Manufacturing Sector in India Monthly Update August 2012
Top Story
Polymer price to remain high in the Indian market Increase in price of naptha and crude oil has significantly contributed towards the hike in polymer prices. Naptha is the primary input used in the production of polymer. Polymer manufacturers have raised the price of polymer by INR 1‐2 per kg across the different variants of polymer. Even though the global manufacturers attempted to reduce prices domestic manufacturers raised the price owing to a depreciation of the rupee. However the depreciation of rupee has proved to be a boon the Indian polymer industry as no polymer has been imported over the last two months. The whole demand of the domestic market is being catered by the Indian manufacturers of polymer. Haldia Petrochemicals, Reliance Industries and Indian Oil Corporation are the primary producers of Polypropylene in India. Companies may increase the prices of polypropylene (PP) and polyethylene (PE) next month. Rise in price of polymer has led to the processors shifting towards cheaper processed polymer.
News Update General
L&T to bring in an investor for L&T IDPL Larsen & Toubro has announced plans to bring in an investor for its infrastructure development unit L&T IDP. Earlier the company had planned an IPO which however did not happen owing to unfavorable market conditions. Company also plans to sell its equity shares in the port project Dhamra in Odisha. Company has set a target to increase its turnover from infrastructure projects in West Asia from INR 82.95 bn to INR 110.60 bn by the end of this year. International projects are expected to compensate for the slowdown in construction contracts being awarded in India. Construction equipment major Caterpillar to launch “remanufactured” products in India Construction Equipment company Caterpillar Inc has announced plans to launch its financial services and remanufactured products in the Indian market. In case of remanufactured products salvage technology is utilized to repair damaged components to yield performance similar to new products. Manufacturing – Monthly Update
Substantial investments are being made to ensure that India emerges as an important export base for the company. It offers integrated solutions customized to meet the requirements of the Indian customers. Government’s emphasis on infrastructure development has presented great opportunities to the company to ensure high growth in the Indian market. Pellet production forced to increase following drop in iron ore fines export Decline in exports of iron ore due to high taxes and high transportation costs have led to a shift towards the production of iron ore pellets for the domestic market. Following the drop in exports since last year many miners engaged in overseas exports of iron ore have conveyed interests to set up pellet plants in India. Major miners and traders who have expressed an interest to set up pellet plants include KJS Ahluwalia, MGM Minerals and Indrani Patnaik. Iron ore pellets are used as an alternative of lumpy iron ore that can be directly fed to blast furnaces. They are formed of powdery iron ore fines and were primarily imported from China. Pipe orders worth INR 4 bn bagged by Essar Steel Flat carbon steel manufacturer Essar Steel has obtained orders from Middle East and Africa for manufacturing steel pipes worth INR 4 bn. The order in Africa involves the construction of offshore line pipe of length 4,000 mts to be used for the Chevron project. The order from the Middle East entails the supply of 45,000 mt of 48 inch high grade coated pipes in the coming quarter. The total order for pipes of the company has reached INR 10 bn. The two major global orders are expected to strengthen the company’s position in the pipe market segment across the world. Mumbai to host International Packaging Expo 2013 The Indian Institute of Packaging is slated to organize the “India Pack 2013”, in the month of Jan next year. The packaging industry is on the lookout for latest technologies. The Expo will provide a major platform to the companies that provide end to end packaging solutions to the various end users hailing from pharmaceuticals to toys, sports good and allied industry. Live demonstration of packaging equipment, machineries, plants will be shown to the visitors. Large and eminent industry exhibitors from, France, China, Korea, Taiwan, Thailand and many other countries is slated to participate in the Expo. India to import coal from Kentucky FJS LLC has signed a deal worth INR 388 mn with India based Abhijeet Group to export coal from West Virginia, Kentucky. Under the deal Kentucky will supply 9 mn tonnes of coal per year to Abhijeet Group. Around 70% of the electricity in India is generated from Manufacturing – Monthly Update
coal fired power plants. The power plants operate at around 70 to 80% of their total capacity. Domestic production cannot meet the rising demand for coal. Import of coal will help the company to meet the growing demand from energy and steel sectors in India. Ghatkuri mines to be allotted to Public Sector Undertakings Steel Authority of India Limited (SAIL) is trying to enter into a mining joint venture with Jharkhand State Mineral Development Corporation (JSMDC) and obtain the lease for the Ghatkuri iron ore mine in West Singhbhum district. Company is trying to enter into the JV following the Supreme Court directive that the Ghatkuri mines can be leased only to public sector companies. The joint venture is expected to meet the raw material requirements of SAIL for around 60 years. The Ghatkuri mine is a major virgin iron ore mine spread over 2580 acres and has an estimated reserve of 600 mn tonnes. Other major public sector companies aiming to obtain the lease include Rashtriya Ispat Nigam Limited (RINL) and National Mineral Development Corporation (NMDC). IECIAL to be known as ICEMA Indian Earthmoving and Construction Industry Association Ltd (IECIAL) have been renamed as Indian Construction Equipment Manufacturers Association. Through this change the association expects to align itself with global industry bodies and expand the scope of its activities. The construction industry is expected to witness robust growth but it needs to be globally competitive. ICEMA is affiliated to CII. It represents 44 leading companies who manufacture, trade and finance a variety of construction equipments such as hydraulic excavators, wheel loaders, backhoe loaders, motor graders, vibratory compactors, etc.
