Market Research Report : Auto Ancillary Market in India 2012 by Netscribes, Inc.

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Auto Ancillary Market India Auto Ancillary Market – 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: ‐ Growing Automotive Industry ‐ Healthy Economic Outlook ‐ Auto Aftermarket Demand ‐ Growing Investments ‐ Opportunity from New US IT Compliance Law

Challenges: ‐ Exposed to Cyclical Downturns in the Automobile Industry ‐ Rising Labour Costs and Price of Raw Materials ‐ Counterfeit Market ‐ Technical Inefficiency ‐ Depreciating Currency

Government Initiatives

 Union Budget 2012‐13  National Automotive Board  National Automotive Testing and R&D Infrastructure Project (NATRIP) N i lA i T i d R&D I f P j (NATRIP)  Export Incentives  ACMA Initiatives

Trends

 Diversification  Rising PE/VC Investments Rising PE/VC Investments  Focus on Quality

Competition

 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, 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

 Adoption of Green Strategies  Increasing Foreign Presence Increasing Foreign Presence  Changing Design

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

•Macro‐Economic Indicators •Market Overview •Segments S t • Major Segments • Major Sub‐Segments j g

•Opportunity Areas •Export‐Import •Drivers & Challenges •Government Initiatives •Trends •Competitive Landscape •Strategic Recommendations g •Appendix AUTO ANCILLARY MARKET IN INDIA 2013.PPT

Indian auto ancillary market, exhibiting rapid development and is expected …

SAMPLE 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 rest the 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

• Indian auto ancillary sector has become a lucrative market for the global investors as the I di t ill t h b l ti k t f th l b l i t th 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

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

SAMPLE

…to grow at a steady pace over the next five years Auto Ancillary Market Size & Growth INR bn +z2% +z1%

2008

2009

2010

2011

2012

2013e

2014e

2015e

2016e

Market Segmentation – Sector‐wise INR bn

Sales to OEMs

Exports

Aftermarket

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

Imports 5

Auto ancillary industry will generate employment opportunities and also contribute to country’s GDP Contribution to Employment Generation

Creating x to y mn additional jobs

Contribution to GDP

SAMPLE

‘000 Person

a3 – a4 +z1%

+z2% 29%

a2 29% a1 28%

71% 71%

72%

2009

2015e Direct

2020e

2009

2015e

2020e

Indirect

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

Auto ancillary market in India is expected to witness robust growth in terms of production, exports as well as imports Auto Ancillary Market – Future Outlook

SAMPLE

INR bn

+z%

a3 i3%

e3%

a2 i2% e2%

a1 e1%

i1%

p3% p2%

p1%

2011

2016e

Imports p

Exports p

2021e

Domestic Production

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

SAMPLE

Value Chain Analysis

Base Raw Material Producers

Raw Material 1, Raw Material 2, R Raw Material 3, Raw Material 4, Raw Material 5

Semi Finished Material Semi Finished Material1, Semi Finished Material 2, Semi Finished Material 3

Type 3 T Type 1 1

T Type 2 2 Tier r Manufacturers

Tier p Manufacturers

Tier q Manufacturers

Function 1

Auto part 1, Auto part 2, Auto part 3 etc.

Market 1 Type 4/ Type 5 Market

Function 3, Function 4, Function 5, Function 6, Function 7, Function 8, Function 9 Function 9

Market 2

Intermediaries End Users AUTO ANCILLARY MARKET IN INDIA 2013.PPT

Opportunities differ across manufacturers positioned at various levels within the auto ancillary sector

SAMPLE

India‐based global supplier Domestic Tier 1 Supplier Domestic Tier 2/3 Supplier Small Local Entrepreneur Opportunity 4 Opportunity 3 Opportunity 2 Opportunity 2 Opportunity 1

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

SAMPLE

Auto Ancillary Market – Segments (1/3)

Auto Ancillary Market – Segmentation (2010‐11) b7% b % b6% b1% b5%

b b4%

Segment 1

Segment 5

Segment 2

Segment 6

Segment 3

Other

Segment 4 b3%

• 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 Segment 5 and Segment 6 represent b5% and b6% respectively

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

SAMPLE

Auto Ancillary Market – Segments (2/3) Segment 1

• Finding 1 g • Finding 2 • Finding 3 • Finding 4

Segment 2

Outlook

• Finding 1 g • Finding 2 • Finding 3 • Finding 4

• These fall into three broad categories: Th f ll i h b d i  Category 1  Category 2  Others

Sub‐segments

• Major parts include: Major parts include:

• Major parts include:  Part 6, Part 7, Part 8 and Part 9, Part 10, etc.

 Part 1, Part 2, Part 3, Part 4, Part 5, etc.

