Fastener Net Repo 2011

8/19/2019 Fastener Net Repo 2011

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–

September 2011


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Executive Summary

Market

Overview

Industrial Fastener market consists of nuts, screws, bolts, washers etc.

Production of nuts and bolts have remained steady over the years

Import‐Export

Imports have

increased

marginally

over

the

years

Exports have risen significantly as Indian automobiles are being accepted in new markets

Drivers

Developing auto

sector

Stron rowth in other en ineerin

Challenges

Increasing cost

of

raw

materials

r vers

Challenges

sector

Rising exports

Introduction of GST

rea

Competition

Major Players in the Market

Lakshmi Precision

2

.

Screws Ltd.

. .

INDUSTRIAL FASTENER MARKET IN INDIA 2011.PPT


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•

•Import &

Export

• r vers a enges

•Government Initiatives

•Competition

•

3INDUSTRIAL FASTENER MARKET IN INDIA 2011.PPT


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Industrial fasteners market is growing steadily and is expected to grow further in the future

Overview – Industrial

Fasteners

Market

Size

and

Growth

(2011)

• Industrial fasteners include high tensile and mild steel

bolts, nuts, screws, studs and rivets1820

INR bn+20%

All type of fasteners except high tensile and special type

fasteners are reserved for SSI sector

• Fasteners such as nuts, bolts, studs, rivets and screws

are used in the assemblies of engineering systems

15

10

15

Market Segmentation

• Automobile sector accounts for approximately 75% of

the total demand of industrial fasteners

Production: Nuts & Bolts

0

2012e2011e

83,42989,640

85,02790,56790,629

80,000

100,000

tons

25%

Unorganized

0

20,000

40,000

,

----- Or anized

75%

4

Source: Industry Sources; Ministry of Commerce and Industry

Organized sector includes imports(Apr-Dec)Note: All figures for respective financial year ending 31st Mar



5/34

Keeping a check on input prices will be the biggest challenge for the manufacturers

Bargaining Power

of

Suppliers

• Steel and coal – both integral

part of production are

becomin scarce and rices are

Impact

High

difficult to control

Impact

ImpactLow

Impact

Medium

Internal Rivalry

• Large number of players in the

unorganized sector

vying

for

Threat of New Entrants

• Auto companies stress

on long term

relationship

for all

high

Threat of Substitutes

•The unorganized sector

stands to

lose

more

in

Medium

fasteners

• Need of R&D for high

valued items

innovation

Impact

Bargaining Power of Buyers

• Auto companies always have

multiple vendors to supply

Medium

5

Source: Netscribes Analysis

competitiveness



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•

•Import &

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•Competition

•



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Asian countries account for the bulk of the critical requirement of fasteners for the Indian market

• As of March 01, 2011: Excise duties specified ‐ Cenvat

of 10% and Excise Cess of 3%

Industrial Fasteners

– Imports

Imports

– Value

13,637.413,744.415,000

INR bn

• As of 2009‐10, top 3 countries from where industrial

fasteners were imported to India include Korea,

China, Germany

Imports from Korea were INR 3.12 bn, from China INR 2.45

, .10,123.1

5,000

10,000

. 0

2009‐102008‐092007‐08 2010‐11

(Apr‐Dec)

Segmentation (2010‐11 Apr‐Dec)Segmentation (2009‐10)

38%

18%

China

Korea RP

32%

17%

Korea RP

China

8%9%

12%

14%

Others

U S A

Japan

8%

13%13%

16%

Others

U S A

Germany

7

Source: commerce.nic “Export Import Data Bank”

Note: HS Code 7318. It includes screws, bolts. Nuts, screw hooks, coach hooks rivets, cotters, cotter pins, washers



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Export trends in India have seen growth with increasing industrialization

• Exports have grown steadily in India

Found wider acceptance

Industrial Fasteners

– Exports

Exports

– Value

10,000

INR bn

New markets opening up

Encouragement given by government to boost exports in

engineering sector

• Germany, USA and Belgium were the top 3 countries

for Indian ex ort

, ., ., .

