india machine tools industry

India Machine Tools Industry


Industry Overview

Structure of The Machine Tool Industry

Classes of Machine Tool Manufacturers Percentage of Companies in Various Classes

Key Players

New Players Entering Market

Scatter of Machine Tool Manufacturers

Production Capability Major Products Products Offered by Major Players

Machine Tools Production Production of Machine Tools over Years Production Break-up NC Machines and Non-NC Machines NC Machines Showing Highest Growth Rate

Machine Tools Consumption Per Capita Consumption Growth in Per Capita Consumption of Machine Tools of

India

Factors Powering Growth Machine Tools Consumer Industries are Growing at a

Good Rate Index of Industrial Production GDP Growth Other Factors

Contents


Challenges

Import Market

Used Machine Tools Market

Technical Centres for Training

Government Regulations

Future Outlook

Sources of Data

Important Associations and Their Websites

About Us

Contact Us


India is the 18th largest producer of machine tools in the world. The Machine Tools industry consists of about 450 manufacturing units, of which about 150 are in the organized sector and international companies like Doosan, DMG & Makino amongst others which import machines for selling. The top ten manufacturers account for almost 70% of the output. Domestic manufacturers account for about 45% of the total Indian machine tool market. The Indian Machine Tool Sector has had a stagnant growth since the beginning of 2000 as investment in the manufacturing sector slowed down considerably. In early 2002, Indian Engineering Sector, especially the automotive sector, witnessed increased investments as global majors started to outsource manufacturing to India. This led to a spurt in demand for machine tools. The machine tool industry, since then, has been growing at a healthy rate. The machine tool Industry in India is now in a position to export general purpose and standard machine tools to even industrially advanced countries. With Index of Industrial Production touching new highs and emphasis on capital investment by the government, the Machine Tool Industry is all set to witness unprecedented growth.

Industry Overview


Machine Tool Industry can be classified according to the types of machines i.e. metal cutting and

metal forming. Both the types of machines can be further classified into manually operated machines

and numerically controlled. As awareness about new technology is increasing, more and more people

are opting for more advanced NC and CNC machines.

Structure of The Machine Tool Industry

*CNC : Computer Numerically Controlled *NC : Numerically Controlled

Machine Tools

Metal Cutting

Metal Forming

Manual

CNC*

Manual

NC*

General Purpose Machine

Special Purpose Machine

Numerically Controlled

Flexible Manufacturing System


Class I Class I comprises of Large Multi National Companies with production set

up in India. (Eg.: Bharat Fritz Werner Ltd., Kennametal India Ltd.)

Class II This class comprises of Large Indian Firms (Eg.: ACE Manufacturing

Systems, Batliboi, HMT Machine Tools, Lakshmi Machine Works, TAL

Manufacturing Solutions)

Class III Indian Mid-Sized Companies makes the Class III of Machine Tool

Players. (Eg.: Jyoti CNC Automation Pvt Ltd., Macpower CNC Machine

Pvt. Ltd., PMT Machines Ltd., Miven Machine Tools)

Class IV This class comprises of Small Indian Companies (Eg:. Accurate Systems,

Anil Machines, Galaxy Machinery Pvt. Ltd)

Class V Companies directly importing in India and which have their after sales

service division in India comes in Class V (Eg:. HAAS Automation, DMG

India Pvt. Ltd., Mori-Seiki, Y. Mazak)

Classes of Machine Tool Manufacturers


Class VI Class VI comprises of companies which only import machines but do not

have their after sales service division in India (Eg.: Dalian Machine Tool

Group, Francis Klein & Co. Pvt. Ltd.)

