Opportunities in India's Manufacturing Sector - EEPC Buyer Seller Meet 030409

7/31/2019 Opportunities in India's Manufacturing Sector - EEPC Buyer Seller Meet 030409

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Slide 1

Opportunities in IndiasManufacturing Sector

Prepared by IE Singapore03 Apr 2009
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Slide 2

India

16% of world population (1.1B)

2.4% of world land area (3.3M km2)

GDP = 1T USD (@ Rs.40/USD)

Per capita GDP = USD 797

4.9

%

64

%

30%

> 65 yrs.

15-64 yrs.

0-14 yrs.

Urban : Age Structure

USD 15.7B FDI inflows FY06. Some of the

global players in India - Daimler Chrysler,General Motors, Ford, LG Electronics,Samsung, Sony.

FDI - USD $33 B in 2008, (USD$3.7B fromSingapore Second largest investor)

It is an Indian car being produced in India. We are

overwhelmed by the reaction. We wanted a find a safe way totransport Indian families at an affordable price. Since theinception of the idea, a lot of things have changed, includingthe global meltdown and other factors. We promised to bringout Indias cheapest car. A promise is a promise and we had tokeep it.. Ratan Tata, on the launch of the Tata Nano, theworlds cheapest car.

SVCS(55%)

IND(26.4%)

AGRI(18.5%)

Composition of GDP

Source: http://www.hindu.com/2004/07/29/stories/2004072905951200.htm

Wealth distribution in India:

Top 5% = 38% of wealth

Top 10% = 53% of wealth

Bottom 80% = 30% of wealth
http://images.google.co.in/imgres?imgurl=http://www.theodora.com/wfb/india/in.gif&imgrefurl=http://www.theodora.com/wfb/india/india_flags.html&h=256&w=365&sz=4&tbnid=SP8FXUh-lC2Q8M:&tbnh=85&tbnw=121&prev=/images%3Fq%3Dindia%2Bflag%26um%3D1&start=1&sa=X&oi=images&ct=image&cd=1


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Slide 3

India Pluses

Large and growing domestic market : Growing consumer base and one of theworlds largest markets for manufactured goods and services.

Versatile and skilled human capital : 2nd largest pool of scientists andengineers in the world (380 universities, 11200 colleges and 1500 researchinstitutions).

Abundant Resources : Manganese 160 Mn T, Chrominium 57 Mn T, Coal 248BT Bauxite 2.4B T and Iron Ore 13B T. India is also the largest producer of milk,sugarcane and tea and the second largest producer of rice, fruit and vegetables.

Steady Economic regime : Investment friendly policies relaxed FDInorms, low tax rates and reduced import duties.

Healthy, vibrant financial sector : India has the largest number of listedcompanies (10,000 +) across 23 Stock Exchanges and the 3rd largest investorbase in the world.

Source : US Geological Survey, Department of Mines, Ministry of Coal, World Fact Book

http://www.pppinindia.com/destination_india_link8.asp, http://www.investmentcommission.in
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Slide 4

Manufacturing Overview

Mfg growth averaged 9% in the last 4

years (2004-08), with a record 12.3% in2006-07.

Core manufacturing sector comprises :

Metals : Steel, Aluminium

Textiles & Garments

Electronics Hardware

Chemicals Automobiles

Auto Components

Gems and Jewellery

Food & Agro Products

The manufacturing sector is estimated to

command a market capitalisation of US$520B by 2014-15 as against US$ 272Bas of Sept 30, 2007 (study byConfederation of Indian Industry and theBoston Consulting Group)


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Slide 5

Indianeconomyexpected togrow at 8% to10% over thenext decade

The quality of Indian work forceis one of Indias key competitive

advantages

Indian manufacturing sector isexpected to grow at 12% to14 % over the next decade

Indian manufacturingcompetitively

positioned for a highgrowth rate era

India is a stabledemocracy withstrong macro-economicfundamentals

The BPOmigration toIndia is gettingreplicated in themanufacturingsector

FDI inflow intoIndia hasdoubled fromUSD 3.4B in2001 to USD 8Bin 2005

India is ranked43 in the latest

GCI index (1)ahead of other

BRICeconomies

(1) Global Competitiveness IndexSource: National Manufacturing Competitiveness Council, IMaCS analysis

Manufacturing Sector Overview


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Slide 6

Key Manufacturing Sectors

Auto Industry:The Indian auto industry is a

US$ 44B industry

(Automotives is USD 34B

and Auto components is

USD 10B)

