Insert Cover Image using Slide Master View Do not distort
Auto Ancillary Market – India November 2014
Executive Summary Market
Auto ancillary market in India is expected to reach INR a9 bn in 20-----, growing at a CAGR of z2 % from INR a5 bn in 20---- 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 20-- - - National Automotive Board National Automotive Testing and R&D Infrastructure Project (NATRIP) Export Incentives ACMA Initiatives
Trends
Diversification Rising PE/VC Investments Focus on Quality
Competition
Adoption of Green Strategies Increasing Foreign Presence Changing Design
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, Player 8, and others
AUTO ANCILLARY MARKET IN INDIA 2014.PPT
2
•Macro-Economic Indicators •Market Overview •Segments • Major Segments • Major Sub-Segments
•Opportunity Areas •Export-Import •Drivers & Challenges •Government Initiatives •Trends •Competitive Landscape •Strategic Recommendations •Appendix AUTO ANCILLARY MARKET IN INDIA 2014.PPT
3
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 20-- - -- from INR a5 bn in 20-- - --
• 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 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 country’s overall automobile industry is expected to witness a u-fold increase in demand by 20along with the business friendly environment, favorable policies and availability of skilled manpower at a comparatively lower cost
AUTO ANCILLARY MARKET IN INDIA 2014.PPT
4
…to grow at a steady pace over the next five years Auto Ancillary Market Size & Growth INR Y 4,000
z2%
3,000
a8
z1%
1,000
a5
a4
2,000 a1
a6
a7
a9
a10
a11
a3 a2
0
2008
2009
2010
2011
2012
2013
2014e
2015e
2016e
2017
2018
Note: Figures for financial year – April to March
Market Segmentation – Sector-wise INR bn 2,500
b1
2,000 1,500 1,000
b2
500
b4 b3
0
Sales to OEMs
Exports
Aftermarket
AUTO ANCILLARY MARKET IN INDIA 2014.PPT
Imports 5
Auto ancillary industry will generate employment opportunities and also contribute to country’s GDP Contribution to Employment Generation
Contribution to GDP
Creating x to y mn additional jobs ‘000 Person
%
2,200
a3 – a4
2,000
+z1%
+z2%
1,800
29%
1,600
a2
1,400 1,200 1,000 800 600
29% a1 28% 71%
400 200
71%
72%
0 2009
2015e Direct
2020e
2009
2015e
2020e
Indirect
AUTO ANCILLARY MARKET IN INDIA 2014.PPT
6
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
INR bn a3 i3%
+z%
e3%
a2 i2%
e2%
a1 e1%
i1%
p3% p2%
p1%
2011
2016e
Imports
Exports
2021e
Domestic Production
AUTO ANCILLARY MARKET IN INDIA 2014.PPT
7
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 Type 1
Type 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
Market 2
Intermediaries End Users AUTO ANCILLARY MARKET IN INDIA 2014.PPT
8
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 1
AUTO ANCILLARY MARKET IN INDIA 2014.PPT
9
SAMPLE
Auto Ancillary Market – Segments (1/3)
Auto Ancillary Market – Segmentation (2010-11) b7% b6% b1% b5%
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
AUTO ANCILLARY MARKET IN INDIA 2014.PPT
10
SAMPLE
Auto Ancillary Market – Segments (2/3) Segment 1
• Finding 1 • Finding 2 • Finding 3 • Finding 4
Segment 2
Outlook
• Finding 1 • Finding 2 • Finding 3 • Finding 4
• These fall into three broad categories: Category 1 Category 2 Others
Sub-segments
• 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 2014.PPT
11
SAMPLE Segment 1
•Sub-segment 1
•Sub-segment 2 •Sub-segment 3 •Sub-segment 4 •Sub-segment 5 •Sub-segment 6 AUTO ANCILLARY MARKET IN INDIA 2014.PPT
12
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; Player 10, Country 3; Player 11, Country 4
Player 3
Player 12, Country 5
Player 4
Player 13, Country 6
Player 5
Player 14, Country 7
Product Variation b8% b6% b7%
Type 1 Type 2 Type 3 Type 4 Type 5 Type 6
b4% b3%
b1%
Player 6
Type 7 Type 8
AUTO ANCILLARY MARKET IN INDIA 2014.PPT
13
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 2014.PPT
Replacement
OE
Export
14
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 in India