Class VII Small companies which buy used machines from outside India and Retro

Fit form Class VII. (Eg.: Askar Microns Pvt. Ltd, Hark Ram Enterprises)

“Majority of the Machine Tool Players in India are small in size (Class IV) and majority of them form a part of the unorganized sector. With the industry growing at a healthy rate, these players are expected to move up higher in the chain i.e. Class II and III”

Percentage of Companies in Various Classes

5%10%

14%

28%

24%

11%

8%

Class IClass IIClass IIIClass IVClass VClass VIClass VII


“Ace and HMT are the leading Machine Tool Manufacturers in India currently in terms of revenue.”

Name Type of Company Home Location ACE Private Limited Bangalore LMW Public Limited Coimbatore BFW Private Limited Bangalore Jyoti Private Limited Rajkot

Batliboi Private Limited Rajkot TAL Private Limited Pune

Lokesh Private Limited Hyderabad HMT Public Limited Bangalore DMG Importer China

Mazak Importer Singapore Makino Importer US Feeler Importer Taiwan Haas Importer US

Doosan Importer Korean

Key Players


Company Country of Origin Status

MAG Industrial Automation Systems USA Sets up subsidiary in India

Heller Germany Forms JV with TAL Manufacturing Solutions

Glidemeister Germany Sets up tech centre in Bangalore

Schuler Germany To enter into Joint Ventures

MAUS Italy Enters into JV with TAL Manufacturing Solutions

Rosa Ermando Italy Enters into JV with UCAM of Bangalore

Citizen Japan Opens representative office in Bangalore

Amanda Japan To set up manufacturing facility on India

“India has emerged as the nerve centre of the machine tool industry in Asia and its technological capabilities are far superior to many other Asian countries. Our JV with UCAM will manufacture a special category of machines, which hitherto were not made in India.”

- Ricardo Rosa

President Rosa Ermando SpA

“We see the market for machine tools in India growing rapidly in the next few years. We are here because of its highly trained, efficient and skilled workforce.”

- Roger W Cope

President MAG Industrial Automation Systems

New Players Entering Market


“The majority of the Machine Tool Manufacturers are located in Karnataka and Maharashtra. Bangalore is the base for most of the Machine Tool Companies in India.”

Current Hubs Upcoming Consumption Areas Mumbai and Pune (Maharashtra) Ahmednagar

Bangalore (Karnataka) Rudrapur

Coimbatore and Chennai (Tamil Nadu) Jaipur

Batala, Jalandhar and Ludhiana (Punjab) West Bengal

Ahmedabad, Baroda, Rajkot, Jamnagar and Surendranagar (Gujarat)



3% 5%12%

2%

28%29%

14%7%

Andhra Pradesh Delhi Gujarat HaryanaKarnataka Maharashtra Punjab Tamil Nadu


The Indian machine tools industry manufactures almost the complete

range of metal-cutting and metal-forming machine tools. Customized in

nature, the products from the Indian basket comprise conventional

machine tools as well as computer numerically controlled (CNC)

machines. There are other variants offered by Indian manufacturers too,

including special purpose machines, robotics, handling systems, and

TPM-friendly machines.

Major Products CNC Turning Centers The Indian machine tools industry produces a range of turning centers in

all sizes, from the small to the very large, and for special applications.

CNC Machining Centers The Indian machine tools industry produces a range of CNC machining

centers covering small to very large sizes. The current trend in

machining centers is to have additional axes of movements to take on

complex machining requirements. Internationally, machining centers are

mostly built with at least 5 axes.

Production Capability


CNC Grinding Machines The main emphasis in grinding machines is on accuracy, surface finish

and high process capability. Such machines are required by the tool and

die making industries, which are on a growth path in India at present.

Special Purpose Machines The Indian machine tools industry has been successful in developing the

ability to design and produce special purpose machines for customers in

almost all industry segments. The special purpose machines

manufactured in India often incorporate the most advanced features of

technology from all over the world. This segment of Indian machine tools

can be a niche for exports, in view of the cost competitiveness of Indian

designs and manufacturing capabilities for these machines.

Metal Forming Presses Metal forming presses for sheet metal working form one of the most

important classes of machines required by the industry. With the

explosive growth of the consumer durables, electronics and auto

industries, these machines represent the core-manufacturing

requirement for these sectors.