Chemicals: The size of chemical industry in

India (Petrochemicals to Paints) isUS$ 30B

Electronics: The electronics industry is USD11B (consumer electronics toelectronic components)

Engineering: A US$ 22B including heavy andlight engineering

Food Processing: A US$ 70B industry growing

at 9% to 12%

Gems & Jewellery:A USD 13B industry (Gold

growing at 15% p.a and

Diamond growing at 27%

p.a)

Leather: Industry size is US$ 4B

Machine Tools: Industry Size is US$ 22M

Textiles: Industry Size is US$ 38B

Source: IMaCS analysis


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Slide 7

Investment in infrastructure is estimated to reach USD 125B between 2005 - 2010

Roads

Four laning 6,000 kms of highways

that link Indias top 4 metros has

been nearly completed (Golden

Quadrilateral)

The project linking the ten major

ports of the country to the GQ

mentioned above is nearing

completion

FDI investment upto 100%

permitted in the road sector

Ports

Indias long coastline (7,517

kms) and the 12 major ports

cater close to 90% of Indias

foreign trade in volume terms

and 70% in value terms


permitted in the port sector. 18

port privatization projects

worth USD 1.39B are under

way (Private participants are

P&O, PSA, Maersk, Gammon

India, CWC and Dubai PortAuthority)

Airports

India has 450 airports including

11international airports

India plans to invest USD 5.07B

in the next five years


permitted in the airport sector

The privatization of New Delhi

and Mumbai airports have been

completed

Emphasis on infrastructure development would support Indian manufacturing to becompetitive

Source: IMaCS analysis

Infrastructure Improvements to

spur Manufacturing Sector


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Slide 8

1) Government of India offers a fiveyear tax holiday for

a) Power projects

b) Firms engaged in exports

c) New industries in notifiedstates

d) Units in Electronic hardware,software parks

e) EOUs and Free TradeZones

2) Tax deductions of 100% on exportprofits

3) Deduction of 30% on net incomefor 10 years for new industries

4) Deduction in respect of certain

inter-corporate dividends

1. Each State & UT offers theirunique industrial and sectoral

policy and incentives

2. The policies offered relate to

industrial estates, taxes,

power tariff, capital investment

subsidies3. States and UT in India

typically follow a Single

Window Clearance (SWC)

mechanism

4. Customized packages

designed for capital intensiveprojects

5. Competition among the states

and UT to attract investment

proven to be beneficial for

investors

Regulatoryadvantage

Better projecteconomics

Central (Federal) Government State (Provincial) Government

Source: GoI website, IMaCS analysis

Regulations for Manufacturers


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Slide 9

India Mfgby Sectors


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Slide 10

Electronics Hardware(Karnataka, Maharashtra and U.P.)

US$ 11B by revenue (FY 05). Projected growthUS$ 62B in 2010

- Consumer Electronics : ~ US$ 3.9B

- Industrial Electronics : ~ US$ 2.1B

Computers : ~ US$ 1.4B

Telecom Equipment : ~ US$ 1.6B

Electronic Components : ~ US$ 1.6B

Major international players Siemens, TexasInstruments, Matsushita, Alcatel, LG, Samsung,Sharp and Lenovo.

Nokia, Sony Ericsson (OEM by Foxconn and Flextronics), LG Electronics, Samsung Mobile andMotorola have set up manufacturing facilities for mobile handsets in India.

100% FDI under automatic route is allowed excepting for aerospace and defence equipment

manufacturers which require an industrial license. New SEZ Act with duty-free imports and income tax concessions.

International contract manufacturers like Flextronics (Chennai) and Jabil Circuit (Pune) have set upbase in India.

Total estimated investment opportunity of US$ 17B

For additional information : Ministry of Information Technology (http://www.mit.gov.in)


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Slide 11

Automobiles(Tamil Nadu, Maharashtra, Karnataka and Haryana)

US$ 34B industry in India (5% of GDP)

8.6M vehicles produced in 04-05 :

1.2M passenger cars

6.6M Two-wheelers

0.38M Commercial vehicles

0.37M Three-wheelers

100% FDI through the automatic route.

Major domestic players Tata Motors, Hero Honda, Bajaj Auto, Ashok Leyland and TVS Motorswith 04-05 revenues of US$ 4B, US$ 1.7B, US$ 1.4B, US$ 0.9B and US$ 0.6B respectively.

