fan industry of pakistan

Fan Industry

Presenting by

M. Asad Jilani & Taha Mehmood

(sp06-bb-0044) (sp06-bb-0086)

Presented by Taha Mehmood & Asad Jilani

Agenda Vision Introduction Historical Background Overview Industry Profile Division of Units Percentage of

Production Variety of Products Raw Material Quality Segment Benefits & Importance

Increasing Demand Company Average Price Exports Projection Fan Development

Institute Gujrat Fan Cluster Manufacturers’ Problems Government Incentives Problems Recommendations SWOT Analysis


Vision

Pakistan Electric Fan Industry

To penetrate the global fan market with a

diversified product base by making the

domestic fan industry internationally competitive.


Introduction Pakistan is Self sufficient in Fan Industry. There are two types of fans:

Domestic Fans The fans that consume less than 125 watts of

energy(SITC 74341)

Industrial Fans The fans that consume over 125 watts of energy

(SITC 74343)

The industry is producing a variety of products in different sizes and designs.


Historical Background

Fan industry is one of the industries that existed at the time of independence.

In the early 1950s, it was declared as cottage industry and its more than 50 per cent units still fall in this category.

In 1992-93, only two-lac fans were exported to only two countries, Iraq and Yemen.


The fan industry is mainly clustered in Gujrat and Gujranwala, whereas some units are also operating in Lahore and Karachi.

Besides small and medium units, a few units are quite large and have integrated system i.e. from motor winding to high-pressure dies casting.

Sales are fairly concentrated with five large firms in Gujrat and two in Gujranwala, accounting for 40% of total industry sales.

Overview


Fan Industry has some more than 500 units in the sector, yet the registered number of units with PEFMA in Pakistan is only 206.

Pakistan used to produce 3 million electric fans a year in 1999 and also use to export 50,000 electric fans and now the Electric fan industry is producing over 6 million electric fans and exporting 2 million fans.

Overview (cont)


Industry Profile 2005-2006Total capital investment Rs. 5 Billion

Installed Capacity 7 million Fan / year

Current Capacity utilization 80%

Total Production 5.6 million Fan / year

Direct Employment 30,000 people

Indirect Employment 40,000 people

Annual Revenue Rs. 5.25 Billion

Exports ( 2005-06 ) US $16.66 Million

Imports (US $ Million ) 0.16

GDP Contribution -


Industry Profile

Total capital investment

Rs. 5 Billion Rs. 3-3.5 billion

Installed Capacity 7 million Fan /

year 5-6 Million Fans /

year

Current Capacity utilization

80% 50%

Total Production 5.6 million Fan /

year 2.5-3 Million

Fans/year

Direct Employment 30,000 people 25,000

Indirect Employment 40,000 people

Annual Revenue Rs. 5.25 Billion Rs. 2.25-2.7

billion

Exports ( 2005-06 ) US $16.66

Million US $ 3.89 Million

Imports (US $ Million )

0.16 -

GDP Contribution - Rs. 1.5 billion

2005-06

2000-01


LARGE SCALE UNITS UNITS 8

PROJECT COST Rs. 250-350 Mn

EMPLOYMENT 200-300

PRODUCTION 60,000-250,000

REVENUE GENERATED

Rs. 150-250 Mn

MEDIUM SCALE UNITS UNITS 50

PROJECT COST Rs. 10-20 Mn

EMPLOYMENT 60-80


REVENUE GENERATED

Rs. 150-250 Mn SMALL SCALE UNITS

UNITS 450

PROJECT COST Rs. 0.5-1.0 Mn

EMPLOYMENT 20-25


REVENUE GENERATED

Rs. 2.0-5.0 Mn

VENDORS UNITS 1000

PROJECT COST Rs. 0.45-1.0 Mn

EMPLOYMENT 5-20

Division of Units


Percentage of Production

Out of the total production, approximately 30% fans consist of pedestals. 7% are brackets fans. 63% are ceiling fans.


The industry is producing a variety of products in different sizes and designs, these are: Ceiling Pedestal Table Table-cum-pedestal fans Circumatic fans Wall bracket Exhaust fans Propellers

Variety of Products


Most of the raw materials used by the fan industry are directly or indirectly imported from different countries. Some of the raw materials used in the manufacturing of a fan are: Electric steel sheets Aluminium Enamelled copper wire Ball bearing Steel rod PVC

Raw Material


Some major fan producing countries are:

Quality Segment

High Quality

Segment

Japan

Middle Quality

Segment

Korea

Hong Kong

Low Quality

Segment

Pakistan

India

Taiwan

China


It has made life comfortable. It enhances the energy of the labor. The use of Fans avoid mosquitoes. It has improve educational environment. Fans increases the number of hours available

for economic activity in shops and workshops by between two and four hours a day, and work itself has been made more efficient.