Products Offered by Major Players

Product Categories AB

HIJ

AT

AB

RO

AC

CU

RA

TE

AC

E

AC

UM

AC

ALE

X

AM

C

AM

S

AR

IHA

NT

ASK

AR

BA

KER

BA

TLIB

OI

BFW

ELEC

TRO

NIC

A

ELEC

TRO

PNEU

MA

TIC

S

EMI I

ND

IA

FIE

FIN

ECR

AFT

S

HM

T

IMI

Turning Machines ■ ■ ■ ■ ■

Machining Centres ■ ■ ■ ■

Flexible Manufacturing Systems ■

Milling Machines ■ ■ ■

Drilling Machines ■ ■

Gear Cutting & Finishing Machines ■

Boring & Milling, Broaching Machines ■

Grinding Machines ■ ■ ■

Spark Erosion & Electric Discharge Machines ■

Honing, Lapping & Polishing Machines ■ ■

Heat Treatment Equipment ■

Testing Equipment ■ ■

Die Casting Machines ■

Plastic Injection Moulding Machines ■

Special Purpose Machines

CNC Systems ■

Cutting Tools / Holders

Accessories, Components & Gauges ■ ■ ■ ■ ■ ■

Tool Room Machines / Attachments ■

Press Brake, Shearing Machines ■ ■ ■

Sheet Metal Presses ■ ■ ■


Products Offered by Major Players

Product Categories ISG

EC

JYO

TI

KA

WA

KEN

NA

MET

AL

LMW

MG

TL

NIS

SEI A

SB

OM

TEC

PAL

PMT

PRA

GA

QU

A-T

ECH

SEC

O

SHA

RD

A

TAC

O

TAL

UN

IVER

SAL

TOO

L

WEL

DO

R

WID

IA

Turning Machines ■ ■ ■ ■ ■

Machining Centres ■ ■ ■ ■

Flexible Manufacturing Systems

Milling Machines ■

Drilling Machines ■

Gear Cutting & Finishing Machines ■ ■ ■

Boring & Milling, Broaching Machines ■ ■

Grinding Machines ■ ■ ■ ■

Spark Erosion & Electric Discharge Machines

Honing, Lapping & Polishing Machines

Heat Treatment Equipment

Testing Equipment

Die Casting Machines

Plastic Injection Moulding Machines ■

Special Purpose Machines ■ ■ ■

CNC Systems

Cutting Tools / Holders ■ ■ ■

Accessories, Components & Gauges ■ ■ ■ ■

Tool Room Machines / Attachments ■ ■ ■

Press Brake, Shearing Machines ■ ■ ■

Sheet Metal Presses ■ ■ ■


Production of Machine Tools over Years

Due to outsourcing of auto-components by foreign automobile

manufacturers to India, there was a spurt in demand for machine tools.

As a result, the production of machine maintained a high growth rate till

2004-05. After that the growth rate came down and remained fairly high.

This growth rate is expected to continue in the coming years and might

see another spurt if there are some favourable changes in the

government policies.

Machine Tools Production

20,95818,192

15,164

11,042

Value in Rs. Million

2005-06

+20%

2006-07 2004-05

+37%

2003-04

+15%

Production of Machine Tools in India


Production Break-up* “NC Machines constitute 57% of the production in terms of value.”

In 2006-07, spares constituted 64% of production in terms of units, NC

machines, Non NC machines and Tools constituted 3%, 2% and 31%

respectively. NC machines constituted 57% of the total value of

production. This is because spares lie in the ‘High Volume Low Value’

category and NC Machines lie in ‘High Value Low Volume’ category. The

remaining 43% of value of production in contributed by Non NC

Machines, Spares and Tools at 25%, 12% and 6% respectively.