News Update Expansion Plans
Putzmeister plans to expand its market base Major German construction equipment manufacturer Putzmeister is planning to expand its base in the tier II cities of Uttar Pradesh. Company is entering into contracts with real estate developers, contractors and builders in order to market its concrete pumping machines. The Putzmeister factory in Goa has a localization percentage of around 80% and caters to demand from countries such as Bangladesh, Bhutan, Sri Lanka etc. Other potential towns identified by the company in India include Lucknow, Kanpur, Agra, Allahabad, Varanasi as well as Noida and Ghaziabad. West India starts a new packaging plant in India Manufacturing – Monthly Update
A new packaging plant will be set up by West Pharmaceutical Services in Sri City, India. The new plant will produce elastomeric pharmaceutical packaging components. The new plant is expected to start production by 2015. Total manufacturing space is planned to be extended to 37,700 sq mts by 2023. The new facility construction in India is a part of the firm’s business expansion in Asia. Monier to set up a new roofing tile plant in India A new concrete tile plant will be set up by the Monier Group in Mumbai. The step is taken by the company to strengthen its presence in the Asian market. The initial work for the plant has already been started and production is due to start from next year. The Monier Group is a major producer of roofing products and has a concrete tile plant in Bangalore and a glazing facility for clay tiles in Calicut , Kerala. Arvind Ltd sets up glass fabric manufacturing unit Arvind Ltd. Has entered into a joint venture with PD Fibre Glass Group to manufacture glass fabrics in India. The new manufacturing facility would require investments worth INR 0.8 bn and is expected to provide business worth INR 2.5 bn within the first three years and INR 5 bn by the fifth year. The new facility will have a production capacity of 30,000 tonnes of fabric after five years. The market for glass composite is valued at INR 5 bn. The production will be exported during the initial years and focus will be diverted on the Indian market following the country’s emphasis towards green energy. Briggs and Stratton to expand Indian business US based Briggs and Stratton has announced plans to expand production capacity of the Coimbatore plant. Owing to the growing agricultural mechanization market the company expects its sales revenue to reach INR 2,343 mn over the next three years. The current production capacity of the plant is around 7,800 units which will be increased to 22,000 units by 2015‐16. Company is also planning to achieve inorganic growth in the Indian market through the acquisition of small and mid‐sized companies that are engaged in the manufacturing of agriculture and construction equipment and generators. Zoomilion to set up a joint venture plant in India Electromech, the largest crane maker in India has entered into a deal with China based Zoomlion Heavy Indus. Scien. & Tech Co for a joint venture plant in India. Zoomilion will hold 70% stake in the tower crane factory which will be Zoomilion’s first overseas investment project. Zoomilion plans to invest around INR 4,687 mn to develop its business in the Indian market.
Manufacturing – Monthly Update
Owing to rising emphasis on infrastructure development the companies expect to earn INR 2,345 mn annually from the joint venture. Earlier Chinese construction company, Sany Heavy Industry Co Ltd had established a factory in 2009 to tap the Indian market.
Industry Expert Speak CIL eyes overseas expansion – S. Narsing Rao, Chairman, CIL “My focus on overseas acquisitions is on government‐to‐government deals and the developing and emerging market routes,” L&T to bring in an investor for L&T IDPL – A. M Naik, Larsen & Toubro (L&T) “Chinese equipment has been giving trouble, and the mindsets (of power developers) are shifting towards better quality. With the rupee’s devaluation and costs going down…hoping Chinese imports go down,"
Transaction Detail (Jun – Aug 2012)
Date
Buyer
Target
Deal Size (INR mn)
% stake
Deal Status
Type of Transaction
26th Aug 2012
Larsen and Toubro Ltd
Flowserve Corp.
NA
100%
Expected
M&A
24th Aug 2012
Jindal Steel and Power
Gujarat NRE Coking Coal (GNCC)
430
2.67
Completed
PE
27th Jul 2012
Crompton Greaves Ltd
ZIV Group
10,207
100%
Completed
M&A
Annual Financial Results – Revenue (INR mn) Company Oil and Natural Gas Corp. Ltd.