State 3
State 4 and Surrounding
Opportunity Area for the auto ancillary manufacturers
AUTO ANCILLARY MARKET IN INDIA 2014.PPT
State 5 15
SAMPLE
State 1 – Opportunity Areas
State 1 – Auto Hub
•Company 1 •Company 2 •Company 3 Place 1 State 1
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 the development of State 1 as an auto hub
Major Auto Hubs
Major Auto ancillary Hubs AUTO ANCILLARY MARKET IN INDIA 2014.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 Sub-finding 3 Sub-finding 4
• Finding 5 Sub-finding 5
• Finding 6
AUTO ANCILLARY MARKET IN INDIA 2014.PPT
17
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
Human Resource Development • Finding 1 Sub-finding 1
• Finding 2 Availability of Land • Finding 1 • Finding 2
AUTO ANCILLARY MARKET IN INDIA 2014.PPT
18
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-finding 4
• Finding 5 2008
2009
2010
2011
2012
2016e
2021e
Export Destinations 20-b4%
b5% b6%
Region 1 Region 2 b1%
Region 3 Region 4
b3%
Region 5 Region 6
b2%
AUTO ANCILLARY MARKET IN INDIA 2014.PPT
19
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 Compliance Law
AUTO ANCILLARY MARKET IN INDIA 2014.PPT
20
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 2014.PPT
2010
2011
2012
2016e
2021e
21
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
Positive Impact
Negative Impact
• Impact 1 • Impact 2 • Impact 3 • Impact 4
• Impact 1 • Impact 2 • Impact 3
AUTO ANCILLARY MARKET IN INDIA 2014.PPT
22
Trends – Summary
SAMPLE Diversification
Rising PE/VC Investments
Focus on Quality Key Trends `
Adoption of Green Strategies
Increasing Foreign Presence
Changing Design
AUTO ANCILLARY MARKET IN INDIA 2014.PPT
23
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 Product 1, Product 2, Product 3, Product 4, Product 5, Product 6, Product 7, Product 8, Product 9, Product 10, Product 11, Product 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 Name
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 2014.PPT
24
SAMPLE
Public: Domestic Company – Company 1(2/4) Financial Snapshot Total Income
Key Ratios
Particulars
Net Profit/Loss
INR mn
INR mn
b1
2008
b2
b3
2009
2010
b4
2011
Financial Summary
y-o-y change (2011-10)
2011
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 • 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) PE Ratio (Abs) (--/07/2012)
x1 x2 x3 x4
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
AUTO ANCILLARY MARKET IN INDIA 2014.PPT
Decline
25
SAMPLE
Public: Domestic Company – Company 1(3/4) Key Business Segments
Key Geographic Segments
Automotive Components
India
100% 50%
100%
Finding 1
x1%
0%
50%
x2%
Finding 2
0%
2011
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 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 2014.PPT
26
SAMPLE
Strategic Recommendations – Summary
Recommendation 1
Recommendation 2
Key Recommendations `
Recommendation 3
Recommendation 4
Recommendation 5
AUTO ANCILLARY MARKET IN INDIA 2014.PPT
27
Thank you for the attention Auto Ancillary Market– India report is part of Netscribes’ Automotive and Logistics Series. For any queries or customized research requirements, contact us at: Phone: E-Mail:
+91 22 4098 7600 info@netscribes.com
About Netscribes, Inc. Netscribes, Inc. is a knowledge-consulting and solutions firm with clientele across the globe. The company’s expertise spans areas of investment & business research, business & corporate intelligence, content-management services, and knowledge-software services. At its core lies a true value proposition that draws upon a vast knowledge base. Netscribes, Inc. is a one-stop shop designed to fulfil clients’ profitability and growth objectives. Disclaimer: This report is published for general information only. Although high standards have been used in the preparation, “Netscribes” is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes and prior permission is required for guidelines on reproduction. AUTO ANCILLARY MARKET IN INDIA 2014.PPT
28