*NC Machines : Numerically Controlled Machines Non NC Machines : Non Numerically Controlled Machines

6%

12%

25%57%

31%

64%

ToolsSparesNon NC Machines

2%

NC Machines

3%Production Break Up in 2006-07

Value Total : Rs 20958.06 Million

Volume Total : 156859 Units


NC Machines and Non NC Machines

The number of Non NC machines produced in India has gone down. This

trend is expected to continue as accuracy becomes more important and

people become more technology literate.

NC Machines Showing Highest Growth Rate

The production of Shearing Machines and Special Purpose Machines

(SPM) has more than doubled over the last year. This is mostly due to

the growth in demand by the manufacturing sector.

4,3235,344

3,2402,455

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000 7,563

2005-06 2006-07

Non NC

NC

7,799

Volume Turnover of Machine Tools in India

Number of Machines Produced

Value Turnover of Machine Tools in India

Value in Rs Million

9,44312,053

4,078

5,164

0

5,000

10,000

15,000

20,000

13,521

2005-06 2006-07

Non NC

NC

17,217

NC Machines Growth Rate in 2006-07

85.19 83.82108.43

152.51

0.0020.0040.0060.0080.00

100.00120.00140.00160.00180.00

EDM,CNC HorizontalMachining Center

SPM CNC's Shearing

Machine Type

Rate

(%)


“Currently India ranks 29th globally in terms of per capita machine tool consumption and lags far behind the top five countries.”

Country Current Per

Capita Consumption

India will reach this level in

Russia 2.7 2009-10 Argentina 3.6 2010-11

Brazil 5.8 2012-13 China 9.9 2014-15

Machine Tools Consumption

Per Capita Consumption of Machine Tools in 2006Top Five Countrie and India

116 112 104

63 61

10

2040

6080

100120

140

Switzerland Taiwan Soth Korea Germany Italy India

Country

US

D

Growth in Per Capita Consumption of Machine Tools of India

1.49 1.98 2.58 3.43 4.385.58

6.848.39

10.29

02468

1012

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

Year

USD


Machine Tools Consumer Industries Are Growing At a

Good Rate

Auto & Auto Component industry and Capital Goods industry form the

major market for machine tools in India. Consumer Durables and

Aviation Industry are the other industry segments where the machine

tools are used. Out of these, auto & auto component industry form about

40% of the machine tools market. All these industries are currently

growing at a healthy rate and the trend is expected to continue in the

coming years.

“Apart from the above mentioned industries, defence and computer hardware manufacturing are the other industries which will which will fuel Machine Tool Industry’s growth in the coming years.”

Factors Powering Growth

Growth Rates

25 2520

13

05

1015202530

Auto AutoComponent

Capital Goods Electronics

Industry

Perc

enta

ge


Index of Industrial Production

The index of industrial production, lead by the manufacturing sector is

showing unprecedented growth. This growth is fuelling the demand for all

capital goods.

“Industrial production in April bucked the traditional lean-month trend and hit an 11-year high on the back of a strong upsurge in manufacturing. Growth in industrial production in April 2007 has been largely fuelled by manufacturing, which grew consistently in double digits in 2006-07 (except October). Year-on-year growth in manufacturing in April was 15.1 per cent, over 11 per cent in the previous year.”

-Business Standard (13th June, 2007)

Index of Industrial Production

0

50

100

150

200

250

300

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Apr-07

Period

Inde

x

0

2

4

6

8

10

12

14

16

Perc

enta

ge

Index Growth of Index


GDP Growth The Indian Economy has been growing at an average rate of more than

8.5% over the last four years. This growth is percolating down to all the

industries and as a result demand for capital goods is also on a high.

“India's economy should grow at a faster pace than previously expected in the fiscal year to March 2008 on buoyant manufacturing and services, but that pace will be slower than the strong 2006-07 expansion, a Reuters poll shows.”

