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Auto Ancillary Market IndiaAuto Ancillary Market – India
March 2013
Executive Summary
Market Auto ancillary market in India is expected to reach INR a9 bn in 2015‐16, growing at a CAGR of z2 % from INR a5 bn in 2011‐12
Engine parts account for the largest share, representing b1% of the total auto component market
Drivers: Challenges:
Drivers & Challenges
Drivers:‐ Growing Automotive Industry
‐ Healthy Economic Outlook
‐ Auto Aftermarket Demand
‐ Growing Investments
Challenges:‐ Exposed to Cyclical Downturns in the Automobile Industry
‐ Rising Labour Costs and Price of Raw Materials
‐ Counterfeit Market
‐ Technical Inefficiency‐ Opportunity from New US IT Compliance Law
Government Union Budget 2012‐13 National Automotive BoardN i l A i T i d R&D I f P j (NATRIP)
‐ Depreciating Currency
Trends Diversification
Rising PE/VC Investments
Initiatives National Automotive Testing and R&D Infrastructure Project (NATRIP) Export Incentives ACMA Initiatives
Adoption of Green Strategies
Increasing Foreign Presence
Competition
Trends Rising PE/VC Investments
Focus on Quality
Market comprises of a large number of domestic players and steadily increasing participation from foreign players, mainly through mergers & acquisitions
Some of the major players in the market are Player 1 Player 2 Player 3 Player 4 Player 5 Player 6 Player 7
Increasing Foreign Presence
Changing Design
2AUTO ANCILLARY MARKET IN INDIA 2013.PPT
Competition Some of the major players in the market are Player 1, Player 2, Player 3, Player 4, Player 5, Player 6, Player 7, Player 8, Player 9, Player 10, Player 11, Player 12, Player 13, Player 14, Player 15, Player 16, Player 17, Player 18 and others
•Macro‐Economic Indicators•Market OverviewS t•Segments
• Major Segments• Major Sub‐Segmentsj g
•Opportunity Areas•Export‐Import•Drivers & Challenges•Government Initiatives•Trends•Trends•Competitive Landscape•Strategic Recommendations
3
g•Appendix
AUTO ANCILLARY MARKET IN INDIA 2013.PPT
SAMPLE Indian auto ancillary market, exhibiting rapid development and is expected …
Auto Ancillary Market – Overview
•Auto ancillary market is one of the fastest growing segment within the manufacturing sector in
India
Auto component market is expected to grow at a CAGR of z2 % to reach INR a9 bn in 2015‐16 from INR a5
bn in 2011‐12
• India has the potential to become one of the top auto component economies by 20‐‐
• There are ~x organized players contributing to y% of the total auto component output, while
the unorganized sector accounts for the restthe unorganized sector accounts for the rest
Unorganized auto component sector comprises of ~z players, mainly in the replacement market, or are Tier
p and Tier q manufacturers
Primarily, Type 1 dominate the Indian auto component market
I di t ill t h b l ti k t f th l b l i t th• Indian auto ancillary sector has become a lucrative market for the global investors as the
country’s overall automobile industry is expected to witness a u‐fold increase in demand by 20‐
along with the business friendly environment, favorable policies and availability of skilled
manpower at a comparatively lower cost
4AUTO ANCILLARY MARKET IN INDIA 2013.PPT
SAMPLE …to grow at a steady pace over the next five years
INR bn
+z2%
Auto Ancillary Market Size & Growth
+z1%
2016e2015e2014e2013e20122011201020092008
INR bn
Market Segmentation – Sector‐wise
5AUTO ANCILLARY MARKET IN INDIA 2013.PPT
ImportsAftermarketExportsSales to OEMs
Auto ancillary industry will generate employment opportunities and also contribute to country’s GDP
SAMPLECreating x to y mn
Contribution to Employment Generation Contribution to GDP
SAMPLE additional jobs
a3 – a4
‘000 Person %
+z1%
29%
a2
29%
+z2%
71%
29%
a1
28%
71%
2020e2009
72%
71%
2015e 2015e 2020e2009
6AUTO ANCILLARY MARKET IN INDIA 2013.PPT
Direct Indirect
Auto ancillary market in India is expected to witness robust growth in terms of production, exports as well as imports
SAMPLEAuto Ancillary Market – Future Outlook
INR bnSAMPLE +z%
a3
i3%
e3%a2
e2%
i2%
a1
p3%
p2%
a1
p1%
e1%i1%
2021e2016e2011
Domestic ProductionExportsImports
7AUTO ANCILLARY MARKET IN INDIA 2013.PPT
pp
SAMPLE Value Chain Analysis
Raw Material 1, Raw Material 2, R Raw Material 3, Raw Material 4, Raw Material 5
Base Raw Material Producers
Semi Finished Material
Semi Finished Material1, Semi Finished Material 2, Semi Finished Material 3
T 1 T 2Type 3
Type 1
Tier p Manufacturers
Function 1
Type 2
Tier q Manufacturers
Auto part 1, Auto part 2, Auto part 3 etc.
