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Electric Wire and Cable Market – India

October 2014

2

Executive Summary

Market Overview

Drivers & Challenges

EXIM

Competitive Landscape

The Indian wire and cable industry is predominantly volume-driven It accounts for ~ ’x’% of the total transmission and distribution segment In 20--, the market stood at INR ‘a’ bn and is expected to reach INR ‘b’ bn by FY 2018, growing at CAGR of

about ‘y’%

Export

India majorly exports to UK, USA, Nepal, UAE and Sri Lanka

Drivers

Focus on Power Sector

Large Investments in Telecom Sector

Robust Industrialization

Growing Urbanization

Challenges

Increase in Price of Raw Materials

Increase in Competition

Safety Hazards

Major Players

Company A Company B Company C

Company D Company E Company F

Trends Technological Innovations

Preference for Aluminum

Import

India mainly imports from Russia, UAE, Turkey and China

ELECTRIC WIRE AND CABLE MARKET IN INDIA 2014.PPT

3

•Macroeconomic Indicators

•Introduction

•Market Overview

•Export-Import

•Drivers & Challenges

•Government Initiatives

•Trends

•Competitive Landscape

•Opportunities

•Strategic Recommendations

•Appendix


4

Economic Indicators (1/3)

11

12

13

14

15

b2

a2

Q1

d1 c1

b1

a1

Q4

c4

b4

a4

Q3

c3

b3

a3

Q2

d2 c2

INR tn

2013-14 2012-13 2011-12 2010-11

GDP at Factor Cost: Quarterly

Inflation Rate: Monthly

-2

-1

0

1

2

q

Jul 2013 - Aug 2013

p

%

Nov 2013 - Dec 2013

t

Oct 2013 - Nov 2013

s

Sep 2013 - Oct 2013

r

Aug 2013 - Sep 2013


5

Backed by growth in end-user industries, wire and cable demand is expected to increase rapidly in the coming years Wire and Cable-Market Overview (1/2)

• Indian wires and cable market is primarily dependent on sales volume and involves huge quality and technical specifications

End-use industries like telecom, energy generation, automotive, construction determines the market prospects for wire and cable industry

• Rise in investment in infrastructure in developing countries like India, China, Brazil , Russia are stimulating the market growth of wire and cable industry

International players are considering India as a potential market for HV and EHV cables


FY2013

x1

0

x2

x3

x4

x5

x6

INR bn

FY 20--

f

e d

c b

Y%

FY 20-- FY 20-- FY 20-- FY 20-- FY 20--

a

Indian Wire and Cable Market – Size and Growth

p1%

p2%

Organized

Unorganised

Market Segmentation-Sector-wise

6

Drivers & Challenges – Summary

Drivers

Focus on Power Sector

Large Investments in Telecom Sector

Robust Industrialization

Growing Urbanization

Challenges

Increase in Price of Raw Materials

Increase in Competition

Safety Hazards


7

Emphasis on transmission lines addition in the 12th FYP will boost the domestic demand for cables

• Indian government has placed utmost importance to the power sector and also to the development of infrastructure

Growth of the infrastructure and power sector is directly related to the GDP of the country

• H1 FY 20-- saw an inflow of INR ‘xx’ bn in the power sector through the FDI route

• FDI up to ‘yy’% is permitted under the automatic route for projects involved in electricity generation (except atomic energy), transmission, distribution and power trading

• Since the power sector is developing and expanding, so the need for electric cables and wires is on the rise and likely to increase even further

Focus on Power Sector (1/4)

Transmission Lines Additions

Impact

b5

b4

b3

b2

b1

0

INR bn

12th FYP

a3%

a4%

11th FYP

a1%

a2%

Distribution

Transmission

z5

z6

z4

z3

z2

z1

0

p1

p2

10th FYP

‘000 Ckt

12th FYP

p3

11th FYP


Planned T&D Investments

H1 refers to the first six month of the financial year

8

Trends

Preference for Aluminum

Technological Innovations


9

Porter’s Five Forces Analysis

Competitive Rivalry

Bargaining Power of Suppliers

Bargaining Power of Buyers

Threat of Substitutes

Threat of New Entrants

Impact X

Impact X

Impact X

Impact X

Impact X


10

Competitive Benchmarking (1/5)

