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CAGR: 3.9%
350 FY15
FY22
267.4
CAGR: 17.0%
increase
Demand for generation
6.7
CAGR: 21.8%
2013
2022E
2013
75.0 2022E
By 2022, Indias generation
equipment industry is expected to
2013
increase to USD27.5 billion from
2022E USD6.7 billion in 2013
By 2022, installed power capacity in India is expected to reach 350 GW from 267.4 GW
in 2015 due to increasing industrialisation and economic development
By 2022, the T&D equipment market
in India is expected to expand to
USD75 billion from USD12.7 billion in
2013
Source: Central Electrical Authority, Electrical Monitor, Government of India, Ministry of Heavy Industries, TechSci Research Notes: T&D - Transmission & Distribution, E - Estimated
3
ELECTRICAL MACHINERY
EXECUTIVE SUMMARY (2/2)
6.7 FY22
CAGR: 27.2%
expected to increase to
CAGR: 6.0%
1.2 1180.00
787.03
FY22
Note: E - Estimated
AUGUST 2015
For updated information, please visit www.ibef.org
4
ELECTRICAL MACHINERY
ADVANTAGE INDIA
Per capita consumption crossed 1000 units
in 2014-15 as compared to 957 in 2013-14
Growing demand
2013 2022E
Power demand is estimated to reach 350,000
MW by 2022 Attractive opportunities
Market Market
Advantage
Higher investments
India
Policy support
The sector has witnessed increasing entry of global players through Electrical machinery sector is de-licensed; 100 per cent FDI is
the JV route permitted
Existing players are planning huge capacity expansion over the next Significant number of SEZs have been approved for the sector
few years
Due to policy support, cumulative FDI of USD4.0 billion (around 1.6 per
22,566 MW of generating capacity have been added during April cent of total FDI inflows) has flown into the country between April 2000
2014 to March 2015 which was exceeding the target of 17, 830 MW to May 2015
Source: Government of India, Ministry of Heavy Industries, Ujwal Bharat, TechSci Research Notes: FDI - Foreign Direct Investment, FY - Indian Financial Year (April -
March), USD - US dollar, EPCG - Export Promotion Capital Goods Scheme, EHTP - Electronic Hardware Technology Park, SEZ - Special Economic Zone, CAGR -
Compound Annual Growth Rate, E - Estimated
AUGUST 2015
For updated information, please visit www.ibef.org
6
ELECTRICAL MACHINERY
The production of switch and control gears has expanded at a CAGR of 6.9 per cent during FY0811
During FY1222, the size of switch & control gears industry is expected to expand at a CAGR of 15.2 per cent to USD8.2 billion
The switch gear industry in India manufactures the entire voltage range from 240 KV to 800 KV
Significant advances have been made in control gears due to major developments in the field of technology
18.9
18.1
CAGR: 6.9%
23.1
CAGR: 15.2%
4.4
Boilers & parts and electrical wires and cables were the primary
drivers of the increase in exports
3.9
4.1
Exports of electrical machinery (USD billion)
5.3
FY09 FY10 FY11 FY12 FY13 FY14 FY15
Source: Engineering Exports Promotion Council ( EEPC) India Note: Export data Includes - Boiler & Parts, Electric Power Equipments & Parts, Electric Wires & Cables and
Transmission Line Towers & Parts
AUGUST 2015
For updated information, please visit www.ibef.org 14
ELECTRICAL MACHINERY
ELECTRICAL MACHINERY EXPORTS ON A RISE (2/2)
Electric power
Exports of boilers & parts and transmission line towers & parts were
worth USD579.3 million and USD234.9 million, respectively
6%
14%
cables
17%
63%
TechSci Research
AUGUST 2015
Industry players are upgrading their transmission capacities to the next higher voltage
Upgrading technology
system of 765 kilovolts (KV) and are gearing up to supply transformers and related
Indian manufacturers are becoming more competitive with respect to their product
Increasing R&D
expenditure
Investments in Research & Development (R&D) in the electrical machinery industry are
Increasing competition in the industry and changing consumer demands have led to new
Diversifying product
portfolio
Players are entering into strategic alliances and tie-ups with technology suppliers to
upgrade capabilities
Adoption of super-
critical technology
th
During the 12 Five Year Plan, 60 per cent of the total additional power is expected to be
KEY PLAYERS
Company
Revenues (FY15)