Major international private players Suzuki, Hyundai, Ford, General Motors, Toyota and Hondawith 04-05 revenues of US$ 22B, US$ 46B, US$ 172B, US$ 193B, US$ 172B and US$ 80B

respectively.

Vehicle production expected to increase from 8.6M in 2004-05 to 15M by 2010-11.

Hyundai and Suzuki are considering India as a global hub for the manufacture of small cars.

Total estimated investment opportunity of US$ 13B in 5 yrs.For additional information : Ministry of Heavy Industries and Public Sector Enterprises (http://dhi.nic.in/dpi)

Societ of Indian Automobile Manufacturers htt ://www.siamindia.com
http://dhi.nic.in/dpihttp://www.siamindia.com/http://www.siamindia.com/http://www.siamindia.com/http://www.siamindia.com/http://www.siamindia.com/http://www.siamindia.com/http://www.siamindia.com/http://www.siamindia.com/http://dhi.nic.in/dpihttp://dhi.nic.in/dpihttp://dhi.nic.in/dpihttp://dhi.nic.in/dpihttp://dhi.nic.in/dpihttp://dhi.nic.in/dpihttp://dhi.nic.in/dpi


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Slide 12

Auto Components(Tamil Nadu, Maharashtra, Karnataka and Haryana)

US$ 8.7B Industry in India ( 1.3% of GDP)

0.4% share of the global Auto Components industry. Expectedto grow to over 3% by 2015-16.

International players Delphi, Visteon, Bosch and Meritorhave set up operations in India.

General Motors, Ford, Toyota etc. have set up IPOs in India to feed their global operations.

GM, Daimley Chrysler, Bosch, Suzuki, Johnson Controls etc. have set up R&D centres in India.

Major domestic players Bharat Forge Ltd., Tata Auto Component Systems, Sundaram Fastenersand Brakes India with 04-05 revenues of US$ 0.4B, US$ 0.2B, US$ 0.2B and US$ 0.1Brespectively.

100% FDI through the automatic route.

Total estimated investment opportunity of US$ 5B in 5 yrs.

For additional information : Ministry of Heavy Industries and Public Sector Enterprises (Http://dhi.nic.in/dpi) Automotive Component ManufacturersAssociation of India (http:acmainfo.com)
http://dhi.nic.in/dpihttp://dhi.nic.in/dpihttp://dhi.nic.in/dpihttp://dhi.nic.in/dpihttp://dhi.nic.in/dpihttp://dhi.nic.in/dpihttp://dhi.nic.in/dpihttp://dhi.nic.in/dpi


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Slide 13

India Mfgby Regions


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Slide 14

India

Auto Manufacturing Landscape

Source: Industry Sources

DelphiDensoSumi Motherson

Siemens VDOBosch

VisteonAutolivDelphi

Johnson Controls(US)

Faurecia (France) Toyo Radiator

(Japan) Yazaki Corporation

(Japan) CHKK (Japan) Ficosa

International(Spain)

Nifco Corporation(Japan)

Sungwoo (Korea)

Owens Corning(US) Yutaka Giken

(Japan) Knorr Bremse

(Germany) Cummins (US)

Chennai

Bangalore

Gujarat

Maharashtra
http://www.royalenfield.com/index.asp


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Slide 15

Traditional Strengths Tamil Nadu

share in India

Cars 34%

Heavy Commercial Vehicles 33%

Auto Components 45%

Railway Coaches 49%

Cotton Yarn 32%

Leather Tanning Capacity 70%

Software 15 % Power Driven Pumps 50%

Economic Activity:

Manufacturing 34%Services 45%

Agriculture 21%

State Priority Areas:

Electronics SoftwareAutomobiles

Auto components Pharmaceuticals Leather

Industry Profile - Tamil NaduIndustry Profile Tamil Nadu


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Slide 16

Capital of the state of Tamil Nadu, locatedon the Coramandel Coast of the Bay of Bengal.

The Detroit of India.

Estimated population of 7.5 M.

Base to 30% of Indias automobile Industry and35% of auto components industry.

Contributes 50%of Indias leather exports

Ranked #1 for Industrial Investment

One of the fastest growing Consumer markets. Prominent financial institutions, including the

World Bank, have back office operations in the city .

