INDIAN LOW & MEDIUM VOLTAGE SWITCHGEAR MARKETS: GEARING FOR AN UPSURGE

Anup Barapatre Industry Analyst Energy & Power Systems July 06, 2011

Focus Points

Research Introduction, Methodology, and Coverage

Indian Low Voltage (LV) and Medium Voltage (MV) Switchgear Market Analysis

Key Market Trends

Market Dynamics

Conclusions

Introduction
Research Aim
The aim of this Research Service (RS) is to provide actionable data, market intelligence, and opportunity related to the Indian LV and MV switchgear markets. To achieve this, the following objectives were identified:

Objectives
Overview of the Indian LV and MV switchgear markets Total LV and MV switchgear market size estimate in 2010 (base year) Demand analysis of various product segments Revenue-based analysis for LV and MV switchgear products by end users, regions, and sales channels Competitive landscape

Time Period
Frost & Sullivan has considered one calendar year (January to December) for market data and analysis: Base Year: 2010 Historical Data: 2009 Forecast/Projections: 2011 to 2017

Currency Exchange Rate

Frost & Sullivan has considered an average exchange rate of 1 US dollar = INR 45.71. The forecast is done with INR as the base currency and market revenues are expressed in $ million (using the prevalent Exchange Rates)

Research Methodology

Frost & Sullivan used a three-step approach to develop the analysis

1. Internal Expertise

Frost & Sullivan tapped into the extensive expertise of its research team, as well as retained market intelligence regarding the LV & MV switchgear markets

2. Desk Research

Desk Research was then utilized to further expand and detail the information collected from Frost & Sullivans Internal Knowledge Banks and Targeted Primary Research Primary Research focused on obtaining targeted information from select market participants (manufacturers, contractors, utilities) related to LV & MV switchgear markets and for updating information from other sources

3. Primary Research

LV and MV Switchgear Market in revenue terms ($ million)

Research Service Coverage & Market Segmentation

MARKET COVERAGE Low Voltage Switchgear 1.1 kV & Below Medium Voltage Switchgear 3.3 kV to 36 kV

REGIONS:

CHANNEL:

REGIONS:

CHANNEL:

North South East West

Direct to end user Stockists/Distributors/Dealers EPC/Panel Builders/System Integrators OEM

North South East West

Direct to end user Stockists/Distributors/Dealers EPC/Panel Builders/System Integrators OEM

COMPETITION:

COMPETITION:

Supplier market share analysis by product segments

Supplier market share analysis by product segments

Market Snapshot
Switchgear Markets: Key Market Characteristics (2010)
Market Size:
LV Switchgear - $950.0 million MV Switchgear - $795.0 million

LV Switchgear
Number of Competitors Key Market Participants High Growth Products Competitive Trends 40 + L&T, Schneider Electric, Siemens, ABB, Havells, Legrand, etc. Contactors & Relays MCCB MCB Highly-competitive market Highly price-sensitive Market penetration with dealer/distributor network Strong after-sales service Competitive pricing Industries Construction Infrastructure

MV Switchgear
20 + Areva, Siemens, CGL, ABB, Schneider Electric, BHEL, etc. RMU CSS Competitive market Price-sensitive

Key Success Factors

Wide product portfolio Strong after-sales service Competitive pricing T&D Utilities Industries Power Gencos

Key End Users

Note: All figures are rounded; the base year is 2010. Source: Frost & Sullivan
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Market Analysis by Product Segments

Revenue: $950.0 million

Revenue: $795.0 million

Note: All figures are rounded; the base year is 2010. Source: Frost & Sullivan

C&Rs led the LV switchgear demand in revenue terms followed by MCCB Demand for C&Rs was primarily from the industrial segment driven by the need for automating and optimizing processes MCB, RCD, and DB are high volume, low margin business due to high competition from unorganized participants

ISGs dominated MV switchgear demand followed by OSGs RMUs are preferred in urban centers where the power distribution network is predominantly underground CSS is a relatively new concept and is steadily gaining significance

End-user Analysis

Revenue: $950.0 million

Revenue: $795.0 million

Others include agriculture & other end-user segments

Others include commercial, residential & other end-user segments

Note: All figures are rounded; the base year is 2010. Source: Frost & Sullivan

Industries dominated the demand for switchgears, followed by commercial infrastructure segments It had demand across all product segments