Tier r Manufacturers
Function 3, Function 4, Function 5, Function 6, Function 7, Function 8,
Function 9Function 9
Market 1Type 4/ Type 5 Market
Market 2
Intermediaries
8AUTO ANCILLARY MARKET IN INDIA 2013.PPT
End Users
SAMPLE Opportunities differ across manufacturers positioned at various levels within the auto ancillary sector
India‐based global supplier
Domestic Tier 2/3 Supplier
Domestic Tier 1 Supplier
Small Local Entrepreneur
Opportunity 2Opportunity 3
Opportunity 4
Opportunity 1Opportunity 2
9AUTO ANCILLARY MARKET IN INDIA 2013.PPT
SAMPLE Auto Ancillary Market – Segments (1/3)
Auto Ancillary Market – Segmentation (2010‐11)
b7%b %
b1%b6%
b5%
b
Segment 2
Segment 1
Other
Segment 6
Segment 5
Segment 3b4%
b3%
Segment 4
• Auto components industry has been classified into six broad segments:
• Segment 1 represent the largest segment with b1% share of auto component market
• This is followed by segment 2 with b2% share
• Segment 3 and Segment 4 account for b3% share each in the entire product range
• Segment 5 and Segment 6 represent b5% and b6% respectively
10AUTO ANCILLARY MARKET IN INDIA 2013.PPT
Segment 5 and Segment 6 represent b5% and b6% respectively
SAMPLE Auto Ancillary Market – Segments (2/3)
Segment 1 Segment 2
• Finding 1 • Finding 1g• Finding 2• Finding 3• Finding 4
Outlook
g• Finding 2• Finding 3• Finding 4
Th f ll i h b d i• These fall into three broad categories: Category 1 Category 2 Others
•Major parts include:
•Major parts include: Part 6, Part 7, Part 8 and Part 9, Part 10, etc.
Sub‐segments
11AUTO ANCILLARY MARKET IN INDIA 2013.PPT
Major parts include: Part 1, Part 2, Part 3, Part 4, Part 5, etc.
SAMPLE Segment 1
•Sub‐segment 1g
•Sub‐segment 2
S b t 3•Sub‐segment 3
•Sub‐segment 4
•Sub‐segment 5
•Sub‐segment 6
12AUTO ANCILLARY MARKET IN INDIA 2013.PPT
Sub segment 6
SAMPLE Sub‐segment 1 (1/2)
Major Players & Strategic AlliancesSub‐segment 1 – Demand
Company Collaboration+z%
mn units
Player 1 Player 7, Country 1
Pl 8 C 2
Product Variation
Player 2Player 8, Country 2;
Player 10, Country 3;
Player 11, Country 42020e2015e2014e2013e20122011
Player 3 Player 12, Country 5
Player 4 Player 13, Country 6
Player 5 Player 14 Country 7
b8%
b1%
b7%b6%
b4%Type 3
Type 2
Type 1
Player 5 Player 14, Country 7
Player 6
b1%b4%
b3%
yp
Type 7
Type 6
Type 5
Type 4
13AUTO ANCILLARY MARKET IN INDIA 2013.PPT
Type 8
SAMPLE Sub‐segment 1 (2/2)
Market Segmentation
Region‐wise Sector‐wise
c4%
c1%
d3%
c3% d1%
EastWestNorthSouth ExportOEReplacement
14AUTO ANCILLARY MARKET IN INDIA 2013.PPT
SAMPLE Opportunity Areas – Summary
State 1
Auto ancillary manufacturing plants should be built near the major automobile production or assembly facilities to capitalize on the growing opportunities provided by the existing as well as the emerging auto hubs in India
State 2 and Surrounding
Automobile Production Hubs
i I diState 3
in India
St t 4 d S di
Opportunity Area for the auto
State 4 and Surrounding
15AUTO ANCILLARY MARKET IN INDIA 2013.PPT
ancillary manufacturersState 5
SAMPLE State 1 – Opportunity Areas
•Company 1
State 1 – Auto Hub
Place 3
Place 1
Company 1
•Company 2
•Company 3
State 1 Place 3
Place 5Place 4
Place 2
•Company 4
State 1
Place 6
Auto ancillary units in Place 2, Place 5 and Place 6 play a
significant role in supportingsignificant role in supporting the development of State 1 as
an auto hub
16AUTO ANCILLARY MARKET IN INDIA 2013.PPT
