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Machine Tools
September 2006
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Contents
• Market Overview
• Government regulations & policy
• Advantage India and business
opportunities
www.imacs.in MACHINE TOOLS

Market
Overview
• Market Overview
• Government regulations & policy
• Advantage India and business opportunities
www.imacs.in MACHINE TOOLS

Market Overview

Indian Machine Tools sector is very small


in comparison to the global market size
Global Machine Tools Market
• Total world market size; USD 65.3 bn
• World leader Japan has USD 10.5 bn has 16% market share
• China leads consumption with US $ 9.3 bn in 2004 ( 20% of world wide production).
It imported US $ 5.8bn ( 62%)

Indian Machine Tools Industry


• Domestic Market Size : USD 620 mn ( consumption)
• Ranks 19th in overall world machine tools production
• Contributes 0.5% to overall world production
• Exports : USD 11 mn
• Exports mainly to developed countries
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Market Overview

Manufacturers are geographically dispersed


•Top 10 producers account for 70% of the output in India
•Around 70% of the players are in the small & medium scale sector
•Hubs of manufacturing centres located near the raw material industry or user industries

Machine Tool hubs in India


• Mumbai and Pune in Maharashtra;
• Batala, Jalandhar and Ludhiana in Punjab;
• Ahmedabad, Baroda, Rajkot Jamnagar, and Surendranagar in Gujarat;
• Coimbatore and Chennai in Tamil Nadu;
• Bangalore in Karnataka.
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Market Overview

Production has grown at a high rate


during the period 2002 to 2005

Metal Forming
bending machines, presses, cold-
Production Rs 528 mn Production Rs 860 mn
heading machines,, shears, coil
slitters, and stamping machines C A G R 47 % C A G R 30%

Metal Cutting
Turning centres, Machining
centres, grinding centres Production Rs 7387 mn Production Rs 2 1 1 3 mn
(70% of total metal cutting C A G R 43 % C A G R 37 %
output)

CNC C onventional
87% of
production
70% of
production
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Market Overview

Metal Cutting constitutes


bulk of the exports
Export of Machine Tools (By Operation)

600

500

400 Machine centres, Lathes,


472 Electro discharge machines
463 and HSC drilling tools together
300 account for ~75% of exports
320 ( in FY 2005 )
200

100
74 75 61
0
2002-03 2003-04 2004-05

Metal Forming Metal Cutting


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Market Overview

Shortage in production capacity


has resulted in rising imports
Consumption Breakup - Machine Tools India

100%
• The surge in domestic demand, capacity
10360
7420 constraints and lowering of import duties
80% 5093 have led to a doubling of imports

60% • The percentage share of imports


in total consumption has also risen from 47%
in 2002-03 to 64% in 2004-05
40% 18208
9655
4507
20%

0%
2002-03 2003-04 2004-05

Imports Domestic Production


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Market Overview

Domestic demand fuelled by


growing end user industries

Automotive Domestic market grown at a CAGR of over 11% ( FY 2000 - FY 2005).


Exports have grown even higher at about 25% CAGR

Auto Domestic market size at USD 8.7 bn and growing at a rate of


Components 15% per annum. Industry estimated to grow at 25% till 2010.

Grown at about 20% in FY 2006. Government’s thrust on infrastructure


Capital Goods development, and growth in core sectors like textile and agriculture are
expected to sustain high growth in this sector

The sector has grown at rate of about 13% in FY 2005.


Consumer
The growing middle class, rising affordably, changing lifestyles have
Durables
all contributed and continue to contribute to this sectors growth pace.
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Government
regulations & policy
• Market Overview
• Government regulations & policy
• Advantage India and business opportunities
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Government regulations & policy

Indian machine tool industry is most


amenable to investments by foreign players
• 100% FDI is allowed
• Machine tools manufacturers are exempt from obtaining
an industrial licence to manufacture
• Manufacturers are free to select the location of the project
• Only specific items under machine tools are reserved for
production by the small scale industry
• Import duties have been constantly reduced to promote increased
import and usage of machine tools
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Advantage India &


business opportunities
• Market Overview
• Government regulations & policy
• Advantage India and business opportunities
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Advantage India & business opportunities