LV &

Transmission & Distribution (T&D) utilities dominated demand for MV switchgears. Most T&D utilities prefer OSGs over ISGs due to low initial investment Power gencos and industrial segment followed primarily with demand for ISGs and CSS

Residential segment primarily had demand for MCBs, RCDs, and DBs

Regional Analysis

Revenue: $950.0 million

Revenue: $795.0 million

Note: All figures are rounded; the base year is 2010. Source: Frost & Sullivan

North: The North Indian market dominated the demand with huge investments in industrial and power infrastructure development, apart from increased use of compact switchgear technologies South & West: Demand in these markets was driven by expansion and renovation of T&D infrastructure, coupled with extensive industrial and commercial development in the regions Eastern India: Low demand due to less spending on infrastructure and residential development, compared to other regions
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Competition Analysis

Revenue: $950.0 million

Revenue: $795.0 million

Others include HPL, IndoAsian, GE, C&S, BCH etc.

Others include Megawin, Jyoti, MEI, KECL, Easun Reyrolle etc

Note: All figures are rounded; the base year is 2010. Source: Frost & Sullivan

The prominent suppliers in the LV switchgear market have an established distribution network complimenting their wide product portfolio Other suppliers either operate with limited products or cater to few end-user segments. However, these participants are steadily expanding their product offerings

Top four participants have significant presence across all product segments in the MV switchgear market Other prominent participants either have a limited product portfolio, or primarily focus on limited enduser segments

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Market Tiers

TIER

Revenue Range

Brand Presence Among End-User Segments (Domestic & Global) Global/Pan India/All End-User Segments Pan India/Major EndUser Segments

Brand Recognition

Technology Superiority

TIER 1

Above $100 million $30 million to $100 million

Globally-Recognized High Degree of Brand Innovation and R&D Pan India Recognition Locally Recognized Brand Low Degree of Innovation and R&D Negligible Innovation and R&D

TIER 2

TIER 3

Less Than $30 Regional Presence/ million Limited End Users

LV SWITCHGEAR: Even with a large number of suppliers operating in this highly price-sensitive market, Tier 1 participants had over 50 percent share MV SWITCHGEAR: Tier 1 and Tier 2 participants together had approximately 75 percent share
Note: All figures are rounded; the base year is 2010. Source: Frost & Sullivan

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Key Market Trends

Price & Market Penetration Key competitive factors

Customization: End users demanding tailormade equipment, which best suit their project needs

Increased acceptance of electronic releases in circuit breakers

KEY TRENDS

Products like C&R, MCCB, RMU, & CSS are likely to have better market growth rates Increased demand for compact and hybrid technologies

Embedded intelligence and communicationenabled switchgear

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Market Dynamics

INDUSTRY CHALLENGES Fluctuating raw material prices Uncertainty and delays in implementation of various power reform programs/initiatives MARKET DRIVERS Expansion in key industry segments T&D network and power capacity augmentation Growing infrastructure and construction segments Increasing demand from replacement and retrofitting programs

MARKET RESTRAINTS Price competition Poor financial health of State Electricity Boards (SEBs) Macro economic challenges constrain public and private funding

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Conclusions

Factors determining the future of the LV and MV Switchgear Market Investments in infrastructure, industrial, and construction (commercial/residential) segments Implementation of reforms regarding T&D network development and power augmentation Efforts to arrest energy crisis and improve power quality and safety

BRIGHTER SIDE OF SWITCHGEAR MARKET: India Inc. witnessing

Increased investments industrial expansion and infrastructure development

Increased budgetary allocations for Revised Accelerated Power Development and Reform Program (R-APDRP) and Rajiv Gandhi Grameen Vidyutikaran Yojna (RGGVY) schemes by the Government of India (GoI) Commercial & Residential Corridors: Post 2009, more and more construction giants are investing commercial and residential projects across the country Increasing focus on alternative energy sources (wind, solar, etc.) in massive

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For Additional Information

Amol Kotwal Deputy Director Energy and Power Systems (+91) 80 - 67028006 akotwal@frost.com

Vivek Verma Business Development Manager Energy and Power Systems (+91) 22 - 66072034 vivek.verma@frost.com

Anup Barapatre Industry Analyst Energy and Power Systems (+91) 22 - 66072012 anupb@frost.com

Ravinder Kaur Assistant Manager Corporate Communications (+91) 44 - 66814080 ravinder.kaur@frost.com

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