auto-part research and analysis

8/13/2019 Auto-Part Research and Analysis

1/43

Chetan Khanna


2/43

Contents

Introduction

Major Companies

Issues

Future Outlook


3/43

Parameter Value (uS$ bn) Y-o-Y growth (%)

Turnover 26 18

Exports 5 32

Investments 12 33

Indian auto components industry: Snapshot

Source : ACMA , FY 11


4/43

What is so special ?

Lower operational

costEnglish speaking

An efficient supplychain and

movement inexchange rates

Establishedproduction lines

Excellentengineering skills

High productivity


5/43

Rotating Auto

Electricals tires and

tubes

Heavy Forgings and

wheel rims

Small castings andforgings

Plastic components

Hand tools metal

bonded and moldedrubber plants

Aftermarket Tier-2-n supplier Tier 1 supplier

High

Medium

Low

Source : IMRB International

Transition of Indian Auto ComponentIndustry

ProductComplexity

Customer Complexity


6/43

Increase in income levels and thuspurchasing power

Gradual shift to higher segmentpassenger vehicles

Availability of a

wider range ofproducts

Availability of low-costfinances

Decrease in product life cycles

Emergence of tier 2 cities andnon metros

Demand drivers for the Automobile segment


7/43

Production of Automobiles in no. of units (2008-09)

Source: SIAM, IMaCS analysis


8/43

Sales of Automobiles in Rs billion (2008-09)

Source: SIAM, IMaCS analysis


9/43

About

The industry employs about 12.5 mn people

It contributes nearly 5% to the national GDP.

The industry contributes nearly 20% to indirect taxes of the

government

The auto components industry has grown at double-digits in each of

the past seven years ending FY11, barring FY09.

Source : ACMA , IFCI and ICAER FY11


10/43

Demand Analysis : Trend in automobileindustry turnovers

Source: D & B Research


11/43

Supply Dynamics : Trend in automobileindustry turnovers

Source: D & B Research


12/43

37%

28%

24%

7%

3% 1%

Europe

Asia

North AmericaAfrica

South America

Australia

Source : ACMA , FY11

Auto components: Composition of export destinations (%)


13/43

Evolution of the Indian Automotive industry

Pre 1983

Closed market

Growth of marketlimited by supply

Outdated models

Players

Hindustan Motors

Premier

Telco

Ashok Leyland

Mahindra &Mahindra

1983-1993

Japanisation -GOI-Suzuki jointventure to formMaruti Udyog

Joint ventures

with companiesin commercialvehicles andcomponents

Players

Maruti Udyog

Hindustan Motors

Premier

Telco

Ashok Leyland

Mahindra &Mahindra

1993-2007

Delicensing ofsector in 1993

Global majorOEMs startassembly in India

(Toyota, GM,Ford, Honda,Hyundai)

Imports allowedfrom April 2001;alignment of dutyon componentsand parts toASEAN levels

Implementationof VAT

Era of

globalization

andevolution

of India as a

global

manufacturi

ng

hub

Source : www.ibef.org


14/43


15/43

31%

12%

9%

19%

12%

10%

7% Engine Parts

Body and chassis

Electrical Part

Drive Transmission &steering parts

suspension & braking

parts

Equipment

Others

Source : ACMA , FY11

Auto components industry: Product composition (%)


16/43Source : IMaCS

Automotive Clusters in India


17/43

Pan-India Major Players


18/43

Products &Services :-

Assembly Joints

Crank Shaft

CV Joints

Engine Blocks

Flywheels

Ring Gears

Clientele:-

Maruti Udyog , JCB, NewHolland Tractors, John

Deere Tractors, HyundaiMotors, ITL, Eicher

Motors

Major Markets :-

Australia/NZ, IndianSubcontinent, Caribbean,

East/Middle Africa,North Africa,

South/West Africa, EastEurope, East Asia,

Central America, NorthEurope, Middle East,

South America,South/West Europe,

South East Asia andNorth America

Amtek India

Source : www.indiamart.com
http://www.indiamart.com/http://www.indiamart.com/


19/43

Bharat Forge

Clientele :-

Maruti Suzuki

Tata

Mahindra

L&T

Ashok Leyland

Escorts

Bajaj

BHEL

Kirloskar

Product andservices:-

Crank ShaftFront Axel Beams

Hubs

Rocker Arm

Transmission Parts

Major Markets :-

Indian subcontinent



20/43

Bosch

Products andservices

Fuel injection equipment,Spark plugs, Autoelectrical, Electric powertools, Injectors, Nozzles,