6,558.6

2,000

4,000

6,000

8,000

0

2010‐11

(Apr‐Dec)

2009‐102008‐092007‐08

Segmentation (2010‐11 Apr‐Dec)Segmentation (2009‐10)

37%27%

U S A

Germany22%

41%

U S A

Germany

7%8% 10%

12%

Others

U A E

U K

9%6%

14%

Others

U A E

Belgium

8

Source: commerce.nic “Export Import Data Bank”

Note: HS Code 7318. It includes screws, bolts. Nuts, screw hooks, coach hooks rivets, cotters, cotter pins, washers



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•Competition

•



10/34

Drivers & Challenges – Summary

Drivers

Developing auto sector

Challenges

Increasing cost of raw materials

sectors

Rising exports

EU threat

Introduction of GST



11/34

Strong growth in automobile sector will only increase the demand for industrial fasteners

Developing auto

sector Impact

•The auto sector in India is on a strong path to recovery:‐

Both 2 wheeler and 4 wheeler market have posted strong growth

Over the last decade, the auto component sector has been growing at 20% and fasteners form an integral

part of all auto components

•The strong

growth

in

auto

sector

is

primarily

on

the

account

of

‐

Rising disposable income of the middle class population

Domestic Sales Trends Auto Component Industry Investments

.

• Auto companies are the biggest buyers of fasteners and account for ~75% of fastener sales

11.79

15

mn

Three Wheelers

Passenger Vehicles540

405

329400

500

600+19%

n

9.37

2.521.950.680.53 0.530.44

5

10

100

200

300

11

Source: Marketing White Book 2011‐12; Sterling Tools “Annual Report” 2010‐11

2010-112009-10 2010-11e2009-102008-092007-08



12/34

Engineering sector is witnessing strong growth leading to demand for fasteners

Strong growth

in

other

engineering

sectors Impact

•The engineering sector is on a strong growth path because of the rise in exports

High demand from new markets like North America

West Asia an A rica is a so opening to In ian engineering exports

• This strong growth is because of the govt. reimburses the exporters on the taxes paid on the

import equivalent

content

of

export

products

• Engineering exports include transport equipment, capital goods, other machinery/equipment and li ht en ineerin roducts like castin s for in s and fasteners

Sales of

Tractors Construction

Equipment

Market

• Almost all the engineering sectors need fasteners, so a robust growth in all these sectors will see the fastening industry to grow

360343347353

296300

400

‘000

553.1

449.9

366.0400

600

INR bn

+22%

0

100

2009-102008-092007-082006-072005-06

.242.1

196.9169.8

0

200

12

Source: Sterling Tools “Annual report”, 2010‐11


d h l h f d h l


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Indian vehicles have found acceptance in the international market thus pushing up the need of fasteners

Strong export

market Impact

• Different brands are utilizing the Indian automobile engineering expertise to manufacture and

export maximum no. of vehicles from their Indian plants

They are expanding their manufacturing facilities owing to India's strong engineering base and expertise in

the manufacturing low‐cost, fuel‐efficient cars

• United Kingdom

is

the

largest

export

market

for

India's

automobile

industry

followed

by

Germany, Netherlands and South Africa

•

Rising Exports: Automobiles

• Strong export market will see the demand for fasteners to increase

Three WheelersTwo Wheelers

Exports of Engineering Products

1,540

1,500

2,000

‘000

Commercial VehiclesPassenger Vehicles

5,400

4,000

6,000

INR bn

+24%

,

453446270173 7645

0

500

1,000

2010-112009-10

,

0

2,000

2015 e2011

13

Source: Sterling Tools “Annual Report” 2010‐11; Business Standard “Govt. eyes $120 bn engineering exports by 2015”, Feb 2011


Note: Engineering

exports

include

heavy

engineering

goods,

transport

equipments,

capital

goods,

other

machinery/equipment

and

light engineering

products

such

as

castings, forgings and fasteners

if d f i ill h


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A uniform

code

of

taxation

will

ensure

transparency

thus

reducing the taxation burden on the manufacturer

Introduction of

GST Impact

• Introduction of GST (Goods and services tax) will benefit the Indian manufacturing sector

immensely, including that of fastener industry

It is likely to commence from 1st April 2012

Through a tax credit mechanism, this tax is collected on value‐added goods and services at each stage of sale

or purchase

in

the

supply

chain

The implementation of GST will lead to the abolition of other taxes such as octroi, Central Sales Tax, State‐

level sales tax, entry tax, stamp duty, telecom license fees

Under GST, the taxation burden will be divided equitably between manufacturing and services, through a

lower tax rate by increasing the tax base and minimizing exemptions

14

Source: Industry Sources; gstindia “What is GST” 2011


Ri i i k ll h fi bili f h


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Rising input

costs

take

a toll

on

the

profitability

of

the

manufacturer

Rise in

Input

prices Impact

The price of coking coal has increased by two and a half times in the international market, so the

finished product i.e. steel prices has seen an upswing

The price of HR coils has been increased 7 times over Dec 2010 ‐ Mar 2011 by INR 9,000 per ton