Fact Sheet : Chennai


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Slide 17

Nokia has invested US$250M and has announced an additional investment of US$75M and

plans to make the Chennai facility as the biggest mobile phone manufacturing facility in the world.Exports from Chennai plant earned the company US$300M (Rs1,200 crore) revenues in 2006-07

Samsung plans to make the Chennai plant as the Global mfg hub for all Samsung operations.Currently a leader in LCD category with 42 % share, it plans to sell at least 4.05 lakhs Flat PanelTVs in 2008.

Dell India Pvt. Ltd, says its revenue increased by 50% last year to touch US$600M (Rs2,370

crore) by the end of Oct 07. Salcomp, a major supplier to Nokia produces 10M chargers a month in the Chennai plant.

Foxconn plans to invest US$ 1.5B in the next three years in its Chennai plant.

US based firm Signet solarinc. set to invest US$ 500M for its mfg facility in Chennai.

Moser BaerLtd, leading mfr of compact discs, will set up a USD 500M photo-voltaic mfg facility

in Tamil Nadu. Ancillary units mfg conductors, inverters and switchgears are expected to set upnear MoserBaers unit

Electronic Sector - Facts


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Slide 18

Low cost cell phonemfg.Cumulative productionreached 125 M in March

2008. 50% of production is

exported to 58 countriesaround the World.

Mfr of mobile phone chargers.Produces 10 M charges per

month.90% of production goesto Nokia

Mfr components for mobilephones, modems digital

photo frames, cable TV set-up boxes with an investment

of US $ 100 M.

Mfr mobile parts for Nokia,Motorola. Telephone

instruments for Cisco with aninvestment of US $110M.

Mfr of mobilehandsets, Set top

boxes. Has capacity toproduce 12 M phones& 6,500 base terminal

stations per year.

Mfr of Flat and Ultraslim TVs ,LCD. Thecompany plans to

invest US $100 M by

2011.

Mfr of Printers, keyboards,transactionSolutions,PowerConditioning Systems. Part of TVS

group which has a turnover ofUS $2.5 B.

Mfr of desktop & Laptopcomputers with a

production capacity of

500,000 units per year.About 5.4 M PCs weresold in India in 2006.

Key Electronic Players in Chennai


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Slide 19

Company Investment US$ ProductsNokia (Finland) 250M Mobile Phones

Foxconn (Taiwan) 110M Electronic hardware

TESSOLVE 220M Packaging & Testing

Flextronics (USA) 100M Electronic hardwareASPOCOMP (Finland) 70M PCBs

Motorola (USA) 30M Mobile Phones

Spel Semiconductors 45M Testing

Salcomp 40M ChargersPerlos 45M Mechanics

Jabil 60M Electronic hardware

Dell Computers 30M Computers & peripherals

Samsung 100M Electronic hardware

Electronic Investments


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Slide 20

ASHOK LEYLAND - TRUCKSHYUNDAI, Korea - CARSMITSUBISHI - CARSBMW - CARSROYAL ENFIELD - Motorcycles

TAFE - TractorsFORD, USA - CARSTATRA-UDYOG - HCVSTVS-SUZUKI - Motor CyclesCATERPILLAR - Earth MovingKOMATSU - Earth MovingCREAVES - TractorsHVF - Battle TanksICF - Railway coachesTI Cycles - Cycles

ChennaiAutomotive SectorChennaiAutomotive Centre


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Slide 21

The Tamil Nadu government estimates $50 B (Rs1.99 T) of auto industry

investment will flow into India by 2016.

Chennai auto plants has an production capacity of 1.2 M cars a year35% ofIndias total. It has attracted $4.5 billion of auto investment so far.

Ford India Pvt Ltd has announced a US $500 M expansion plan to set up asmall car production facility and an engine manufacturing unit . The car plantcapacity would double to two lakh vehicles a year by 2010.

The Nissan-Renault plant are planning to start production in early 2010 withan investment of US $650 M. The company expects to have eight models inthe country by 2012 and use the plant for export purposes.

Mahindra & Mahindra have decided to set up a tractor plant in Chennai in2010, with a production capacity of 50,000 tractors per year.

Automotive Sector - Facts


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Slide 22

Mfg passenger cars.Produces 100,000 units per

year.

Mfg passenger carsProduces 600,000 units peryear. Exports destinations

are to increase from 73 to 90

countries by end of 2008.

Nissan & Renault (JV)planning to start

production in 2010 inpassenger car segment

with an investment ofUS $1.1 B

Mfr of two wheelers ,autocomponents. Produces720,000 units per year.Annual turnover more

than US $1 B in 2006-07.

The plant has an

capacity toassemble 1,700cars per year.