Major Auto Hubs Major Auto ancillary Hubs Emerging Auto ancillary Hubs
Auto majors establishing manufacturing plants in State 1, resulting in a higher demand for auto ancillary units
State 1 – Auto Industry Scenario
• Finding 1
Sub‐finding 1
Sub‐finding 2
• Finding 3
• Finding 4Finding 4
Sub‐finding 3
Sub‐finding 4
• Finding 5
Sub‐finding 5
• Finding 6
17AUTO ANCILLARY MARKET IN INDIA 2013.PPT
SAMPLE State 1 is likely to attract investment owing to its favourable environment
•Finding 1• Finding 2
Government Support
Location Advantage
`
• Finding 1• Finding 2
State 1 –Growth Drivers
H R D l t
• Finding 1 Sub‐finding 1
• Finding 2
Human Resource Development
g
• Finding 1
Availability of Land
18AUTO ANCILLARY MARKET IN INDIA 2013.PPT
Finding 1• Finding 2
Growth of exports have been hampered by the turbulent global economic scenario
•Finding 1
Sub‐finding 1
Exports (Value)Exports – Overview
INR bn
Sub‐finding 2
• Finding 3
Sub‐finding 3
Sub‐finding 4
+z%
Sub finding 4
• Finding 5
Export Destinations 20‐‐
2021e2008 20102009 2016e20122011
b6%b5%
b4%
b1%R i 4
Region 3
Region 2
Region 1
b3%
Region 6
Region 5
Region 4
19AUTO ANCILLARY MARKET IN INDIA 2013.PPT
Drivers & Challenges – Summary
Challenges
Drivers
Exposed to Cyclical Downturns in the Automobile Industry
Rising Labour Costs and Price of Raw MaterialsDrivers
Growing Automotive Industry
Healthy Economic Outlook
Materials
Counterfeit Market
Technical Inefficiency
Auto Aftermarket Demand
Growing Investments
O t it f N US IT
Depreciating Currency
Opportunity from New US IT Compliance Law
20AUTO ANCILLARY MARKET IN INDIA 2013.PPT
Growth in the automobile industry is expected to generate huge order…
ImpactGrowing Automotive Industry (1/3)
• Finding 1
Sub‐finding 1
• Finding 2
Sub‐finding 2
• Finding 3
Growing Automotive Industry Turnover Rising Passenger Vehicle Production
INR tr
+z1%
‘000 units
+z1%+z2%
21AUTO ANCILLARY MARKET IN INDIA 2013.PPT
2011 2016e 2021e2016e2012201120102009
SAMPLE Union Budget 2012‐13 has hit the auto ancillary industry in both advantageous as well as disadvantageous ways
Union Budget 2012‐13
• Finding 1
• Finding 2
• Finding 3Finding 3
Negative Impact Positive Impact
• Impact 1
• Impact 2
• Impact 3
• Impact 1
• Impact 2
• Impact 3• Impact 4
Impact 3
22AUTO ANCILLARY MARKET IN INDIA 2013.PPT
SAMPLE Trends – Summary
Diversification
Rising PE/VC Investments
`
Focus on Quality
Key Trends
Adoption of Green Strategies
Ch i D i
Increasing Foreign Presence
23AUTO ANCILLARY MARKET IN INDIA 2013.PPT
Changing Design
SAMPLE Public: Domestic Company – Company 1(1/4)
Company Information Offices and Centres – India
Corporate Address Address 1
Tel No. +91‐xx‐ yyyyyyyyy
Fax No. +91‐ww‐zzzzzzzz
Website www.xxx.com
Year of Incorporation ‐
New Delhi
Products and Services
Ticker Symbol ‐
Stock Exchange Bombay Stock Exchange (BSE)Head Office
Key People
Products and Services
Products
Product 1, Product 2, Product 3, Product 4, Product 5, Product 6, Product 7, Product 8, Product 9, Product 10, Product 11, Product 12 P d t 13 P d t 14 P d t 15 P d t 16 P d t 17 N D i ti12, Product 13, Product 14, Product 15, Product 16, Product 17, Product 18, Product 19, Product 20, Product 21, Product 22, Product 23, Product 24, Product 25 and Product 26
Name Designation
Person 1 MD and Executive Director
Person 2 VP of Finance and Accounts
Person 3 CEO of Subsidiary 1
24AUTO ANCILLARY MARKET IN INDIA 2013.PPT