Industry

expects

finished

steel

prices

to

rise

by

an

average

7

%

in

2012

than

in

2010‐

11 Increase in steel prices is expected to have a cascading effect on the price of fasteners as the

prices of inputs will go up

Price of

Steel

Prices of HRC coils is expected to rise by another INR 1,500 from October, 2011

44,11043,96043,86045,25045,710

43,54043,49043,61043,61043,59043,410 44,140

50,000

INR Steel Billets

Hot Rolled Coils

38,16037,30037,36037,36037,56036,43035,45034,87035,13034,95034,69034,710

30,000

35,000

40,000

,

15

Source: Metal Miner “Indian Steel Prices to Rise from October”, Sep 2011


6/1/115/1/114/1/113/1/112/1/111/1/1112/1/1011/1/1010/1/109/1/108/1/107/1/10

EU id bl h h I di


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EU poses

a considerable

threat

to

the

Indian

exporters

on

account of strict anti dumping laws

EU threat Impact

• European Union has threatened to impose a tariff on the import Indian fasteners as they fear

their producers might be victims of subsidies and price undercutting

In July 2010, the EU closed similar inquiries covering imports of the same goods from India and Malaysia

without imposing duties

• Under EU practices, the commission can impose provisional anti subsidy duties for four months

and provisional anti‐dumping levies for six months

• As a result of this , Indian exporters might lose out some of the most lucrative markets , if extra

duties are levied

16

Source: China Fasteners “EU revives threat of duties on Indian stainless steel fasteners”, May 2011



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•


G t t t d l th i d t i l f t k t


18/34

Government wants

to

develop

the

industrial

fastener

market

through a slew of benefits through SSI sector

Government Subsidies

And

Incentives

• All types of fasteners except high tensile and special type of fasteners are reserved for SSI Sector

• The fastener industry has been delicensed and is eligible for 100 per cent FDI under the automatic route

Scheme Details

Policy Support

The investment limit for the SSI sector will continue to be at INR 10 mn

The Ministry of SSI brings out a specific list of hi‐tech and export oriented industries

which would

require

the

investment

limit

to

be

raised

up

to

INR

50

mn

to

admit

of

suitable technology up‐gradation

Fiscal Support To improve the competitiveness of Small Scale Sector, the exemption for excise duty

limit raised from INR 5 mn to INR 10 mn

Credit Support The composite loans limit raised from INR 1 mn to INR 2.5 mn

Infrastructural Support The Integrated Infrastructure Development (IID) Scheme will progressively cover all

areas in the country with 50 % reservation for rural areas

Technological Support and Quality

Im rovement

One time Capital Grant of 50% will be given to Small Scale Associations which wish to

develo and o erate Testin Laboratories rovided the are of international standard

18

Source: Ministry of Micro, Small and Medium Enterprise “Comprehensive policy package for SSI and tiny sector”



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•



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Major Players (1/12)

Company Snapshot:

GKW

Ltd.

Corporate Information Financial Performance

ea quar ers um a

Founded 1992

Products Press tools, dyes, fasteners, sheet

Net Income

0.86

1.18

1.0

1.5

2

3

INR bn INR bn

Key People J. D. Curravala,, MD

0.410.25

0.0

0.5

0

1

2011201020092008

• Present annual turnover is INR 630 mn

•The company has a development laboratory at Bhandup, Mumbai

• It

boasts

of

ISO

9000

certification

at

all

its

factories

• In 2009, GKW had sold Powmex Steels Undertaking Division to Graphite India for INR 436 mn

• To support its overseas operation GKW Ltd. has owned subsidiary under the name of GKW Overseas Trading Ltd.

• As on 31st March 2011 Indian promoters control 60% of the share holding of the issued share capital whereas the

20

• As on

31st march

the

company

has

reserves

and

surplus

of

INR

548

mn

Source: Press Articles; Company Websites; Capital IQ Note: All figures for respective financial year ending 31st Mar



21/34


Company Snapshot:

Lakshmi

Precision

Screws

Ltd.


ea quar ers o a

Founded 1972

Products Bolts, screws, nuts, Allen Key

Net Income3.14

2.602.522.31

2

3

4

0.05

0.10

INR bnINR bn

Key People Lalit Kumar Jain, Chairman 0

1

0.00

2011201020092008

• As of 31st March 2011, the installed capacity of Lakshmi Precision Screws Ltd. was 23,146 metric tonnes per annum