-The Economic Times (27th June, 2007)

GDP of India (At Factor Cost) and its Growth

0

500000

1000000

1500000

2000000

2500000

3000000

2003-04 2004-05 2005-06 2006-07

Year

(Rs.

, Cro

res)

0.00

2.00

4.00

6.00

8.00

10.00

Gro

wth

Per

cent

age


Other Factors

Growing per-capita income and disposable income which is

resulting in increase in consumption

Growing stature of India in the global market as a sourcing hub for

auto components and other manufacturing industry products.

Increase in export of cars, especially small cars, from India to the

rest of the world.

Strong and growing domestic demand for mobile phones, personal

computers, consumer, medical, strategic and automotive

electronics and other consumer durables

Increasing demand for telecom infrastructure equipment due to

increase in tele-density from the present 100 per 1000 to 220 by

2007.

Push to the infrastructure of the country by the government

resulting in demand for capital goods.

Rising defence expenditure and opening up of the defence

equipment manufacturing to the private sector.

Increasing awareness of the technologically efficient products and

the adaptation of same by the manufacturers.


Used machinery market is big in India and is expected to grow at

around 30% this year. As the cost of new machines is still high due

to import duties, used machines are a big challenge for machine

tool companies importing new machines.

Time required to deliver a machine after placing an order is about

8- 10 months which is a concern for the Industry.

Technical Support and Service of players importing machines is a

major concern as Indian customers are very specific about the

servicing and usage aspect aligned with purchase of machinery.

Price is another important area of concern. Indian companies prefer

to pay premium on a machine which has product features second

to best but is excellent in terms of technical service. This again

poses problem for technically sound international companies as

they don’t have a good service network compared to Indian

companies.

Dollar depreciation is a concern for Indian Machine Tool Players.

Local players are upgrading themselves technologically by entering

into collaboration with other International players. This would

increase the competition in the market.

Challenges


Due to slow down in the machine tool market till early 2002, the

vendors of machine tools companies reduced production. The

vendors have not been able to ramp up the capacity since then. As

a result, machine tool manufacturers haven’t been able to expand

as desired. This shortage in supply is a big concern for machine

tool companies aspiring to expand rapidly.

Even though India produces one of the largest numbers of

engineers in the world today, most of them of opt for IT related

fields. As a result, machine tool industry is facing a crunch of

engineers. Also there is shortage of CNC machine operators in the

country which is hampering technology adoption.


Imports account for about 40-50 per cent of total consumption of

machine tools. In the calendar year 2006, a total of 20,050 metal cutting

machine tools worth Rs.27,847 million and 3,717 metal forming machine

tools worth Rs.10,089 million were imported.

By and large, imports are restricted to specialized requirement not

produced in India. These include high speed, high precision machines

and heavy-duty machines. A few users, who export their products, do

import their capital goods under the Export Promotion and Credit

Guarantee scheme on price consideration. Due to price advantage,

several companies have imported pre-owned machines.

The current import tariff on machine tools is about 33 percent. Industry

sources expect it to be lowered in the coming years. This would result in

increased competition from foreign multi-national even though the

implementation of VAT has worked towards the advantage of local

manufacturers.

Import Market

27,84722,914

13,0745,699

10,0896,1222,9271,068

+174%

+65%

2006

+75%

+109%

+129%

+22%

Metal FormingMetal Cutting

2005 2004 2003

Growth of Machine Tool Imports over Years

Values in Rs. Million


As India is a cost sensitive country, the demand for used machinery in

the country is very high. Seeing the potential, international big names like

DMG have started giving guarantees on there used machines. Apart

from this, used machines of almost all the international companies are

being imported into the country.

Used machine tools form a major chunk of the machine tools market of

India currently. High import duties coupled with long delivery time are

only adding to the demand for used machines.

There are large numbers of retro-fitters and used machine dealers in

India who import machines and after some repairs sell them to the local

customers. The cost of retro-fitting is very low in India as compared to

other countries. This helps in keeping low cost of used machine tools.