FY ‘09
FY ‘10
FY ‘11
FY ‘12
1,052,756.6
1,026,655.8
1,201,955.1
1,463,705.6
Manufacturing – Monthly Update
Hindalco Industries Ltd.
659,629.5
607,079.2
720,778.7
808,213.7
Coal India Ltd.
412,035.7
467,840.0
526,334.8
624,154.3
Gail India Ltd.
247,818.0
270,353.0
351,066.5
440,578.2
Sterlite Industries (India) Ltd.
212,636.6
244,903.0
302,472.0
412,063.0
Grasim Industries Ltd.
184,316.9
200,870.8
214,612.3
251,470.9
Aditya Birla Nuvo Ltd.
138,939.7
157,699.4
183,839.4
220,732.5
Pantaloons Retail (India) Ltd.
76,690.4
97,869.4
122,117.9
130,713.9
NMDC Ltd.
75,640.3
62,390.9
113,689.4
112,605.3
Ashok Leyland Ltd.
59,810.7
72,447.1
111,771.1
128,419.9
Crompton Greaves Limited
87,372.6
91,408.7
100,051.1
112,485.8
Welspun Corp Ltd.
57,395.3
73,636.7
80,236.4
89,765.8
Alok Industries Ltd.
30,907.8
44,243.4
66,149.0
89,008.6
JBF Industries Ltd.
43,099.1
49,409.1
64,655.7
71,673.6
National Aluminium Co. Ltd.
52,112.2
51,745.1
60,554.9
65,002.7
Havells India Ltd.
54,774.9
51,625.7
56,126.3
65,182.0
Voltas Ltd.
43,259.0
47,574.7
51,913.8
51,857.4
NA*
56,947.1
45,948.9
60,263.9
Jain Irrigation Systems Ltd.
28,695.2
34,348.0
41,745.6
NA
DCM Shriram Consolidated Limited (DSCL)
35,580.7
35,704.5
41,678.3
50,062.1
Jindal Saw Ltd
Manufacturing – Monthly Update
Annual Financial Results – Income (INR mn) Company
FY ‘09
FY ‘10
FY ‘11
FY ‘12
197,953.4
194,035.3
224,559.3
281,436.1
Hindalco Industries Ltd.
4,838.9
39,254.7
24,563.7
33,969.5
Coal India Ltd.
19,675.0
96,224.5
108,673.5
147,882.0
Gail India Ltd.
28,263.5
33,278.3
40,209.7
44,436.1
Sterlite Industries (India) Ltd.
35,399.9
39,263.0
48,898.0
38,998.0
Grasim Industries Ltd.
21,866.6
30,955.3
22,790.1
26,474.6
Aditya Birla Nuvo Ltd.
(4,357.3)
1,545.6
8,221.0
8,901.3
100.7
674.9
1,212.1
880.8
NMDC Ltd.
43,723.8
34,472.6
64,992.2
72,653.9
Ashok Leyland Ltd.
1,900.0
4,236.7
6,313.0
5,659.8
Crompton Greaves Limited
5,599.0
8,598.7
8,886.7
3,735.9
Welspun Corp Ltd.
2,135.1
6,104.0
6,330.3
2,385.4
Alok Industries Ltd.
740.5
1,377.1
3,115.4
3,805.3
JBF Industries Ltd.
1,873.8
1,864.0
5,460.0
2,229.8
National Aluminium Co. Ltd.
12,722.7
8,142.2
10,693.0
8,495.0
Havells India Ltd.
(1,601.6)
695.6
3,035.7
3,699.2
2,514.0
3,809.9
3,572.4
1,620.6
NA*
5,495.3
4,421.8
1,891.1
1,294.4
2,475.9
2,807.1
NA
Oil and Natural Gas Corp. Ltd.
Pantaloons Retail (India) Ltd.
Voltas Ltd. Jindal Saw Ltd Jain Irrigation Systems Ltd.
Manufacturing – Monthly Update
DCM Shriram Consolidated Limited (DSCL)
842.5
(142.7)
119.2
NA
*change in financial year
Quarterly Financial Results – Revenue (INR mn)
JulSep 2011
OctDec 2011
Jan Mar 2012
MarJun 2012
Oil and Natural Gas Corp. Ltd.
NA
185,171.3
NA
NA
Hindalco Industries Ltd.
NA
66,469.7
NA
NA
Coal India Ltd.
131,480.8
153,492.8
194,189.9
165,005.9
Gail India Ltd.
NA
112,597.8
NA
NA
Sterlite Industries (India) Ltd.
102,352.0
102,461.8
110,022.8
105,913.9
Grasim Industries Ltd.