Security Systems,Portable Electric PowerTools, Nozzle Holders,

Filter & Filter Inserts,Spare & Components

Clientele :-

Maruti Suzuki,Mahindra & Mahindra,

Tata Motors, Ford,Ashok Leyland,

Kirloskar, Hyundai andTVS Motors

Major Markets :-Indian Subcontinent,East Asia, Middle East

and South East Asia

http://economictimes.indiatimes.com/tata-motors-ltd/stocks/companyid-12934.cmshttp://www.indiamart.com/http://www.indiamart.com/http://economictimes.indiatimes.com/tata-motors-ltd/stocks/companyid-12934.cms


21/43

Exide Industries

Products and services

Manufacturer of all kinds oflead acid batteries, batteryplates, lead oxide battery,

automotive batteris,

motorcycle batteries, oldscrab batteries and industrialbatteries

Clientele:-

Honda City, Honda Accord,Hyundai Santro, HyundaiAccent, Hyundai Sonata,Suzuki Balero and SuzukiWagon R, Mitsubishi Lancer,

Tata Indica, Tata Indigo, FiatPalio, Opel Corsa, ToyotaQualis, Mahindra Scorpio andMahindra Bolero.

Major Markets :

Indian Subcontinent

www.indiamart.comwww.exideindustries.com


22/43


23/43

Sona Koya


Major Markets :

Indian Subcontinent,South/West Africa, Central

America, South Americaand North America

Clientele :-

Maruti Suzuki, Toyota,Hyundai, Tata Motors,

Mahindra and Mahindra,

General Motors andMahindra-Renault


24/43

Sundaram Fasteners

Products & Services:-

Automobile Components

Bolts

Cold Extruded PartsGear Shifters

Gear Shifters Nuts

High Tensile Fasteners

Iron Powder

Powder Metal PartsRadiator Caps

Clientele :-

Ashok Leyland ,

Bajaj Auto ,Behr , BEML ,Bosch , Fiat ,

Maruti Suzuki ,Tata ,

Volkswagen ,

Mahindra

MajorMarkets :-

Indian

Subcontinent, East

Asia,South/Wes

t Europe

and NorthAmerica



25/43

558.83

944.49

281.14

1250

251.79

531.57

0

200

400

600

800

1000

1200

1400

Amtek India Bharat Forge Bosch Exide

Industries

Sona Koyo Sundaram

Fasteners

Sales Turnover ( in crore )

The above are the results of the 3rd

quarter that is October-December2011

Source : www.mydigitalfc.comwww.moneycontrol.com


26/43


27/43

Delphi Automotive

Major Markets :

Australia/NZ, IndianSubcontinent, NorthAfrica, East Europe,

East Asia, CentralAmerica, North Europe,

Middle East, SouthAmerica, South/West

Europe, South East Asiaand North America

Products

Body Controls

Delphi ElectronicThrottle Controls

Electrical/ElectronicArchitecture , almost in

every segment

Clientele :-

Hyundai MotorsKalyani Group

Kinetic Engineering

MetaldyneMICO BoschTata Motors

MahindraMaruti Udyog

Bajaj

General MotorsAshok Leyland



28/43

Denso India

Major Products :-

Automotive Components

Automotive Body PartsAutomotive Components

Automotive Spare Parts

Clientele :-

Maruti Suzuki

Hero Moto corp

Major Market :-

Indian Sub continent

www.indiamart.com


29/43

Asahi India

Major Markets :

Indian Subcontinent,East Asia, Middle East

and South East Asia

Clientele :-

Maruti Udyog ,TELCO, Mahindra &Mahindra and DCM Toyota ,General

Motors and Daewoo Motors , Hyundai,

Ford, Toyota and Hindustan Motors

Products andservices :-

Glass (Windshields)

www.indiamart.com


30/43


31/43

l ( )