With the demand for machine tools reaching new heights due to

burgeoning economy, the demand for used machine tools is only going

to increase.

Used Machine Tools Market


Due to shortage of skilled manpower and growing demand of Tools and

dies in the country, particularly in the SSI sector, Government of India

have decided to assist the State Governments to set up Mini Tool Room

and Training center. There are about 20 centers all over India catering to

the requirement.

These centres have proved to be a boon to Machine tool Industry. It has

provided the base for training and development of the manpower in the

industry and thus improve productivity.

Technical Centres for Training


100% FDI is allowed in the Machine Tool Industry.

Machine tools manufacturers are exempt from obtaining an

industrial licence to manufacture.

Machine tool Manufacturers are free to select the location of their

project.

Only specific items under machine tools are reserved for production

by the small scale industry.

Import duties have been constantly reduced to promote increased

import and usage of machine tools.

Manufacturing units of machine tools and consumer companies can

take benefit of the EPCG scheme. EPCG scheme allows import of

capital goods for pre production, production and post production at

5% Customs duty which otherwise would be 12.5% subject to an

export obligation equivalent to 8 times of duty saved on capital

goods imported under EPCG scheme to be fulfilled in 8 years

reckoned from Authorisation issue-date.

Government Regulations


Machine Tool Industry is in a position to export general purpose and a standard machine tool to even industrially advanced countries. The industry, however, lacks in design and engineering capability to undertake very high precision CNC Machines. Some companies have taken up manufacture of CNC Machines, but there is a need to upgrade research and development in this field. Indian machine tools are manufactured to the international standard of quality / precision and reliability. A number of collaborations have also been approved for bringing in the latest technology in this field of modern machine tools and the industry is now exporting conventional as well as NC/CNC high - tech machine tools. With the boom in the manufacturing sector, and growth in exports due to growing acceptance of India’s technical prowess, the demand for machine tools is only going to increase. By overcoming some of its engineering and designing deficiencies, and utilizing the available skilled manpower fully, India can become the global hub for machine tools in the coming years.

Future Outlook


D’Essence Research Indian Machine Tool Manufacturers Association Website Department of Heavy Engineering (Govt. of India) Report IBEF report on Machine Tools International Business Strategies Report Business Standard The Economic Times Economic Survey – Govt. of India Cygnus Report on Heavy Engineering Gardner’s Report on Machine Tool Consumption China Machine Tool Market Report - KPMG Automobile Component Manufacturers Association (ACMA)

Website Society of Indian Automobile Manufacturers (SIAM) Website

Sources of Data


Indian Machine Tools Manufacturers’ Association

http://www.imtma.in/

Rajkot Machine Tools Manufacturers’ Association http://www.mtmarajkot.org/

Ludhiana Machine Tools Manufacturers’ Association http://www.lmtma.org/

Auto Component Manufacturers Association http://acmainfo.com/

Society of Indian Automobile Manufacturers http://www.siamindia.com/

Tool and Gauge Manufacturers Association of India

http://www.tagmaindia.org/

Important Associations and Their Websites


D'Essence Consulting is a Management Consulting, Business Advisory and Talent Management Consulting Boutique firm. We have been operational since 1998 with our base in Mumbai, India. We assist Corporate organizations, Government institutions and Industry associations to build, grow and remain competitive. We advise companies on building their sales, improving their productivity and increasing their bottom line. Majority of our work is focused on the areas of growth, leadership, strategy and confidential projects. We also help organizations in M&A dealings & forming Joint Ventures, Strategic alliances and partnerships. In case of Machine Tools, we have an experience of working with a Global Machine Tool Giant. We are very well versed with the Macro-Micro Linkages that affect the Demand & Supply of Machine Tool Industry. We have In-Depth Knowledge of the Industry right from its Supply Chain, Sourcing of Human Resource, and Vendor Management to Customer Needs & Requirements. WE CAN HELP YOU WITH:

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