Mfr of automotiveelectrical systems andcomponents .Revenue

of US $250 M in2006-07.

Auto Sector Main Players
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Slide 23

Mfg of Bullet Motorcycles.

Produces 39,000 units per yearand exports to 25 countries.

Has an R&D facility, plans toset up a Tractor unit in 2010

with a production capacity of50,000 units per year.

Tractors and Farm EquipmentLimited (TAFE),Mfr of

Tractors.Acheived a sales of 8000tractors in 2006-07.

Mfr of tyres and conveyor belts.Produces 400,000 radial tyres &

600,000 two wheeler tyres per year.Exports to 75 countries.

Mfr of Mitsubishi Lancercars in technical

collaboration with MitsubishiMotors, Japan.

Production capacity of12,000 units per year.

Auto Sector Main Players
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Slide 24

Company Investment US $ Products

Hyundai 2B Passenger cars

Ford 800M Passenger cars

Nissan 650M Passenger cars(Production will startearly 2010)

Renault 450M Passenger cars

(Production will start

early 2010)

Source: The Hindu dated April 23,2008.

Auto majors Volkswagen and General Motors are in the pipeline.

Auto Sector Investments


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Slide 25

Pune

Pune

Population 5.5M in 2008

2nd largest city (700 sq. km) in Maharashtra and 8thlargest in India.

160 kms (~ 3 hrs drive) from Mumbai

Per capita GDP Rs.46000 (~US$ 1076)

2nd highest in growth of software exports in 2005 06

Oxford of the East 5,00,000 students

Over 1,100 technical and engineering institutes and anannual pool of 3,00,000 technically qualified students.

Biggest (~ 55%) automobile manufacturing base.
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Slide 26

Automotive SectorSome of the Major Companies are

Indian

TATA Motors. Trucks, Cars, Jeep, Multi Utility vehicles and a range of light and heavycommercial vehicles. : Location - MIDC Pimpri, Block No. F1, Pune

Bajaj Auto Ltd. Two and Three Wheeler ( largest manufacturer of two wheeler in countryand Three Wheeler in the World ) : Location - Akurdi, MIDC Pimpri, Pune.

Kinetic Motor Company Limited : Location- MIDC Chinchwad Bajaj Tempo Ltd. Petrol and Diesel Automobiles - LCVs / HCVs

Location - Akurdi, MIDC Pimpri, Pune.

Foreign

Mercedes Benz India. Part of Daimler Chrysler Group: Manufacturer of luxury vehicles

Location - Sector 15 A, Chikhali, Pimpri MIDC, Pune JCB has an existing plant in Chakan

General Motors has recently set up a new plant in Ranjangaon spreading over 300 Acresfor Chevrolet cars

Volkswagen will be investing in a full production plant with a press shop, body shop, paint

shop and assembly lines to be built on the 230 hectare site in the Chakan industrial parknear Pune


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Slide 27

Investments Stack up Auto

SectorBusiness Standard 10 May, 2008

Company Investment

(Bn US$)

Purpose Capacity

Volkswagen 35 New Plant 110,000

General Motors 14 New Plant 140,000

Fiat Tata 40 New Plant 200,000 cars

300,000 engines

Tata Motors 60 Capacity expansion 600,000

Mahindra 40 New Plant 300,000

Daimler 2.5 New Plant 5,000

Bajaj Auto 20 New Plant for 3-4Wheelers

500,000


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Slide 28

Most strategically located, encompasses

Delhi, the Capital City from three sides.

Has the 2nd highest per capita income inthe country.

Ranks fourth as per the infrastructure index

developed by CMIE.

Ninety-three of top Fortune -100 companieswith their corporate offices and productionbases already in Haryana.

Very close to International, Domestic

Airports, inland Container Depot/s andexcellent Air-Rail-Road-Highway links.

Good Human Resources availability, superbsocial, urban and industrial infrastructureand excellent law and order situation.

Haryana -- Key Indicators


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Slide 29

Automotive & Auto Components

Key Manufacturing Sectors -

Haryana


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Slide 30

Key Manufacturing Sectors - UP

Automotive, Consumer Electronics


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India Land of Opportunities

Slide 31


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Slide 32

Thank YouContact: Terence Khi

Email: [email protected]

DID: 6433 4767

Opportunities in India's Manufacturing Sector - EEPC Buyer Seller Meet 030409

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Transcript of Opportunities in India's Manufacturing Sector - EEPC Buyer Seller Meet 030409