Public Trading Comparables

Company A Company B Company C Company D

Market Capitalization (INR mn)

Share Price (INR)

EV/EBITDA (x)

EV/Revenue (x)

PE Ratio


11

Key Ratios of Top 4 Companies – Operational Basis (FY 2013) (1/3)

Competitive Benchmarking (2/5)

• Company B recorded gross margin of b1%, higher than that of Company A, Company C and Company D which recorded gross margin of a1%, c1%, d1% respectively

• Company A recorded highest operating margin of a2%, followed by Company B, Company D and Company C which recorded operating margin of b2%, d2%, and c2% respectively

• Company A recorded a net margin of a3%, higher than that of Company D and Company C but lower than Company B which recorded net margin of b3%

x5

x4

x3

x2

x1

%

Company D

d3 d2

d1

Company C

c3 c2

c1

Company B

b3 b2

b1

Company A

a3 a2

a1

Net Margin Operating Margin Gross Margin


12

Public: Domestic Company – Company A Ltd. (1/4)

Key People

Products and Services

Company Information Offices and Centres – India

Corporate Address

Tel No.

Fax No.

Website

Year of Incorporation

Ticker Symbol

Stock Exchange

Name Designation

Person 1 Chairman and Managing Director

Person 2 Director

Person 3 Director( Finance)

Person 4 Executive Director

Noida

Category Products/Services

Lighting Products

Wires and cables

Energy Meters

Modular Wiring

accessories

Headquarters


13

Financial Snapshot Key Ratios

Financial Summary


• The company incurred a net loss of INR ‘d2’ mn in FY 20-- as against INR ‘c2’ mn in FY 20--

• The company reported total income of INR ‘d1’ mn in FY 20--, registering an increase of ‘p’% over FY 20--

• The company earned an operating margin of ‘x.x’% in FY 20--, an increase of ‘y.y’ % points over FY 20--

• The company reported debt to equity ratio of ‘w.w’ in FY 20--, an increase of ‘z.z’% over FY 20--

Key Financial Performance Indicators

Indicators Value (dd/mm/yyyy) Market Capitalization (INR)

Total Enterprise Value (INR)

EPS (INR)

PE Ratio (Absolute)

Particulars y-o-y change

(20-- - --) 20-- 20-- 20-- 20--

Profitability Ratios

Operating Margin

Net Margin

Profit Before Tax Margin

Return on Equity

Return on Capital Employed

Return on Working Capital

Return on Assets

Return on Fixed Assets

Cost Ratios

Operating costs (% of Sales)

Administration costs (% of Sales)

Interest costs (% of Sales)

Liquidity Ratios

Current Ratio

Cash Ratio

Leverage Ratios

Debt to Equity Ratio

Debt to Capital Ratio

Interest Coverage Ratio

Efficiency Ratios

Fixed Asset Turnover

Asset Turnover

Current Asset Turnover

Working Capital Turnover

Capital Employed Turnover

Improved Decline

Net Profit/Loss Total Income

x1

y3

y2

y4

y1

y0

x4

x3

x2

c1

20--

b2

b1

20--

a2

a1

20--

d2

INR mn INR mn

d1

20--

c2


14

Key Business Segments Key Geographic Segments

Business Highlights

Description News

Overview

• Company A Ltd. was formerly known as Company E Ltd. and changed its name to Company A Ltd. in July 20--

• Manufactures and markets a wide range of electrical products like wires and cables, fans, switches, geysers and mobile accessories

• Demerged its metering and power generation business in 20-- and diversified the business of LED lighting products and energy efficient water heaters and fans

Expansion Plans • In FY 20--, acquired two factories at SIDCUL Haridwar and is looking to diversify into home appliances

x4

x3

x2

x1

x0

20--

c4 b4

a4

20--

c3 b3

a3

20--

e1 d1 b2

a2

20--

c1

b1 a1

y3

y2

y1

20--

p4

20--

p3

20--

p2

20--

s1 r1

p1

Switchgear

M&PG

Others

Lighting

Cables&Wires Other Countries European Union India



15

T O

W S

Public: Domestic Company – Company A (4/4)


16

Private: Domestic Company – Company B (1/5)

Key People

Products and Services

Mumbai

Company Information Offices and Centres – India

Corporate Address

Tel No.

