engineering - august 2013

7/29/2019 Engineering - August 2013

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Source: Dept of Heavy Industries, India Electrical and ElectronicsManufacturer Association, NASSCOM, Aranca Research

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

Increasing industrialisation and economicdevelopment to drive capital goods &

engineering market

Expansion in the electrical equipmentindustry

Engineering research & design segmentrevenues to increase fourfold by 2020

Capital goods & engineering turnover isexpected to reach USD125.4 billion by

2017 from USD57.6 billion in 2012

Electrical equipment market size expectedto reach to USD105 billion by 2022 from

USD24.2 billion in 2011

ER&D revenues projected to reach toUSD45 billion in 2020 from USD11.2

billion in 2012

57.6

125.4

2012 2017CG & Engineering turnover

CAGR: 16.8%

24.2

105

2011 2022Electrical equipment market size

CAGR: 14.2%

11.2

45

2012 2020ER&D revenue

CAGR: 19.0%


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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 togrow sevenfold from 2012 to 2020

Indian telecom equipment market to morethan double by 2020

Increased production of Central PublicSector Enterprise (CPSE)

Construction equipment market projectedto reach USD22.7 billion by 2020 from

USD3 billion in 2012

Telecom equipment market to reachUSD37 billion by 2020 from USD16 billion

in 2011

Production of CPSE under DHI toaggregate 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%

9.210.7

2011 2014Production of CPSE's

CAGR: 5.4%


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

Due to policy support, there wascumulative FDI of USD14.0 billion intothe sector over April 2000 February2012, making up 8.6 per cent of totalFDI 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 suchas infrastructure, power, mining,oil & gas, refinery, steel,automotives, and consumerdurables driving demand in theengineering sector

Rising demand for electrical andconstruction equipment

Attractive opportunities

Nuclear capacity expansion toprovide significant businessopportunities to the electricalmachinery industry

Rapid increase ininfrastructure investment andindustrial production to fuelfurther growth

Policy support

De-licensed engineering sector; 100per cent FDI permitted

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

Higher investments

Comparative advantage vis--vispeers in terms of manufacturing

costs, market knowledge,technology and creativity

Highly organised sector anddominated by large playersemploying over four million skilledand semi-skilled labour

Engineeringexports

from India:USD56.7

billion

FY14E

Engineeringexports

target fromIndia:

USD125.0

billion

AdvantageIndia

FY13


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Engineering

Heavy Engineering

Light Engineering

Heavy Electrical

Heavy Engineering andMachine Tools

Automotive

Low TechnologyProducts

High TechnologyProducts


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Source: Ministry of Heavy Industries and Public Enterprise Annual Report 2012-13, Aranca ResearchNotes: MW - Mega Watt, KVA - KiloVolt - Ampere

Boilers

The Indian boiler industry has the capability to manufacture boilers with super criticalparameters up to 1000 MW unit size

The industrys market size was USD5.1 billion in FY12 and is expected to reach USD11.7billion in FY22

Turbines and generatorsets

The industry manufactures various turbines in the range of 8007000 MW per annum, andgenerators 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 isestimated to reachUSD6.7 billion by FY22

Transformers

A whole range of power and distribution transformers, including special type oftransformers required for furnaces, electric tracts and rectifiers, are manufactured in thecountry

The transformers market in India was valued at USD2.7 billion in FY11 and is expected toreach USD11.1 billion in FY22

Switchgear and controlgear

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


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Source: Ministry of Heavy Industries and Public Enterprise Annual Report 2012-13, Cabinet Committee on Infrastructure report, Aranca ResearchNotes: TPD - Tonnes Per Day

Machine tools

This segment churns out basic machinery for all major industries and determinescompetitiveness in other sectors such as automobiles, heavy electrical and defence

Nearly 200 machine tool manufacturers are operational in the organised sector along with 400small-scale units

Production of machine tools totalled USD900 million, while exports stood at USD288.7 millionin 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 processtechnology (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 handlingequipment

With around 50 units in the organised sector, the material handling equipment industry isengaged in the setting up of coal/ore/ash handling plants and manufacturing associatedequipment

The sectors total imports stood at USD331 million in FY12, while exports aggregatedUSD31.9 million


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Source: Ministry of Heavy Industries and PublicEnterprise Annual report 2012-13, Aranca Research

Plastic processingmachinery

There are 11 major and nearly 200 small & medium manufacturers Domestic manufacturers cater to 95 per cent of the processing industrys 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 plantequipment

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 andmining equipment

Currently, 20 large and global manufacturers, and 200 small & medium manufacturersoperate in the industry