Person 4 MD of Subsidiary 2
SAMPLE i i l S h K i
Public: Domestic Company – Company 1(2/4)
Financial Snapshot Key Ratios
Particulars y‐o‐y change (2011‐10)
2011 2010 2009 2008
Profitability RatiosOperating Margin ‐ ‐ ‐ ‐ ‐
Net Profit/LossTotal IncomeINR mn INR mn
Net Margin ‐ ‐ ‐ ‐ ‐
Profit Before Tax Margin ‐ ‐ ‐ ‐ ‐
Return on Equity ‐ ‐ ‐ ‐ ‐
Return on Capital Employed ‐ ‐ ‐ ‐ ‐
Return on Working Capital ‐ ‐ ‐ ‐ ‐
Return on Assets ‐ ‐ ‐ ‐ ‐20112009
b3b1 b4
2008 2010
b2
Financial Summary
• The company incurred a net profit of INR a4 mn in FY 2011, as compared to net profit of INR a3 mn in FY 2010
• The company reported total income of INR b4 mn in FY 2011, registering an increase of x% over FY 2010
Return on Fixed Assets ‐ ‐ ‐ ‐ ‐
Cost RatiosOperating costs (% of Sales) ‐ ‐ ‐ ‐ ‐
Administration costs (% of Sales)
‐ ‐ ‐ ‐ ‐
Interest costs (% of Sales) ‐ ‐ ‐ ‐ ‐registering an increase of x% over FY 2010
• The company earned an operating margin of p% in FY 2011, an increase of q percentage points over FY 2010
• The company reported debt to equity ratio of r in FY 2011, an increase of z% over FY 2010
Interest costs (% of Sales)
Liquidity RatiosCurrent Ratio ‐ ‐ ‐ ‐ ‐
Cash Ratio ‐ ‐ ‐ ‐ ‐
Leverage RatiosDebt to Equity Ratio ‐ ‐ ‐ ‐ ‐
b i l iKey Financial Performance Indicators
Indicators Value (‐‐/07/2012)Market Capitalization (INR mn) x1Total Enterprise Value (INR mn) x2EPS (INR)
Debt to Capital Ratio ‐ ‐ ‐ ‐ ‐
Interest Coverage Ratio ‐ ‐ ‐ ‐ ‐
Efficiency RatiosFixed Asset Turnover ‐ ‐ ‐ ‐ ‐
Asset Turnover ‐ ‐ ‐ ‐ ‐
Current Asset Turnover ‐ ‐ ‐ ‐ ‐
25AUTO ANCILLARY MARKET IN INDIA 2013.PPT
EPS (INR) x3PE Ratio (Abs) (‐‐/07/2012) x4
Working Capital Turnover ‐ ‐ ‐ ‐ ‐
Capital Employed Turnover ‐ ‐ ‐ ‐ ‐
Improved Decline
SAMPLE Public: Domestic Company – Company 1(3/4)
Key Business Segments Key Geographic Segments
100%
India
100%
Automotive Components
0%
50%
100%
x2% Finding 2
0%
50%
100%
x1% Finding 1
Business Highlights (1/2)
0%2011
0%2011
Description News
Overview
• Company is engaged in manufacturing and sales of integrated automotive components primarily in Country 1, Country 2 and Country 3 It produces parts for segment 1, part 1, part 2 and part 3 for segment 2,segment 3, and segment 4 and segment 5 Also, it manufactures components for various sectors, such as the sector 1, sector 2, sector 3, sector 4, sector 5, sector 6 and sector 7
• In Mar 201‐‐, company had raised ~INR x bn via issuance of foreign currency convertible bonds to fund acquisitions and other capital investments
26AUTO ANCILLARY MARKET IN INDIA 2013.PPT
Fund Raising bonds to fund acquisitions and other capital investments Previously, in Jan 20‐‐, company’s board was allowed to raise ~INR y bn via foreign debt instruments, such as GDRs, ADRs, FCCBs or other securities convertible into equity
SAMPLE Strategic Recommendations – Summary
Recommendation 1
Recommendation 2
` Recommendation 3Key
Recommendations
Recommendation 4
27AUTO ANCILLARY MARKET IN INDIA 2013.PPT
Recommendation 5
Thank you for the attentionThe Auto Ancillary Market – India 2013 report is a part of Netscribes’ Automotive and Transport Industry Series.For any queries or customized market research requirements, contact us at:Phone: +91 33 4027 6214/6215
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28AUTO ANCILLARY MARKET IN INDIA 2013.PPT
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