Fax No.

Website

Year of Incorporation

Category Products/Services

Cables

Wires

Headquarters

Name Designation

Person 1 CEO

Person 2 Director


17


Shareholders of the Company as on dd/mm/yyyy Ownership Structure

Name No. of Shares held

Shareholder 1 a

Shareholder 1 b

Total x

48.6%

Directors or relatives of directors


18

Financial Snapshot Key Ratios

Financial Summary

Particulars y-o-y change

(20-- - --) 20-- 20-- 20-- 20--

Profitability Ratios

Operating Margin

Net Margin

Profit Before Tax Margin

Return on Equity

Return on Capital Employed

Return on Working Capital

Return on Assets

Return on Fixed Assets

Cost Ratios Operating costs (% of Sales)

Administration costs (% of Sales)

Interest costs (% of Sales)

Liquidity Ratios Current Ratio

Cash Ratio

Leverage Ratios Debt to Equity Ratio

Debt to Capital Ratio

Interest Coverage Ratio

Efficiency Ratios Fixed Asset Turnover

Asset Turnover

Current Asset Turnover

Working Capital Turnover

Capital Employed Turnover

Improved Decline

Net Profit/Loss Total Income

x3

x2

x1

y3

y1

y2

b4

a4

2012

b3

a3

2011

b2

a2

2010

b1

a1

INR mn

2013

INR mn



• Company earned a net profit of INR ‘b4’ mn in FY 20--, as compared to net profit of INR ‘b3’ mn in FY 20--

• It reported total income of INR ‘a4’ mn in FY 20--, registering a decrease of ‘p’% over FY 20--

• Earned an operating margin of ‘x.x’ % in FY 20-- a decrease of ‘y.y’ percentage points over FY 20--

• The company reported debt to equity ratio of ‘w.w’ in FY 20--, an increase of ‘z.z’% over FY 20--

19

Business Highlights

Description News

Overview

• Company B manufactures, supplies and exports electrical wires and cables in India

• Manufacturing facility is in ‘Z’

• ISO 9001-2008 and ISO 14001 : 2004 certified and follows BIS and CSA standards

Certifications and approvals

• The products are approved by Technical Advisory Committee, Mumbai port trust, HPCL and Public Works Department (PWD)

• Obtained certificate of performance from companies like Reliance Petroleum Ltd. and Abby Lighting

Clients • Domestic clients include A, B, C., D • It also exports its products in countries like UK, North Ireland and Middle East



20

T O

W S



21

Growing prominence of renewable energy in India to provide huge opportunity to wire and cable industry

• Principal sources of renewable energy are

Wind Energy

Small Hydro up to 25 MW

Biofuel

Solar Energy

• Renewable energy capacity presently accounts for x% of the total installed power capacity and y% of the electricity produced in India

• The installed capacity is estimated to increase to z% by 20--

• India plans to more than double its renewable energy capacity by 20--

• The Government of India plans to generate an additional xx GW of renewable energy in the 12th Plan Period, more than double the yy GW added during the 11th Five Year Plan

Renewable Energy Market Segmentation

d%

b%

c%

a%

Shift Towards Renewable Energy Forecasted Generation Mix by 20--

Jan, 2014

Small Hydro Power

Solar

Biofuel

Wind

Total installed capacity of

renewable energy is x GW

Resources Estimated Installed Capacity (GW)

Coal xx

Gas xx

Hydro xx

Renewable xx

Nuclear xx


22

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