Products
Electronics
Competitive Rivalry
Threat of New
Large players provide complete solutions
Entrants
Government plans to increase investment in power,
rivalry is expected to increase
(Low)
Competitive (Low)
Substitute (Medium)
Power of
AUGUST 2015
ELECTRICAL MACHINERY
Promotion of R&D
New
technologies
STRATEGIES ADOPTED
Capacity
addition
High voltage technology is being developed in the electrical equipment
industry, for economical power transmission
addition in power sector, demand for electrical machinery would rise,
prompting the companies to increase their production capacity
Firms are
diversifying
into nuclear
reactor
business, as Government is helping companies enhance the level of research to match
government the best in the world
wants to
increase its
nuclear Government has relieved custom duties on some equipment
power base
Source: Draft Indian Electrical Equipment Industry Mission Plan (2012-2022), TechSci Research
AUGUST 2015
For d information, please visit
update www.ibef.org 22
ELECTRICAL MACHINERY
GROWTH DRIVERS
AUGUST 2015
ELECTRICAL MACHINERY
GROWTH DRIVERS OF ELECTRICAL MACHINERY SECTOR
Demand-side
drivers Industrialisation leading to demand for boilers and turbines
Easy fuel linkages and faster regulatory clearance for power projects
De-licensing of power
Policy
Investment
subsidised loans to
Increasing FDI inflow
power companies
937
CAGR: 5.9%
831
862
1162
777
1069
739
691
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16*
* FY16- Expected
Increasing investments in capacity has resulted in rising demand As on May;15, around 46.5 MW of power generation has been
for power generation and transmission equipment achieved. In addition around 1100 new census villages were
connected through the grid.
UPA government has planned to add 118536 MW, of this 51, 795
MW was added in first two years, while the reaming 66,740 MW
was planned to add by 2017. Moreover, the current government
hopes to double this capacity by 2017. In that, current Capacity addition for power generation in the recent Five-Year
government achieved 46,450MW capacity addition as on Plans (000 MW)
May15.
th
The increase in capacity during the 11 Five-Year Plan (FY07
th
12) stood at 45,300 MW by the end of 11 Five-Year Plan 115
101
The figure is more than five times the corresponding one in 1990
(8.1 MW)
17.1
22.3
12.1
8.1
FY90
FY97
FY02
FY07
AUGUST 2015
For updated information, please visit www.ibef.org 26
ELECTRICAL MACHINERY
Initiatives to increase power generation
National Electricity
Policy (NEP)
De-licensing
SEZ
This has Through the Accelerated Power Development Reform Programme, the
facilitated the government plans to provide reliable, affordable and high-quality power
entry of global to all
majors into the
electrical
machinery
industry in India
The government aims to achieve per capita electricity consumption of
1,000 kWh through its Power for all by 2012 mission under NEP
Government has
removed tariff
protection on
capital goods
The government has cleared significant number of SEZs for the
engineering sector across the country; electrical machinery is a part of
the sector
Government has
lowered custom
duties on a range
Delhi Mumbai Industrial Corridor being developed across seven states
of equipments
could boost the engineering sector
Vision statement
Focus on industry
competitiveness
To make India the country of choice for the production of electrical equipment and reach an output of
USD100 billion by balancing exports and imports
To focus on technology and R&D and bring it on par with global benchmark, the government has
lowered customs duties on a range of equipment
The government plans to establish electrical equipment industry clusters
The government plans to It plans to take steps to enhance product-testing infrastructure in the country
set up the Electrical
Equipment Skill
Development Council
(EESDC) which would focus
on identifying critical
manufacturing skills The government plans to provide credit support to economically less-developed export markets
required for the electrical
machinery industry
It aims to create a dedicated fund for EXIM bank to support exporters in the electrical machinery
industry
Developer
Location
Products
Hazira, Gujarat
