Chetan Khanna

Contents
Introduction Major Companies Issues Future Outlook

Indian auto components industry: Snapshot

Parameter
Turnover

Value (uS$ bn)

26

Y-o-Y growth (%)

18

Exports
Investments

5
12

32
33
Source : ACMA , FY 11

What is so special ?
An efficient supply chain and movement in exchange rates

Lower operational cost

English speaking

Established production lines

Excellent engineering skills

High productivity

Transition of Indian Auto Component Industry

Low Rotating Auto Electricals tires and tubes Heavy Forgings and wheel rims

Product Complexity

Medium

Small castings and forgings

Plastic components

Hand tools metal bonded and molded rubber plants

High

Aftermarket

Tier-2-n supplier

Tier 1 supplier Source : IMRB International

Customer Complexity

Demand drivers for the Automobile segment

Increase in income levels and thus purchasing power Gradual shift to higher segment passenger vehicles Availability of low-cost finances

Availability of a wider range of products

Decrease in product life cycles

Emergence of tier 2 cities and non metros

Production of Automobiles in no. of units (2008-09)

Source: SIAM, IMaCS analysis

Sales of Automobiles in Rs billion (2008-09)

Source: SIAM, IMaCS analysis

About
The industry employs about 12.5 mn people

It contributes nearly 5% to the national GDP.

The industry contributes nearly 20% to indirect taxes of the government The auto components industry has grown at double-digits in each of the past seven years ending FY11, barring FY09.
Source : ACMA , IFCI and ICAER FY11

Demand Analysis : Trend in automobile industry turnovers

Source: D & B Research

Supply Dynamics : Trend in automobile industry turnovers

Source: D & B Research

Auto components: Composition of export destinations (%)

3% 1% 7% 37% 24%

28%

Europe Asia North America Africa South America Australia

Source : ACMA , FY11

Evolution of the Indian Automotive industry

Pre 1983
Closed market Growth of market limited by supply Outdated models Players Hindustan Motors Premier Telco Ashok Leyland Mahindra & Mahindra

1983-1993
Japanisation GOI-Suzuki joint venture to form Maruti Udyog Joint ventures with companies in commercial vehicles and components Players Maruti Udyog Hindustan Motors Premier Telco Ashok Leyland Mahindra & Mahindra

1993-2007
Delicensing of sector in 1993 Global major OEMs start assembly in India (Toyota, GM, Ford, Honda, Hyundai) Imports allowed from April 2001; alignment of duty on components and parts to ASEAN levels Implementation of VAT

Era of globalization and evolution of India as a global manufacturi ng hub

Source : www.ibef.org

Engine and engine parts

Electricals

Transmission and steering parts

Auto component segment

Equipment

Suspension and braking parts

Auto components industry: Product composition (%)

7%
10% 31%

Engine Parts Body and chassis Electrical Part

12%

Drive Transmission & steering parts suspension & braking parts Equipment

19% 9%

12%

Others

Source : ACMA , FY11

Automotive Clusters in India

Source : IMaCS

Pan-India Major Players

Amtek India

Products & Services :Assembly Joints Crank Shaft CV Joints Engine Blocks Flywheels Ring Gears

Major Markets :Clientele:Maruti Udyog , JCB, New Holland Tractors, John Deere Tractors, Hyundai Motors, ITL, Eicher Motors

Australia/NZ, Indian Subcontinent, Caribbean, East/Middle Africa, North Africa, South/West Africa, East Europe, East Asia, Central America, North Europe, Middle East, South America, South/West Europe, South East Asia and North America

Source : www.indiamart.com

Bharat Forge
Clientele :Maruti Suzuki Tata Mahindra L&T Ashok Leyland Escorts Bajaj BHEL Kirloskar

Product and services:Crank Shaft Front Axel Beams Hubs Rocker Arm Transmission Parts

Major Markets :Indian subcontinent

Source : www.indiamart.com

Bosch
Products and services
Fuel injection equipment, Spark plugs, Auto electrical, Electric power tools, Injectors, Nozzles, Security Systems, Portable Electric Power Tools, Nozzle Holders, Filter & Filter Inserts, Spare & Components

Clientele :Maruti Suzuki, Mahindra & Mahindra, Tata Motors, Ford, Ashok Leyland, Kirloskar, Hyundai and TVS Motors

Major Markets :Indian Subcontinent, East Asia, Middle East and South East Asia

Source : www.indiamart.com

Exide Industries
Products and services Manufacturer of all kinds of lead acid batteries, battery plates, lead oxide battery, automotive batteris, motorcycle batteries, old scrab batteries and industrial batteries Clientele:Honda City, Honda Accord, Hyundai Santro, Hyundai Accent, Hyundai Sonata, Suzuki Balero and Suzuki Wagon R, Mitsubishi Lancer, Tata Indica, Tata Indigo, Fiat Palio, Opel Corsa, Toyota Qualis, Mahindra Scorpio and Mahindra Bolero.

