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Electric Wire and Cable Market – India October 2014
Executive Summary Market Overview
Drivers & Challenges
Trends
EXIM
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’% 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
Technological Innovations Preference for Aluminum Export India majorly exports to UK, USA, Nepal, UAE and Sri Lanka
Import India mainly imports from Russia, UAE, Turkey and China Major Players
Competitive Landscape
Company A
Company B
Company C
Company D
Company E
Company F
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•Macroeconomic Indicators •Introduction
•Market Overview •Export-Import •Drivers & Challenges
•Government Initiatives •Trends •Competitive Landscape
•Opportunities •Strategic Recommendations •Appendix ELECTRIC WIRE AND CABLE MARKET IN INDIA 2014.PPT
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Economic Indicators (1/3) GDP at Factor Cost: Quarterly INR tn 15
13
d1 c1 b1
12
a1
14
c4 b4 a4
c3 b3 a3
d2 c2 b2 a2
11
Q1
Q2 2010-11
2011-12
2012-13
Q3 2013-14
Q4
Inflation Rate: Monthly % 2 1
p
r
s
q
0 -1
t
-2
Jul 2013 - Aug 2013
Aug 2013 - Sep 2013
Sep 2013 - Oct 2013
Oct 2013 - Nov 2013
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Backed by growth in end-user industries, wire and cable demand is expected to increase rapidly in the coming years Market Segmentation-Sector-wise
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
Unorganised Organized p2%
End-use industries like telecom, energy generation, automotive, construction determines the market prospects for wire and cable industry p1%
• Rise in investment in infrastructure in developing countries like India, China, Brazil , Russia are stimulating the market growth of wire and cable industry
FY2013
International players are considering India as a potential market for HV and EHV cables
Indian Wire and Cable Market – Size and Growth INR bn f
x6
Y%
x5
d
x4 x3
e
a
b
c
x2 x1 0 FY 20--
FY 20--
FY 20--
FY 20--
FY 20--
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FY 20-5
Drivers & Challenges – Summary
Challenges Drivers
Increase in Price of Raw Materials
Focus on Power Sector
Increase in Competition
Large Investments in Telecom Sector
Safety Hazards
Robust Industrialization Growing Urbanization
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Emphasis on transmission lines addition in the 12th FYP will boost the domestic demand for cables Focus on Power Sector (1/4)
Impact
• 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
Planned T&D Investments
Transmission Lines Additions
Transmission
‘000 Ckt
Distribution INR bn
z6 z5
b5 b4 b3 b2 b1
p3
a2% a1%
a4%
z4
z3 a3%
0
p2 p1
z2 z1 0
11th FYP
12th FYP
10th FYP
11th FYP
12th FYP
H1 refers to the first six month of the financial year
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Trends
Technological Innovations
Preference for Aluminum
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Porter’s Five Forces Analysis
Threat of New Entrants
Impact X
Bargaining Power of Suppliers
Impact X
Impact X
Competitive Rivalry
Impact X
Bargaining Power of Buyers
Impact X Threat of Substitutes
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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
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Competitive Benchmarking (2/5) Key Ratios of Top 4 Companies – Operational Basis (FY 2013) (1/3) Gross Margin
Operating Margin
Net Margin
% b1
x5
x4
a1
c1
x3 x2
a2
a3
b2
b3
d1
c2
x1 Company A
Company B
Company C
d2
c3
d3
Company D
• 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%
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Public: Domestic Company – Company A Ltd. (1/4) Company Information
Offices and Centres – India
Corporate Address Tel No. Noida
Fax No. Website Year of Incorporation Ticker Symbol Stock Exchange
Headquarters
Products and Services Category Lighting Products
Products/Services
Key People Name
Wires and cables Energy Meters Modular Wiring accessories
Designation
Person 1
Chairman and Managing Director
Person 2
Director
Person 3
Director( Finance)
Person 4
Executive Director
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Public: Domestic Company – Company A Ltd. (2/4) Financial Snapshot
Key Ratios
Total Income
INR mn
Net Profit/Loss
INR mn
b2
x4
y4 y3
x3
a2 b1
x2
a1 20--
d2 d1
c1
x1
Financial Summary
c2
20--
20--
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 Total Enterprise Value (INR) EPS (INR) PE Ratio (Absolute)
y1 y0
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
• The company incurred a net loss of INR ‘d2’ mn in FY 20-- as against INR ‘c2’ mn in FY 20--
Market Capitalization (INR)
y2
Particulars
Value (dd/mm/yyyy)
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
ELECTRIC WIRE AND CABLE MARKET IN INDIA 2014.PPT
Decline
13
Public: Domestic Company – Company A Ltd. (3/4) Key Business Segments
Key Geographic Segments
Cables&Wires
Others
Lighting
M&PG
Switchgear
x4
India
European Union
Other Countries
y3
x3
b1 a1 c1
x2 x1
a2
a3
d1 e1 b2
c3 b3
a4 c4 b4
y2 y1
x0 20--
20--
20--
20--
p1
s1
p2
p3
p4
20--
20--
20--
r1
20--
Business Highlights Description
News • Company A Ltd. was formerly known as Company E Ltd. and changed its name to Company A Ltd. in July 20--
Overview
• 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
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Public: Domestic Company – Company A (4/4)
S
W
O
T
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Private: Domestic Company – Company B (1/5) Company Information
Offices and Centres – India
Corporate Address
Tel No.
Fax No. Website Year of Incorporation Mumbai Headquarters
Products and Services Category Cables
Products/Services
Key People Name
Wires
Designation
Person 1
CEO
Person 2
Director
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Private: Domestic Company – Company B (2/5) Shareholders of the Company as on dd/mm/yyyy Name
No. of Shares held
Shareholder 1
a
Shareholder 1
b
Total
Ownership Structure Directors or relatives of directors
x
48.6%
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Private: Domestic Company – Company B (3/5) Financial Snapshot
Key Ratios
Total Income INR mn
INR mn
x3 x2
Particulars
Net Profit/Loss
b2 b1 a2
b3 a3
b4
a4
y3 y2
a1 x1
y1 2010
2011
2012
2013
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)
Financial Summary • 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--
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
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18
Private: Domestic Company – Company B (4/5) Business Highlights Description
News • Company B manufactures, supplies and exports electrical wires and cables in India
Overview
• Manufacturing facility is in ‘Z’ • ISO 9001-2008 and ISO 14001 : 2004 certified and follows BIS and CSA standards
• The products are approved by Technical Advisory Committee, Mumbai port trust, HPCL and Public Works Certifications and approvals
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
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Private: Domestic Company – Company B (5/5)
S
W
O
T
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Growing prominence of renewable energy in India to provide huge opportunity to wire and cable industry Shift Towards Renewable Energy • 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
Forecasted Generation Mix by 20-Resources
Estimated Installed Capacity (GW)
Coal
xx
Gas
xx
Hydro
xx
Renewable
xx
Nuclear
xx
Renewable Energy Market Segmentation Wind
b%
Biofuel
c%
Solar d%
Small Hydro Power a%
Jan, 2014
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Total installed capacity of renewable energy is x GW
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