Engineering
Gujarat Industrial Development Corporation Ltd (GIDC)
Gandhinagar, Gujarat
Electronic products
Ahmedabad, Gujarat
Engineering
Amreli, Gujarat
Engineering
Dishman Infrastructure Ltd
Ahmedabad, Gujarat
Engineering
Sonepat, Haryana
Engineering
Gurgaon, Haryana
Engineering
Ansal Kamdhenu Engineering SEZ Ltd
Sonepat, Haryana
Engineering
Shimoga, Karnataka
Engineering
Mangalore, Karnataka
Satara, Maharashtra
Engineering
Pune, Maharashtra
Engineering
Patiala, Punjab
Engineering
Source: SEZ India, TechSci Research
Developer
Location
Products
Engineering
Perundurai Engineering SEZ by SIPCOT
Engineering
Engineering
(UPSIDC)
Source: SEZ India, TechSci Research
AUGUST 2015
CAGR: 19.8%
Cumulative FDI inflows during April 2000 to May 2015 stood at 3.2
USD4.0 billion 3.3
3.9 4.0
3
1.5
2.2 1.1
2.4
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16*
Source: Department of Industrial Policy & Promotion, TechSci Research Note: FY08 - Cumulative from April 2000 to March 2008 and so on *FY16- As on May15
Target
Acquirer
Companies seek inorganic growth by
targeting foreign and domestic players Type
Year
Crompton Greaves acquired the smart grid
automation company ZIV Group for EUR150
million
Toshiba Mitsubishi-
In 2010, Legrand acquired the switch gear
Acquisition
business of Indo Asian Fusegear for
USD127.6 million 2014
Solutions India
Electric
Voestalpine Bohler
Acquisition
2013
RS Infosystems
Advance Metering
Acquisition Welding
2013
Pvt Ltd
Technology
2012
Henikwon
Acquisition
2012
Corporation
Schneider Electric
Energy Grid
Automation
Acquisition
2012
Infra Ltd
ZIV Group
Crompton Greaves
Acquisition Ltd
India Ltd
Ltd
Alstom T&D
Grid Equipments
Acquisition
2012
Source: Thomson Banker, Edelweiss Research, Assorted News articles, TechSci Research
AUGUST 2015
For d information, please visit
update www.ibef.org 32
ELECTRICAL MACHINERY
BRIGHT PROSPECTS LURE GLOBAL MAJORS
51%
49%
Joint Venture
Indian partner
Foreign partner
L&T - MHI
51%
Bharat Forge -
49%
51%
49%
BGR - Hitachi
70/74%
Alstom
30/26%
Thermax -
Boiler capacities planned through JV
Companies in JV
Capacity (MW)
Toshiba - JSW
GB Engineering -
15%
BGR Hitachi
85%
4,000
Ansaldo
Thermax- Babcock
3,000
2,000
Turbine capacities planned through JV L&T MHI
4,000
BGR Hitachi
Companies in JV
4,000
Capacity (MW)
Toshiba JSW
5,000
GB Engineering Ansaldo
Source: Edelweiss Research, TechSci Research Notes: JV Joint Venture, MHI
3,000
Mitsubishi Heavy Industries
AUGUST 2015
ELECTRICAL MACHINERY
GROWTH OPPORTUNITIES IN ELECTRICAL MACHINERY INDUSTRY
India currently operates 20 atomic reactors which produce 4,780 MW of electricity and has set an
ambitious target of generating 63,000 MW nuclear power by 2032
Generated 36,102 GWh of power during FY2015, up from 34,228 GWh in FY2014
Capacity factor of these reactors increased to 83 per cent in FY2014 from 63 per cent in FY2007
Power capacity addition
With many bilateral nuclear Foreign participation in the development and financing of generation and transmission assets,
agreements in place, India engineering services, equipment supply and technology collaboration in nuclear and clean coal
is expected to become a technologies is expected to increase
major hub for manufacturing
nuclear reactors and
associated components
Power transmission in India, which is currently carried out largely in the 220 KV and 400 KV range, is
expected to move up to a higher range of 765 KV and high-voltage direct current
AUGUST 2015
ELECTRICAL MACHINERY
BHEL MAINSTAY OF THE ELECTRICAL MACHINERY INDUSTRY (1/2)
Accounted for over 57 per cent of India's total installed generating
capacity in FY14
One of the major Integrated Power Plant Equipment (IPPE) Net sales (USD billion)
manufacturers in the world with operations in over 75 countries
9.3
17 manufacturing units, two subsidiaries, five joint ventures, 8.9
and over 150 project sites
3.9
7.0
6.5 2.8
5.8
Source: Company Reports, TechSci Research Note: Maharatna is the title given to
nine Public Sector Enterprises by the Government of India having comparative
4.9 advantages * FY15- 9 months data (Till December14)
Recent Awards and Recognitions Awarded Maharatna status by the Indian government (2013)