Production and exports totalled USD3.8 billion and USD274.9 million, respectively, inFY12


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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 utilityvehicles

Currently, there are 16 manufacturers of passenger cars and multi-utility vehicles, 13manufacturers 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 inFY12 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 andabout 10,000 entities in the unorganised sector

The industrys turnover expanded at a CAGR of 19 per cent between FY08 and FY12 toUSD43.9 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 worlds 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


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Source: Ministry of Heavy Industries and Public Enterprise Annual Report 2012-13, IVG Research, Aranca ResearchNotes: MMT - Million Metric Tonnes

Casting and forging

The Indian casting industry produces 6 MMT of various grades of casting and ranks sixthin the world

The forging industry comprises around 10 organised players, with nearly 100 players inthe small and medium sector

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

Medical and surgicalequipment

The medical and surgical equipment industry manufactures a wide range of medicalequipment 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 percent from FY12


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

Ministry of Commerce & Industry Estimates, Aranca ResearchNote: P - Data for FY12 is provisional,

R - Data for FY11 is revised

Indias engineering exports (USD billion)Indian engineering exports stood at USD56.7 billion in FY13

Over FY0813, exports registered a CAGR of 12.6 per cent

Engineering exports include transport equipment, capitalgoods, other machinery/equipment and light engineeringproducts such as castings, forgings and fasteners

Exports target for FY14 is estimated at USD125 billion

To boost engineering trade, India Engineering SourcingShow 2013 was held by the Engineering Export PromotionCouncil (EEPC) in March

64 countries participated in the show and there were320 exhibitors including 60 overseas companies

418 business enquiries worth USD38.0 millionreceived by the respondents

31.3

45.3

38.3

58.1

67.1

56.7

FY08 FY09 FY10 FY11R FY12P FY13

CAGR: 12.6%


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Source: Engineering Export Promotion Council, Aranca Research

Exports performance of principle commodities(FY13)

Transport equipment is the leading contributor toengineering exports. The segment accounted for 32.5 percent of the total engineering exports during FY13

Machinery and instruments is the other major contributorwith a share of 26.8 per cent

The engineering sector retained its 18 per cent share inoverall exports from the country which is the maximum interms 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


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Source: Company Reports, News Article, Bloomberg, Aranca ResearchNote: Financial Year Ending * 30 September 2012, ** 31 December 2012

Company Revenues (FY13) Products

Larsen & Toubro USD28.3 billionEngineering & Construction,

Cement, Electrical & Electronics

Bharat Heavy Electricals Ltd USD9.3 billionPower Generation, Transmission,

Transportation

Siemens India Ltd USD2.6 billion*

Power Generation and DistributionEquipment, Transportation

Systems, Communication andHealthcare Products

ABB Ltd USD1.4 billion** Transformers, Switch Gears,Control Gears

Crompton Greaves Ltd USD2.1 billionPower Generation and

Transmission Equipment


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Company Revenues (FY13) Products

Engineers IndiaUSD0.5 billion

Highways & Bridges, Mass RapidTransport Systems Construction,Specialist Materials Manufacturing

Kirloskar Oil Engines Ltd USD0.4 billionEngines, Engine Bearings & Valves,Grey Iron Casting

Cummins India Ltd USD0.8 billionPower Generation, Constructionand Mining Equipment, Fire Pumps& Cranes, Compressors

Thermax USD1.0 billionBoilers and Heaters, Air Pollution

and Purification, Absorption Cooling

BGR Energy USD0.6 billion Boilers, Turbines, Generators

Source: Company Reports, News Article, Aranca Research


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Source:Aranca ResearchNote: 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-addedproducts

Rising competition is driving domestic players to focus on improving their capabilities,become more quality conscious, and upgrade their technology base in line with globalrequirements

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

growth opportunities Entry of new players has raised the industrys competitiveness


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Growthdrivers

Demand-sidedrivers

InvestmentPolicy

De-licensing Reduction in tariff and

customs Supportive government

policies leading tohigher investments

Increasing FDI inflows Higher M&A

Easy credit facilities formanufacturingcompanies

Capacity addition forpower generation

Increase ininfrastructure spending

Rise in exports


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Energy requirement (000 MU)Indias energy requirement increased at a CAGR of 6.7 percent over FY0613 to 995.5 billion units

Demand for energy grew 6.2 per cent during FY13 vis--visthe previous year

Higher demand for energy has led to increasing capacityadditions for power generation that, in turn, boosteddemand 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

632691

739 777831 862

937 996

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

CAGR: 6.7%


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Addition in generating capacity (000 MW)Investments to increase capacity have led to rising demandfor power generation and transmission equipment