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

SAMPLE Segment 1

•Sub‐segment 1 g •Sub‐segment 2 •Sub‐segment 3 S b t3 •Sub‐segment 4 •Sub‐segment 5 •Sub‐segment Sub segment 6 6 AUTO ANCILLARY MARKET IN INDIA 2013.PPT

SAMPLE

Sub‐segment 1 (1/2)

Major Players & Strategic Alliances

Sub‐segment 1 – Demand mn units

Company

+z%

2011

2012

2013e

2014e

2015e

2020e

Collaboration

Player 1

Player 7, Country 1

Player 2

Player 8, Country 2; Pl 8 C 2 Player 10, Country 3; Player 11, Country 4

Player 3

Player 12, Country 5

Player 4

Player 13, Country 6

Player 5 Player 5

Player 14 Country 7 Player 14, Country 7

Product Variation b8% b6% b7%

Type 1 Type 2 Type 3 yp Type 4 Type 5 Type 6

b4% b3%

b1%

Player 6

Type 7 Type 8

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

SAMPLE

Sub‐segment 1 (2/2)

Market Segmentation

Region‐wise

Sector‐wise

d3%

c4% c1% c3%

South

d1%

North

West

East

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

Replacement

Export

SAMPLE

Opportunity Areas – Summary 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 1

State 2 and Surrounding

Automobile Production Hubs i I di in India

State 3

St t 4 d S State 4 and Surrounding di

Opportunity Area for the auto ancillary manufacturers

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

State 5 15

SAMPLE

State 1 – Opportunity Areas

State 1 – Auto Hub

•Company Company 1 1 •Company 2 •Company 3 Place 1 State 1 State 1

Place 3 Place 3

Place 4 Place 2

•Company 4 Place 5 Place 6 Auto ancillary units in Place 2, Place 5 and Place 6 play a significant role in supporting significant role in supporting the development of State 1 as an auto hub

Major Auto Hubs

Major Auto ancillary Hubs AUTO ANCILLARY MARKET IN INDIA 2013.PPT

Emerging Auto ancillary Hubs 16

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 4 Finding 4  Sub‐finding 3  Sub‐finding 4

• Finding 5  Sub‐finding 5

• Finding 6

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

State 1 is likely to attract investment owing to its favourable environment

SAMPLE Government Support

• Finding 1 • Finding 2 Location Advantage

State 1 – Growth Drivers `

• Finding 1 • Finding 2

H Human Resource Development R D l t • Finding 1  Sub‐finding 1

• Finding 2 g Availability of Land • Finding 1 Finding 1 • Finding 2

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

Growth of exports have been hampered by the turbulent global economic scenario Exports – Overview • Finding 1  Sub‐finding 1

Exports (Value) INR bn

 Sub‐finding 2

+z%

• Finding 3  Sub‐finding 3  Sub Sub‐finding finding 4 4

• Finding 5 2008

2009

2010

2011

2012

2016e

2021e

Export Destinations 20‐‐ b4%

b5% b6%

Region 1 Region 2 b1%

b3%

Region 3 R i 4 Region 4 Region 5 Region 6

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

Drivers & Challenges – Summary

Challenges Exposed to Cyclical Downturns in the Automobile Industry

Drivers

Rising Labour Costs and Price of Raw Materials

Growing Automotive Industry

Counterfeit Market

Healthy Economic Outlook

Technical Inefficiency

Auto Aftermarket Demand

Depreciating Currency

Growing Investments Opportunity from New US IT O t it f N US IT Compliance Law

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

Growth in the automobile industry is expected to generate huge order… Growing Automotive Industry (1/3)

Impact

• Finding 1  Sub‐finding 1

• Finding 2  Sub‐finding 2

• Finding 3

Growing Automotive Industry Turnover INR tr

Rising Passenger Vehicle Production ‘000 units

+z1%

2011

+z2%

2016e

2009

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

2010

2011

2012

2016e

2021e

Union Budget 2012‐13 has hit the auto ancillary industry in both advantageous as well as disadvantageous ways

SAMPLE Union Budget 2012‐13

• Finding 1 • Finding 2 • Finding 3 Finding 3

Positive Impact

Negative Impact

• Impact 1 • Impact 2 • Impact 3 • Impact 4

• Impact 1 • Impact 2 • Impact 3 Impact 3

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

Trends – Summary

SAMPLE Diversification

Rising PE/VC Investments

Focus on Quality Key Trends `

Adoption of Green Strategies

Increasing Foreign Presence

Ch Changing Design i D i

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

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

‐

Ticker Symbol

‐

Stock Exchange

Bombay Stock Exchange (BSE)

New Delhi

Head Office

Products and Services 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 12, 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

Key People N Name

D i ti Designation

Person 1

MD and Executive Director

Person 2

VP of Finance and Accounts

Person 3

CEO of Subsidiary 1

Person 4

MD of Subsidiary 2

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

SAMPLE

Public: Domestic Company – Company 1(2/4) Financial Snapshot i i lS h Total Income

K Key Ratios i

Particulars

Net Profit/Loss

INR mn

2008

2009

2010

2011

Financial Summary

y‐o‐y change 2011 (2011‐10)

2010

2009

2008

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

• 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 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

Key Financial Performance Indicators Indicators

Value (‐‐/07/2012)

Market Capitalization (INR mn) Total Enterprise Value (INR mn) EPS (INR) EPS (INR) PE Ratio (Abs) (‐‐/07/2012)

x1 x2 x3 x4

Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales) Interest costs (% of Sales)

Liquidity Ratios Current Ratio Cash Ratio

Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio b i l i Interest Coverage Ratio

Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover

Improved

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

Decline

SAMPLE

Public: Domestic Company – Company 1(3/4) Key Business Segments

Key Geographic Segments

Automotive Components

India

100% 50%

100%

Finding 1

x1%

50%

x2%

Finding 2

2011

Business Highlights (1/2) 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

Fund Raising

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 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 AUTO ANCILLARY MARKET IN INDIA 2013.PPT

SAMPLE

Strategic Recommendations – Summary

Recommendation 1

Recommendation 2

Key Recommendations `

Recommendation 3

Recommendation 4

Recommendation 5

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

Thank you for the attention The 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 E‐Mail: info@netscribes.com Follow us on:

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