• It serves sectors such as wind energy, locomotives, automobiles, agriculture equipment, machine building, and industry

•The

company

also

exports

its

products

primarily

to

the

United

States,

Australia,

Canada,

Denmark,

Dubai,

France,

Germany, Hong‐Kong, Indonesia, Japan, Malaysia, Singapore, South Africa, Switzerland, and Sweden

• They have entered into a licensing agreement with Acument Global Technologies to manufacture Torx drive

• Also entered into license agreement with DORKEN of Germany to provide finishing coatings in Delta Tone and Delta

Seal

21

•The promoter

and

directors

of

the

company

occupy

as

much

as

62..8%

of

the

total

shares

of

the

company




22/34


Company Snapshot:

Sundaram

Fasteners

Ltd.


ea quar ers enna

Founded 1966

Products

Automotive and engineering

components, sintered levers, bearing

Net Income

2.51.8

1.51.52

3

0.10

0.15

0.20

INR bn INR bn

races, clutch parts

Key People Suresh Krishna , MD 0

1

0.00

0.05

20102008 20112009

• Sundaram Fasteners Limited is a part of the INR 225 bn TVS Group

• It has operations in India, China, the United Kingdom, Malaysia, and Germany

These locations are supported by sales, engineering and logistics capabilities so as to maximize customer satisfaction

• As a part of its diversification strategy, the company wanted to supply fasteners to other non auto companies as well

This move would help the company to insulate itself from the cyclical trends in the automotive industry

• All divisions of the company are ISO/TS 16949 and ISO 14001 certified

• It has been re orted that the com an will invest INR 1.5 bn next ear as art of ram in u existin facilit and to set

22

up a manufacturing

unit

for

wind

power

generators




23/34


24/34


25/34


Corporate Information Business HighlightsCompany

Snapshot:

ABC

Fasteners

Ltd.

• Serves 150 companies across various sectors like ea quar ers um a

Founded 2000

Products Nuts, Bolts, Eye Nut

Electrical & Electronics, Telecom, Automobiles,

Fertilizers etc

•The fasteners are produced as per DIN, ISO, BS JIS &

ASTM std

Key People NA

Company Snapshot: Atop Fasteners Pvt. Ltd.

Corporate Information Business Highlights

Headquarters Mohali • Atop has been certified as ISO/TS/16949 Company in

July

2007

by

TUV

Sud

Founded 1988

Products Circlips, Washers, Dowels, Lock

Retainers

•The company has five plants in India which are in the

business of manufacturing the auto component

• In 2010, the company had earned profits worth INR

4.5 mn to that of INR 3.8 mn in 2009

25

Source: Factiva; Capital IQ; Securities

Key People Parveen Kaur, Director

Note: The list is not exhaustive



26/34



Snapshot:

Boltsman

• In 2008‐09 the company introduced India’s first ea quar ers ew e

Founded 1962

Products Bolts, Washers, Nuts, Rivets

Online Fasteners Enquiry System

• Their

clientele

includes

companies

from

Engineering

Industries, Cooling equipment Industry, automobile

industry etc.

Key People Nishant Gupta & Bhanu Vikrant ,

Holding partners

Company Snapshot: Bharat Industrial Fasteners


Headquarters Chennai • Apart from making their own range of industrial

fasteners they also undertake the task of making

Founded 1975

Products Screws, pins, steel balls, hot tip

galvanizing

industrial fasteners for other companies

• They are the manufacturers, traders and exporters of

dealers for all kinds of bolts, nuts & industrial

fasteners

26


Key People N.A.




27/34



Snapshot:

Gripwel

Fasteners

• Provides fasteners and gripping solutions for tractors ea quar ers ew e

Founded 1984

Products Hitch balls, weather caps, pins

above 80 HP category

• John

Deere,

Massey

Ferguson,

Case

New

Holland,

Fiat, Mahindra are some of its clients

• It also rovides machined com onents for the

Key People NA

Agriculture and Construction machinery segments

•All its factories are ISO 9000 certified

Company Snapshot: Karna International


Headquarters Ludhiana • Manufacturing facility is ISO 9000 certified and spans

over a area of 25,000 sq yards

Founded 1992

Products Anchors, Threads, Nuts, Bolts

• Apart from manufacturing fasteners, they also export

various metal components and fasteners to clients

abroad

It is also certified by govt. of India as a star export house

27


,




28/34



Snapshot:

Micron

Precision

Screws

Ltd.