56,491.9
62,600.7
73,668.4
67,934.2
Aditya Birla Nuvo Ltd.
52,859.0
56,530.6
64,242.9
52,535.8
Pantaloons Retail (India) Ltd.
31,802.6
31,748.0
32,772.8
35,524.5
NMDC Ltd.
30,623.2
28,219.5
25,936.5
28,379.0
Ashok Leyland Ltd.
30,945.7
28,798.0
43,721.2
29,409.8
Crompton Greaves Limited
27,055.3
30,279.5
30,773.6
28,111.4
Welspun Corp Ltd.
20,345.0
24,496.8
26,997.8
25,497.2
Alok Industries Ltd.
NA
NA
NA
NA
JBF Industries Ltd.
18,520.2
18,040.1
19,207.6
17,965.3
National Aluminium Co. Ltd.
15,837.3
14,486.2
17,534.1
17,480.7
Havells India Ltd.
15,850.0
16,596.0
17,777.0
17,778.0
Company
Manufacturing – Monthly Update
Voltas Ltd.
11,019.3
11,646.4
15,841.8
16,766.5
NA
10,967.1
NA
NA
Jain Irrigation Systems Ltd.
7,711.1
NA
NA
NA
DCM Shriram Consolidated Limited (DSCL)
10,601.9
13,996.9
13,312.8
NA
Jindal Saw Ltd
Quarterly Financial Results – Income (INR mn)
JulSep 2011
OctDec 2011
Jan Mar 2012
AprJun 2012
Oil and Natural Gas Corp. Ltd.
NA
67,414.1
NA
NA
Hindalco Industries Ltd.
NA
4,506.9
NA
NA
Coal India Ltd.
25,931.1
40,377.6
40,134.1
44,692.6
Gail India Ltd.
NA
10,914.2
NA
NA
Sterlite Industries (India) Ltd.
6,421.0
9,135.2
3,487.7
12,015.9
Grasim Industries Ltd.
4,179.4
6,690.7
8,087.8
7,180
Aditya Birla Nuvo Ltd.
2,142.5
2,523.9
1,702.9
2,668.4
150.5
(79.6)
(0.6)
227.1
NMDC Ltd.
19,631.5
18,588.1
16,422.8
19,060.0
Ashok Leyland Ltd.
1,540.8
669.0
2,587.4
669.4
Crompton Greaves Limited
1,166.6
771.4
1,003.2
859.0
Welspun Corp Ltd.
710.8
(701.9)
1,185.5
74.7
Alok Industries Ltd.
NA
NA
NA
NA
Company
Pantaloons Retail (India) Ltd.
Manufacturing – Monthly Update
JBF Industries Ltd.
760.1
711.8
235.4
337.0
1,393.4
512.2
2,821.0
2,230.8
Havells India Ltd.
808.0
886.0
1,208.2
713.0
Voltas Ltd.
418.7
(1,154.1)
1,038.1
640.1
NA
365.4
NA
NA
115.7
NA
NA
NA
(384.1)
(252.0)
494.9
NA
National Aluminium Co. Ltd.
Jindal Saw Ltd Jain Irrigation Systems Ltd. DCM Shriram Consolidated Limited (DSCL)
Events Calendar
Conference on “Latest Trends in Construction Industry” Date: 3rd Sep 2012 Venue: Hotel Club Melange, Erode, Tamil Nadu, India Organizer: Confederation of Indian Industry Website: www.cii.in Contact ID: s.manoharan@cii.in Contact No: +91‐424‐4272460
Conference on "Sustainable Mining The Road Ahead" Date: 8th Sep, 2012 Venue: Radisson Blu, Main Road Kadru Diversion, Ranchi, Jharkhand, India Organizer: Confederation of Indian Industry Website: www.cii.in Contact ID: chira.ranjan.saha@cii.in Contact No: + 91‐33‐22315576
Conference on Infrastructure Project Management Date: 20th Sep, 2012 Venue: Hotel Leela Palace, Diplomatic Enclave, Chankyapuri, New Delhi, Delhi, India Organizer: Confederation of Indian Industry Website: www.cii.in Contact ID: sakshi.kohli@cii.in Contact No: +91‐11‐45772037
Lean Manufacturing for Releasing Hidden Capacity Date: 26th ‐27th Sep, 2012 Venue: CII Naoroji Godrej Centre of Excellence, CII Naoroji Godrej Centre of Excellence, Godrej Station‐Side Colony, Mumbai, Maharashtra, Organizer: Confederation of Indian Industry Website: www.cii.in Contact ID: s.d.puranik@cii.in Contact No: + 91‐22‐2574 5146
Manufacturing – Monthly Update
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Manufacturing – Monthly Update