Capacity increased to 20600 MW during FY13 compared to20500 MW in FY12

Source: Ministry of Power, Annual report 2012-13, Aranca ResearchNote : MW - Mega watt

8.1

12.1

17.1

22.3

32.9

20.5 20.6

FY90 FY97 FY02 FY07 FY11 FY12 FY13


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Infrastructure index and growth rateThe Infrastructure Index (part of the wider Index of IndustrialProduction) 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 5.1per cent since FY07

The infrastructure index rose to 145.1 over AprilDecember2012

Source: Reserve Bank of India, Aranca Research

Notes: The base year for Infrastructure index has been changedfrom 1993-94 to 2004-05* - April 2012-December 2012

112.6 118.5121.8

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*


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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 andbridges 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

7,0919,044

9th Plan 10th Plan 11th Plan*

Source: National Highway Authority of India, Ministry of Road Transport and Highways, Aranca ResearchNotes: * - Physical Achievements under National Highways Development Project during 11 th Five Year Plan upto Sept, 2011


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

The government has eliminated tariff protection on capital goods It has reduced custom duties on a range of engineering equipment

Initiatives focussed onpower generation and

infrastructuredevelopment

The government has an ambitious mission of Power for all by 2012 and has plannedcapacity additions of 120 GW in the 12th Five-Year Plan

Governmental infrastructure projects such as Golden Quadrilateral and the North-Southand 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 theengineering sector

Delhi Mumbai Industrial Corridor (DMIC) is being developed across seven states that isexpected to bolster the sector

National ManufacturingPolicy (2011)

Government of India launched the National Manufacturing Policy with the aim ofenhancing the sectors share in GDP to 25 per cent within a decade and creating 100million jobs by 2022


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Source: Union Budget FY14Note: Capex - Capital Expenditure

JNNURM - Jawaharlal Nehru National Urban Renewal Mission

15 per cent investmentallowance to boost

capex

The government would provide 15 per cent exemption on tax to manufacturing companiesthat invest more than USD18.4 million in plant and machinery over FY1415

Cut in excise duty to aidthe auto industry

A cut in excise duty on truck chassis from 14 per cent to 13 per cent would increase profitmargins for major automobile companies such as Ashok Leyland and Eicher Motors

Increase in allocation toJNNURM to aid

infrastructure andcapital goods

The government has increased the allocation to JNNURM from USD1.3 billion in FY13 toUSD2.6 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 USD16billion for modernisation-related expenditure. This could further increase investments in

the defence equipment industry


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Source: SEZ India, Aranca Research

Developer Location Product

Andhra Pradesh Industrial Infrastructure CorporationLimited (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, GujaratHigh-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, KarnatakaPort-based for high-tech engineering

products


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Developer Location Product

Quest Machining and Manufacturing Pvt Ltd Belgaum, KarnatakaAuto, aerospace and industrial

engineering

Viraj Profiles Ltd Thane, Maharashtra Stainless steel engineering products

Navi Mumbai SEZ Pvt LtdNavi 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


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Source: Department of Industrial Policy & Promotion, Aranca ResearchNote: FY10 - Cumulative from April 2000 to March 2010 and so on

FDI inflows includes Automobile industry, Electrical equipment, Miscellaneousmechanical 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 inFY13 from USD8.9 billion in FY10

With the increasing focus by government to attract foreigninvestors in manufacturing and infrastructure, FDI in thesector is set to rise

8.9

11.1

14.7

17.3

FY10 FY11 FY12 FY13


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Source: Grant Thornton, Aranca ResearchNote - * - 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 SystemsIgarashi Group-Agile Electric Drives

Technologies and HoldingsMajority stake December, 2010


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Source: Company Reports, Indian Express, Aranca ResearchNote: 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 3.94.5

5.8

7.1

9.0

10.49.2

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

Salient features

One of the largest engineering and manufacturingcompanies with Navratna status

One of the major integrated power plant equipment(IPPE) manufacturers in the world

Profit-making company since 197172

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 generatingcapacity in FY12


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Key success factors

Boilerefficiency

Lowerdesign heat

rate

Better PLFLowerlifecycle cost

Lowerauxiliary

powerconsumption

Recent Awards and Recognitions

Golden Peacock Award 2011 for Occupational Healthand Safety(2011)

SCOPE Meritorious Award 2010-11 for Best Practicesin 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 ofIndia (2011)

CII-Thompson Reuters Innovation Award (2010)


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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 newmarkets such asUS and Greece