Cumulative power projects installed worldwide crossed 1,50,000 Golden Peacock Award 2011 for Occupational Health and Safety
MW by FY14 (2011)
First 800 MW Boiler synchronized for APPDCL at Krishnapatnam SCOPE Meritorious Award 201011 for Best Practices in Human
in 2014 Resource Management
Received PSE Excellence award 2014 for R&D and Technology Intellectual Property Award from the Government of India (2011)
development
AUGUST 2015
Conferred the ICAI National Award for Excellence in Cost
Management in 2012
power
Boiler efficiency
Key success
rate
consumption
Lower auxiliary
factors
Navratna is one of the designations given to public sector enterprises based on their
profitability and there by granted certain autonomy
Better PLF
cost
For updated information, please visit www.ibef.org 38
ELECTRICAL MACHINERY
L&T ONE OF INDIAS LEADING PLAYERS IN THE SECTOR (1/2)
Net sales (USD billion)
13.72
Enjoys AAA rating with stable outlook from CRISIL and LAAA
14.12
from ICRA
9.18
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Source: Company reports, TechSci Research
Won award for Best Attractive Employer in the infrastructure Thought Leader Brands in India (2011)
sector
28%
National Award for Export Excellence (2012)
22%
23% PAT
8%
6%
Notes: CRISIL - Credit Rating and Information Services of India Ltd, ICRA -
Investment information and credit rating agency of India CSR - Corporate Social
Order Inflow Order BookSales
Responsibility, Company website
EBITDARecurring
Revenue base of
over USD2.3
CROMPTON GREAVES: GAINING GLOBALLY
billion in FY15 (1/2)
Consolidated
revenue
expanded at a leading companies in the
CAGR of
Global leader in
offshore
Opened a
wind companies
transformer
2005, including
manufacturing
unit
applications,
with 42 per
in Bangalore
Pauwels Group
cent market
share
Focus on R&D
Among the
worlds Strong brand presence in the consumer electric products market
Made nine
market reach, and wide
Entered into
electrical
Focused on
gaining transformers and power
engineering
with
product portfolio
Focused on
motors and
system products
technological
edge, global
manufacturing
of
193760
19602005
consumer 200515
products
Source: Crompton Greaves website; TechSci Research
AUGUST 2015
Crompton
Greaves
established
its
international
2.4
2.3
Pauwels Group
2.2
2.3
2.2
1.9
1.9
The companys successful acquisitions include Ganz,
revenues
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Segmental revenue (FY15)
13.49%
Power Segment
Industrial Systems
62.82%
Source: Company reports, Company website, TechSci Research
AUGUST 2015
ELECTRICAL MACHINERY
INDUSTRY ASSOCIATIONS
501, Kakad Chambers, 132, Dr Annie Besant. Road, Worli, Mumbai 400018.
Tel: +91-22-2493 0532, +91-22-2493 0532 / 6528 / 6529 Fax: +91-22-2493 2705
mumbai@ieema.org
st
Vanijya Bhawan, 1 Floor International Trade Facilitation Centre, 1/1, Wood Street,
E-mail: eepc@eepcindia.org
AUGUST 2015
For updated information, please visit www.ibef.org 44
ELECTRICAL MACHINERY
GLOSSARY (1/2)
USD: US Dollar
200708
40.27
Year 46.14
200910
200405 47.42
44.81
201011
200506 45.62
44.14
201112
200607 46.88
Exchange rates (Calendar Year)
201213
54.31
Year
INR equivalent of one USD
201314
60.28 2005
2014-15(Expected)
60.28
43.98
2006
2007
41.34
2010
45.72
2008
43.62
2011
46.85
2009
2014
61.03
2012
53.46
2015(Expected)
2013 61.03
58.44
AUGUST 2015
For updated information, please
visit www.ibef.org 47
ELECTRICAL MACHINERY
DISCLAIMER
India Brand Equity Foundation (IBEF) engaged TechSci to prepare this presentation and the same has been prepared by
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and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to
any third party except with the written approval of IBEF.
This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to
ensure that the information is accurate to the best of TechSci and IBEFs knowledge and belief, the content is not to be construed
in any manner whatsoever as a substitute for professional advice.
TechSci and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this
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Neither TechSci nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part
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AUGUST 2015 For updated information, please visit www.ibef.org 48