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
India
Competing countries
India
Competing countries
Source: Booz Allen Hamilton, Nasscom, Aranca Research
Note: ESO is Engineering Services Outsourcing
India’s electrical equipment industry
significant growth in the last few years
has
witnessed
Major electrical equipment registered a CAGR of 21.8 per
cent from 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 projected to reach USD75.0
billion in FY22 from USD18.4 billion in FY11
Indian Electrical Equipment Industry posts marginal 3.5 per
cent growth in 2013-14, out of which capacitors and energy
meters showed the maximum growth of 41.1 per cent and
10 per cent
Growth in industry size of major electrical equipment
(USD billion)
30.0
25.0
25.0
CAGR: 21.8%
20.0
15.0
13.2
11.4
10.2
11.0
FY08
FY09
FY10
10.0
5.0
0.0
FY11
FY12
T&D equipment demand projection (USD billion)
80
70
60
50
40
30
20
10
0
75.0
39.9
18.4
FY11
FY17
FY22
Source: Indian Electrical and Electronics Manufacturers Association, Department of Heavy Industries
Notes: T&D - Transmission and Distribution, BTG - Boilers, Turbine, Generator
The generation equipment (BTG) segment is projected to grow 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)
Generation equipment-wise demand projection
(USD billion)
Market share of electrical equipment (FY13)
30
Rotating Machines
10.0%
25
23.4%
6.7
20
15
6.7
3.3
10
0.6
5
3.3
1.6
3.8
11.7
5.8
Boiler
FY17
Turbine
Generator
15.2%
Cables
Transformers
3.9%
0.9%
Capacitors
Energy Meters
19.3%
27.3%
Transmission Lines
0
FY11
Switchgear
FY22
Source: Indian Electrical and Electronics Manufacturers Association
Note: BTG - Boiler, Transmission and Generation
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 to 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
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
3.0%
Earth moving
13.2%
Road constrution
equipment
Concrete equipment
19.0%
56.2%
Material handling
8.5%
Material processing
Source: Indian Construction Equipment Manufacturer’s Association, NBM media
Notes: CE - Construction Equipment, ECE - Electrical and Construction Equipment
Net sales (USD billion)
Salient features
12.0
• 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
• Net sales totalled USD6.3 billion in FY14
10.4
10.0
9.0
8.0
7.1
5.8
6.0
4.0
3.9
9.2
6.3
4.5
3.0
2.0
0.0
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
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
Recent awards and recognitions
• CII-ITC Sustainability Award (2012)
• AIMA Managing India Award for Outstanding PSU of
the year (2012)
• India Pride Award for Excellence in Heavy Industries
2012–13 from Union Minister of Petroleum & Natural
Gas
• 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)
• Conferred the PSE Excellence Award by the Indian
Chamber of Commerce (ICC) in 2013
• Conferred the ICAI National Award for Excellence in
Cost Management in 2012
Boiler
efficiency
Lower
auxiliary
power
consumption
Key success
factors
Lower
lifecycle cost
Lower
design heat
rate
Better PLF
Acquisitions in
various countries
FY14
USD1099
million
turnover
Transmission parts
Entry into new
markets such as
US and Greece
Hubs
Joint ventures
and technical
partnerships
Organic growth &
integration
Front axle beams
Awarded
Sword Of
Honour for
Safety
Success
Crank shaft
ISO accreditations
Closed die forging
Won a
Euro 250
million
multi-year
contract
FY05
USD245
million
turnover
Open die forging
1960
1970
1980
1986
1990
1996
2000
2004
2005
2006
2007
2008
2011
2012
2013
2014
Source: Company reports, Aranca Research
Net sales (USD billion)
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
centers across eight locations in India
• Promoted and established 11 joint venture companies
in collaboration with leading international and Indian
aviation organisations
• Offers services for aircraft accessories, foundry and
forge, engine, helicopter, industrial & marine gas
turbine division and transport aircraft division
3.5
2.9
3.0
2.5
3.0
2.6
2.4
2.1
2.3
2.0
1.5
1.0
0.5
0.0
FY08
FY09
FY10
FY11
FY12
FY13
Source: Company reports, Aranca Research
Notes: ‘Navratna’ is the title given to nine Public Sector Enterprises (by the
Government of India) having distinct comparative advantages,
HAL - Hindustan Aeronautics Limited
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: team@natrip.in
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: info@araiindia.com
Fluid Control Research Institute
Kanjikode West,
Palakkad - 678623.
Phone: 91-491-2566120/2566206
Fax: 0491-2566326
E-mail: fcri@fcriindia.com
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: eepc@eepcindia.org
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
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
Exchange rates (Fiscal Year)
Exchange rates (Calendar Year)
Year
INR equivalent of one USD
Year
INR equivalent of one USD
2004–05
44.81
2005
43.98
2005–06
44.14
2006
45.18
2006–07
45.14
2007
41.34
2007–08
40.27
2008
43.62
2008–09
46.14
2009
48.42
2009–10
47.42
2010
45.72
2010–11
45.62
2011
46.85
2011–12
46.88
2012
53.46
2012–13
54.31
2013
58.44
2013–14
60.28
Q12014
61.58
Average for the year
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