Acquisitions invarious countries

FY13USD1050

millionturnover

FY05USD245million

turnover

Joint venturesand technicalpartnerships

Source: Company Reports, Aranca Research


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Source: Company Reports, Aranca ResearchNote: 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 Asias largest aerospace companies withNavratna status

Produced over 3,700 aircraft including 15 types ofindigenous 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 Indianaviation organisations

Offers services for the aircraft accessories, foundryand forge, engine, helicopter, industrial & marine gasturbine division and transport aircraft division


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Source:Aranca ResearchNotes: 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 percent would be earmarked for procuring manufactured items which is likely to translate intoa market opportunity of USD91 billion over 20102014

Government initiatives, such as allowing private sector participation, have been reinforcedby opening up the sector to 26 per cent FDI, and its offset policy is expected to enhanceprivate sector (including SME) participation

Civil nuclear sector

Indias nuclear capacity is expected to be strengthened by 3.8 GW by 2012; an additional12,000 MW has been planned under the 12th Five-Year Plan (201217)

It represents a total business opportunity worth USD312 million for the manufacturingindustry, which is likely to garner 61 per cent

Auto components

Global auto majors are rapidly ramping up the value of components they source fromIndia, steered by the countrys advanced engineering skills, established production lines, athriving domestic automobile industry and competitive costs

Industry sales are expected to increase to USD40 billion by 2016, with about USD20billion generated from exports


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Source:Aranca Research

Power transmission anddistribution (T&D)

T&D expenditure is set to increase as a result of growth in power generation andprivatisation 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 fromsteel, power, mineral and other infrastructure industries

Market demand for material handling equipment is estimated at USD30 billion over 200714

Machine tools

Demand for machine tools from the capital goods sector (especially automobile and textileindustries) is projected to remain high

Considering the industry's demand for higher productivity, superior precision andaccuracy, as well as low-cost manufacturing solutions, computer numerically controlled(CNC) machine tools are set to be in greater demand


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Source: Booz Allen Hamilton, Nasscom, Aranca ResearchNotes: 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 reachUSD4050 billion, propelled by increasing onshore tooffshore movement of services

2009

The global engineering services spending is

estimated to be around USD850 billion

About USD40 billion is expected to flow through theoutsourcing channel into vendor countries

India accounts for about 20 per cent of theoutsourced market

2020

The global engineering services spending isprojected to reach USD1100 billion

About USD180 billion is estimated to flow through theoutsourcing channel into vendor countries

India can account for about 2530 per cent of thisoutsourced revenue


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Growth in industry size of major electrical equipment(USD billion)

Indias electrical equipment industry has witnessedsignificant growth in the last few years

Major electrical equipment registered a CAGR of 21.8 percent from a small base of USD11.4 billion to USD25 billionbetween 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, domesticdemand for electrical equipment is targeted to be USD100billion by FY22

Demand for T&D equipment is expected to reach USD13.9billion in FY22 from USD3.4 billion in FY11

11.4 10.2 11.013.2

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


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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)

3.85.8

11.71.6

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 AssociationNotes: BTG - Boiler, Transmission and Generation


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Indias earthmoving and construction equipment (ECE) industry has enjoyed strong growth over the last seven years due torapid economic development

The organised construction sector in India (for example, roads, urban infrastructure) accounts for approximately 55 per cent ofthe ECE industry. Mining, irrigation and other infrastructure segments (power, railways) account for the remaining

During FY1014, 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 concreteequipment 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 9000Source:Indian Construction Equipment Manufacturers Association, NBM media

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


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National Automotive Testing and R&D Infrastructure Project (NATRiP)NBCC Place, South Tower,3rd Floor,Bhishma Pitamah Marg,Pragati Vihar,Lodhi Road,New Delhi - 110003Tel : + 91-11-49215555Fax : +91-11-24369333E-mail : [email protected]

The Automotive Research Association of IndiaSurvey No 102, Vetal Hill, Off Paud Road,Kothrud, Pune - 411 038P.B. No 832, Pune - 411 004Tel. No : +91-020-30231111Fax No : +91-020-25434190Email Id: [email protected]


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Fluid Control Research InstituteKanjikode West,Palakkad - 678623.Phone : 91-491-2566120/2566206Fax : 0491-2566326E-mail : [email protected]

Engineering Export Promotion Council (EEPC)

Vanijya Bhawan, 1st FloorInternational Trade Facilitation Centre1/1, Wood StreetKolkata, West Bengal700016Phone: 91-33-22890651, 22890652Fax: 91-33-22890654E-mail: [email protected]


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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 Manufacturers 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


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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


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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


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engineering - august 2013

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