• Micron Precision Screws contains make special ea quar ers o a

Founded 1979

Products Socket, Hex products, Pin products

fasteners and automobile components as per

customer blue‐prints

• In 2000, they became a INR 585 mn company

• It has the ca acit to roduce 5 000 different t es of

Key People Karan Vig

fasteners and produces 3,000 T of fasteners per year

Company Snapshot: Pacific Forging & Fasteners Pvt. Ltd.


Headquarters Mumbai • They follow ASTM Specification in all the grades of

products

Founded NA

Products Hot forged products, CNC machine

products

• Maintains a 24 hour helpline in case of emergency

breakdown

• Also provides various services like engineering

services, supply chain services, automated supply

28


Key People NA services, heat treatment etc.




29/34

Major Players (10/ 12)


Snapshot:

Karamtara

Fasteners

Pvt.

Ltd.

• Kamtara Fasteners Pvt. Ltd. has been awarded ISO ea quar ers um a

Founded 2004

Products Telecom towers, electricity towers

9001 certification

• KFPL has added the advantage of an in‐house

Ceramic Galvanizing

Bath,

which

has

helped

KFPL

gain

an edge over other manufacturers in the industry

Key People T.H.M. Singh, Director • Income increased from INR 469 mn in 2009 to INR

567 mn in 2010

Company Snapshot:

Kito

Fasteners


Headquarters Ludhiana • Kito Fasteners have their global presence in countries

like Australia, New Zealand, Dubai, Kuwait, Saudi

oun e

Products Galvanized steel wire, bolt, nuts,

washers, sliding nails

ra a e c.

• Follows total quality management systems to ensure

a strict check on quality

29


,




30/34



Snapshot:

Deepak

Fasteners

Ltd.

• It has 4 production units which follow International ea quar ers u ana

Founded 1956

Products Nuts, Washers, Screws

Standards like DIN, ISO, IS, ASTM, BS, ANSI etc.

• In 2008, DFL acquired the worldwide rights of the

Unbrako brand

from

SPS

Technologies,

a subsidiary

of

PCC group of USA

Key People N.A.• In 2010, Deepak Fasteners raised its first round of

funding worth INR 675 mn from BanyanTree Growth

Capital

Company Snapshot:

Precision

Fasteners


Headquarters Ludhiana • Globally they are present in Russia, New Zealand,

Australia, Singapore, Africa, Middle East, UK, Brazil

oun e

Products Bolts, Fasteners, Nuts, coatings

Key People Dilip Singh Lodha , MD

•Its client list includes clients from diversified fields

like auto, oil, white goods, power etc.

30

Source: Factiva; Capital IQ; Securities Note: The list is not exhaustive



31/34



Snapshot:

Rishi

International

• Rishi International is a ISO 9001:2000 certified ea quar ers u ana

Founded 1974

Products Nuts, Heavy Steel Forging, Pipe

company

• International customers of Rishi International are

from countries

like

America,

Qatar,

Canada

•The company is backed by a research team , so as to c amps

Key People Rishi Gupta, NA

innovate and maintain quality

Company Snapshot:

Nexo

Industries

Pvt.

Ltd.


Headquarters Ludhiana •The company is engaged in manufacturing and

exports of mild steel and high tensile galvanized

oun e

Products Fasteners, metal scrapings

Key People Rajinder Singh, MD

• As of 2009, the production status was 22,305 MT

• It is a ISO 9002 certified company & also certified by

TUV

• Nexo Industries are the only ISO Certified Company in

31


India for Hot Dip Galvanized Fasteners




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•Import &

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•



33/34

Strategic Recommendations

Achieving

economies

of

scale

so as to offset the increase in

raw material prices

Business

Sub‐

segments

Invest in technology and create

Recommendations

• Invest in

R&

D

• Entry as OEM suppliers

High Capital Intensive

`

Success

Elements

a po n o erence

d u s t

r y

c t i v e n e s s

Recommendations• Focus on replacement Skill

Build credible relationships with

customers

I

A t t r

Recommendations

demand through large

dealers

Intensive

Maintain a strong supply chain

• Highly competitive

• No point of difference

• Preferably stay away

Low Labor

Intensive

33

Source: Netscribes Analysis

an op or g o a e ups


h k f h


34/34

Thank you for the attentionThe Industrial Fastener Market – India report is part of Netscribes’ Manufacturing Series.

For more detailed information or customized research requirements please contact:

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Phone: +91 22 4098 7530

E‐Mail: [email protected]

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Phone: +91 33 4064 6214

E‐Mail: [email protected]

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