32/43

0

50

100

150

200

250

300

350

400

450

Delphi Automotive Denso India Asahi India Lumax

Sales Turnover ( in crore )

The above are the results of the 3rd

quarter that is October-December2011

Source : www.mydigitalfc.com

www.moneycontrol.com


33/43

Category No. of firms

ISO 9000 552

TS 16949 438

QS 9000 33

ISO 14001 204

OHSAS 18001 95

JIPM 3

Deming Award 11

TPM Award 15

Japan Quality Medal 1

Shingo Silver Medallion 1

Source : ACMA , FY 11

Firms with quality certifications & recognition


34/43

Making Clients

Low

replacement costPerceived quality Sales Promotion

Prices/Margins Commission Brand awareness


35/43

Why should we export ?

Charge higher international prices for manufactured goods

Competitive pressures in domestic market reducing pricesand margins

Competitors leveraging their profitability in foreign markets

to increase their market share in domestic market

Automotive mission plan (amp) 2006-16 to offset the tradeimbalance .


36/43

Important Info

The Governmentcollected Rs 5,001 crorefrom the sector as excise

duty in the previousfiscal

The revenues from theexcise duty on cars wentup even though the levywas increased by only 2

per cent in the UnionBudget

At present, the exciseduty on small cars

stands at 10 per cent,

while for larger cars it is22 per cent.

The foreign exchangeearnings ( automotive

parts ) through exportsin 2010-11 rose only 5per cent to Rs 15,276

crore

Though the value of exports in 2010-11stood at Rs 7.81 lakh crore, the share of the

sector in the total foreign exchange earningsin the same fiscal was 1.95 per cent.

Source : August 16th2011 , Hindu Business Line , Praful Patelssreply in parliament

i d


37/43

Strength Weakness

Easy access to raw materials Supply chain bottlenecks

Ability to cater to low income group Low investment in research and

development

Established domestic manufacturing base Presence of a large counterfeit

components marketLow manufacturing cost

Opportunity

Threats

Large and growing domestic auto market Influx of spurious parts

MNCs looking at low-cost outsourcing

countries

Cheap imports from other low-cost

countries such as China, Thailand, Taiwan,

etc

Proximity to other growing Asian Slowdown in global markets

Auto components industry


38/43

Outlook

Transmission andsteering parts

The unorganized sector is

unlikely to enter The share of the

replacement market insub-segments such asclutches is likely to grow

Engine and engineparts

o It is likely to be led byexisting major players

o Introduction of

turbochargers and commonrail systems.

o The trend of outsourcing

Source : www.ghallabhansali.com, 11thMay 2011
http://www.ghallabhansali.com/http://www.ghallabhansali.com/


39/43


40/43

Electrical parts

Growing recognition ofelectric start

mechanisms for thetwo-wheeler segment.

Competition isexpected to intensify

in the electrical partssegment due to arrivalof MNCs

Others

Leading players in thesheet metal parts sub-

segment are in theprocess of expandingtheir customer base.

Companies in this

segment are likely toreduce their costs andimprove their margins.

Outlook (contd..)

Source : www.ghallabhansali.com, 11thMay 2011
http://www.ghallabhansali.com/http://www.ghallabhansali.com/


41/43

There is a proposal for reducing tariff ofCBUs (completely built units ) to 30% andadditionally a Tariff Rate Quota of 10% for

unspecified number of cars

Source : The Economic Times , 16thFeb 2012

Scoop


42/43

Any proposal to reduce tariffs at this stage would bedetrimental to Indias auto manufacturing ..

Reversal ofinvestment

encouragingpolicy

JeopardizingAutomotive

Mission Plan

2006-2016targets

Not fair to

other OEMs -Japanese andKorean

companies,etc.

Encouragingimports while

discouragingdomestic

manufacturing(penal excise

duty)

Source : The Economic Times , 16thFeb 2012


43/43

THANK YOU !!!!!!!!!!

By :-

Chetan Khanna

auto-part research and analysis

Documents