India enjoys several advantages for


the growth of machine tool industry
• Design Skills
• Lower cost of manufacture
• Availability of raw materials
• Availability of skilled manpower
• Presence of support industries (like foundry)
• Growth in end user industries
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Advantage India & business opportunities

Rising demand and cost competitiveness


drives investment and growth
• There is a substantial demand-supply gap for machine tools currently being
met through exports

• Availability of skilled manpower and design skills coupled with cost


competitiveness make Indian machine tool industry amenable to outsourcing
opportunities by foreign manufacturers and consumers

• Limited production capacities of specialised products like high speed, high


precision machines and heavy duty machines provide scope for investment
in production facilities
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Advantage India & business opportunities

Leading players have built


substantial capabilities
Pioneer in Machine tools business in India
Leading manufacturer of conventional and CNC machines
Revenues of INR 2902 mn

Largest machine tool manufacturer in the Private sector


Collaboration with German Machine Tool manufacturing
Company Manufacturer of CNC horizontal and
vertical machining centers, Special Purpose Machines,

ACE Designers Ltd., is a leading manufacturer of CNC turning


centers and Auto Lathes Part of the ACE Group of companies
that manufactures and exports CNC machine tools,
grinding machines, turrets etc., to Europe and USAGroup
Revenues close to INR 2500 mn

Jyoti is a leading CNC machine tool manufacturer from


Gujarat Has recently tied up with French CNC manufacturer
Hurron Graffenstaden SAS to produce Special Purpose CNC
machines to be sold in Europe and other western countries

Batliboi Limited is among the leading engineering and


machine tool manufacturers in India
Machine tool business revenues of INR 400 mn
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Advantage India & business opportunities

Leading players have built


substantial capabilities
Lakshmi Machine Works is a leading engineering and
machine tool manufacturing Company
Produces CNC machine tools
Also has supporting foundry division to manufacture castings
Machine tool revenues close to Rs.1000 mn

Kennametal India Limited is the largest cutting tools


Kennametal manufacturer in India and is a Subsidiary of Kennametal,
India Germany
Sales revenues of INR 3631 mn

Other Leading Players are:


Heavy Engineering Corporation; Motor Industries Company Limited; Lokesh Machines Limited
Premier Limited; TAL Manufacturing Solutions Limited; Godrej & Boyce Manufacturing Company Limited;
Mysore Kirloskar Limited;

Many of the global players like Makino, DMG, Yamazaki, Haas, Trumpf, Daewoo, Agia Charmilles,
Schuler , Cummins, Siemens , ABB Ltd etc. are present in India either through their marketing
agents, technical centers, service centers or assembly centers.
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The India Brand Equity Foundation is a public-private partnership


between the Ministry of Commerce & Industry, Government of India
and the Confederation of Indian Industry. The Foundation’s primary
objective is to build positive economic perceptions of India globally

India Brand Equity Foundation


c/o Confederation of Indian Industry
249-F Sector 18, Udyog Vihar Phase IV
Gurgaon 122015, Haryana, INDIA
Tel +91 124 401 4087, 4060 - 67
Fax +91 124 401 3873
Email j.bhuyan@ciionline.org
Web www.ibef.org
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ICRA Management Consulting Services Limited

Disclaimer
This publication has been prepared by ICRA Management Consulting Services (IMaCS) for the India Brand
Equity Foundation (“IBEF”).

All rights reserved. All copyright in this publication and related works are jointly owned by IBEF and IMaCS.

The same may not be reproduced, wholly or in part in any material form (including photocopying or storing
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This publication is for information purposes only. While due care has been taken during the compilation of
this publication to ensure that the information is accurate to the best of knowledge and belief of IBEF and
IMaCS, the content is not to be construed in any manner whatsoever as a substitute for professional advice.

IBEF and IMaCS neither recommend nor endorse any specific products or services that may have been
mentioned in this publication and nor do they assume any liability or responsibility for the outcome of
decisions taken as a result of any reliance placed on this publication.

IBEF or IMaCS shall in no way, be liable for any direct or indirect damages that may arise due to any act or
omission on the part of the user due to any reliance placed or guidance taken from any portion of this
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