Major Markets : Indian Subcontinent

www.indiamart.com www.exideindustries.com

Sona Koya
Major Markets : Indian Subcontinent, South/West Africa, Central America, South America and North America

Clientele :Maruti Suzuki, Toyota, Hyundai, Tata Motors, Mahindra and Mahindra, General Motors and Mahindra-Renault

Source : www.indiamart.com

Sundaram Fasteners
Products & Services:Automobile Components Bolts Cold Extruded Parts Gear Shifters Gear Shifters Nuts High Tensile Fasteners Iron Powder Powder Metal Parts Radiator Caps

Clientele :Ashok Leyland , Bajaj Auto , Behr , BEML , Bosch , Fiat , Maruti Suzuki , Tata , Volkswagen , Mahindra

Major Markets :Indian Subcontine nt, East Asia, South/Wes t Europe and North America

Source : www.indiamart.com

Sales Turnover ( in crore )

1400 1250 1200 1000

944.49

800
600 400 200 0 Amtek India Bharat Forge The above are the results of the 3rd quarter that is October-December 2011 Bosch Exide Industries Sona Koyo Sundaram Fasteners 558.83 531.57 281.14

251.79

Source : www.mydigitalfc.com www.moneycontrol.com

Players from Delhi-NCR

Delphi Automotive
Major Markets : Australia/NZ, Indian Subcontinent, North Africa, East Europe, East Asia, Central America, North Europe, Middle East, South America, South/West Europe, South East Asia and North America

Products Body Controls Delphi Electronic Throttle Controls Electrical/Electronic Architecture , almost in every segment

Clientele :Hyundai Motors Kalyani Group Kinetic Engineering Metaldyne MICO Bosch Tata Motors Mahindra Maruti Udyog Bajaj General Motors Ashok Leyland

Source : www.indiamart.com

Denso India
Major Products :Automotive Components Automotive Body Parts Automotive Components Automotive Spare Parts Clientele :Maruti Suzuki Hero Moto corp

Major Market :Indian Sub continent

www.indiamart.com

Asahi India
Major Markets : Indian Subcontinent, East Asia, Middle East and South East Asia
Clientele :Maruti Udyog ,TELCO, Mahindra & Mahindra and DCM Toyota ,General Motors and Daewoo Motors , Hyundai, Ford, Toyota and Hindustan Motors

Products and services :Glass (Windshields)

www.indiamart.com

Lumax
Products :Clientele:Maruti suzuki Kinetic Daimler Eicher Ashok leyland Hero honda Hyundai

Major Markets:Indian Subcontinent, East Asia, Middle East and South East Asia

Rear & Side View Mirror Air Cleaners, Oil & Fuel Filters Plastic Injection & Blow Moulded Components

www.indiamart.com

450 400 350 300 250 200

Sales Turnover ( in crore )

150
100 50 0

Delphi Automotive Denso India The above are the results of the 3rd quarter that is October-December 2011

Asahi India

Lumax

Source : www.mydigitalfc.com www.moneycontrol.com

Firms with quality certifications & recognition

Category
ISO 9000 TS 16949 QS 9000 ISO 14001

No. of firms
552 438 33 204

OHSAS 18001 JIPM Deming Award TPM Award Japan Quality Medal Shingo Silver Medallion

95 3 11 15 1 1
Source : ACMA , FY 11

Making Clients

Low replacement cost

Perceived quality

Sales Promotion

Prices/Margins

Commission

Brand awareness

Why should we export ?

Charge higher international prices for manufactured goods

Competitive pressures in domestic market reducing prices and margins

Competitors leveraging their profitability in foreign markets to increase their market share in domestic market Automotive mission plan (amp) 2006-16 to offset the trade imbalance .

Important Info
The Government collected Rs 5,001 crore from the sector as excise duty in the previous fiscal
The revenues from the excise duty on cars went up even though the levy was increased by only 2 per cent in the Union Budget

At present, the excise duty on small cars stands at 10 per cent, while for larger cars it is 22 per cent.

The foreign exchange earnings ( automotive parts ) through exports in 2010-11 rose only 5 per cent to Rs 15,276 crore

Though the value of exports in 2010-11 stood at Rs 7.81 lakh crore, the share of the sector in the total foreign exchange earnings in the same fiscal was 1.95 per cent.

Source : August 16th 2011 , Hindu Business Line , Praful Patelss reply in parliament

Auto components industry

Strength
Easy access to raw materials Ability to cater to low income group Established domestic manufacturing base Low manufacturing cost

Weakness
Supply chain bottlenecks Low investment in research and development Presence of a large counterfeit components market

Opportunity
Large and growing domestic auto market MNCs looking at low-cost outsourcing countries Proximity to other growing Asian

Threats
Influx of spurious parts Cheap imports from other low-cost countries such as China, Thailand, Taiwan, etc Slowdown in global markets

Outlook
Engine and engine parts
o It is likely to be led by existing major players o Introduction of turbochargers and common rail systems. o The trend of outsourcing
Source : www.ghallabhansali.com , 11th May 2011

Transmission and steering parts

The unorganized sector is unlikely to enter The share of the replacement market in sub-segments such as clutches is likely to grow

Outlook (contd..)
Suspension and braking parts
The segment is estimated to witness high replacement demand, with players maintaining a diversified customer base They are likely to focus on setting in place a wide distribution network, maintaining a wide range of products and building a brand image

Equipment
Indian companies are becoming more globally competitive Maintaining a product portfolio and pricing policy.

Source : www.ghallabhansali.com , 11th May 2011

Outlook (contd..)
Electrical parts
Growing recognition of electric start mechanisms for the two-wheeler segment. Competition is expected to intensify in the electrical parts segment due to arrival of MNCs

Others
Leading players in the sheet metal parts subsegment are in the process of expanding their customer base. Companies in this segment are likely to reduce their costs and improve their margins.

Source : www.ghallabhansali.com , 11th May 2011

Scoop
There is a proposal for reducing tariff of CBUs (completely built units ) to 30% and additionally a Tariff Rate Quota of 10% for unspecified number of cars

Source : The Economic Times , 16th Feb 2012

Any proposal to reduce tariffs at this stage would be detrimental to Indias auto manufacturing ..

Reversal of investment encouraging policy

Jeopardizing Automotive Mission Plan 2006-2016 targets Encouraging imports while discouraging domestic manufacturing (penal excise duty)
Source : The Economic Times , 16th Feb 2012

Not fair to other OEMs Japanese and Korean companies, etc.

THANK YOU !!!!!!!!!!

By :Chetan Khanna