Improvement in hygiene.

Benefits & Importance


Due to increase in population. Speedy migration of people towards

big cities. Increase in Exports. Local demand for quality products is

increasing. Climate of Pakistan. People are becoming quality conscious.

Reasons of Increasing Demand


Major Electric Fan Companies

BRAND NAME

COMPANY

PAK FAN M/S Wahid Industries Limited, G.T. Road, Gujarat

G.F.C. FAN M /s General Fan Company(Pvt) Ltd, G.T. Road, Gujarat

YUNUS FAN

M/s Younas Metal Works , G.T.Road, Gujarat

ROYAL FAN

M/s Rafiq Engineering Industries (Pvt) Ltd, , G.T. Road, Gujarat

MATRO FAN

M/s Hi Tech Industries (Pvt) Ltd, , G.T. Road, Gujarat


Ahad Fans Rs. 1975 Rs. 2000

Pak Fans Rs. 1470 Rs. 1750

Royal Fans Rs. 1563 Rs. 1650

Younas Fans Rs. 1512 Rs. 1600

Parvaz Fans Rs. 1391 Rs. 1600

G.F.C Fans Rs. 1282 Rs. 1600

Average Price Rs. 1584

Rs. 1700

Company Average Price (Rs)

2003

2007


Average Unit Price ComparisonCOUNTR

Y Other Fan Unit Value

(US $)

Fan under 125 Watt (US $)

PAKISTAN

16 17

USA 64 46

MALAYSIA

48 30

INDIA 40 16

CHINA 38 5


Exports


Countries to Export of Pakistan’s Fan

COUNTRY Other Fan Fan under 125 Watt

BANGLADESH

44% 48%

SAUDI ARAB 14% 19%

UAE 25% 17%

OTHERS 17% 16%


Major exporters of fans include: Germany China Japan USA Taiwan

exporting nearly 70% of the total international market of fans industry.

These fans consisted of Industrial fans & Domestic Fans.

World’s Export of Fan


World’s Export of Industrial Fans COUNTRY SHARES

PAKISTAN 0.02%

FRANCE 2%

NETHERLAND

3%

SWEEDEN 3%

KOREA 1%

CANADA 5%

UK 4%

ITALY 9%

USA 14%

JAPAN 19%

GERMANY 33%

TAIWAN 7%


World’s Export of Domestic Fans COUNTRY SHARES

PAKISTAN 0.1%

SINGAPORE 1%

UK 1%

TAIWAN 20%

CHINA 44%

THAILAND 6%

GERMANY 5%

USA 3%

ITALY 2%

SPAIN 2%

JAPAN 2%

OTHER 13%


World Vs Pakistan Export of Fans

VALUE IN US $

OTHER FAN

FAN UNDER 125 WATT

WORLD US $ 3.9

Billion 73% 27%

PAKISTAN

US $ 30 Million

34% 66%


Fan Export by Type(Rs. Million)

Type 1998-99 1999-00 2000-01 2001-02

Ceiling Fans

2.6 15.7 59.3 208.9

Pedestal Fans

32.4 66.4 161.6 183.6

Table Fans 1.1 -- -- 0.9

Exhaust Fans

0.1 0.1 0.1 --

Other Fans 2.9 6.9 5.1 27.2

Fan Blowers

24.9 13.2 0.7 --

Other Fans 3.0 9.7 5.3 2.0

Total 45.0 42.0 232.1 422.6


Projection


Facilitate the manufactures in testing their fans. Provide facilities of material testing. Provide Display Centre facility to introduce latest

types of fans in international markets for the local entrepreneur to match their products.

Provide technical training to existing manpower and new entrants in the field of fan industry.

Also provide technical support in production management, material control, management and marketing.

Fan Development Institute


Fan Development Institute

Training courses offered

Course Title Duration

Certificate Course (Fan Technology) 4 Months

Certificate Course (Fan Technology) 6 Months

Diploma Course in Elect. & Mech secs of Fan 2 Years

Certificate Course (Mgt/Marketing in Fan Ind.) 6 Months


Gujrat Fan Cluster

In collaboration with

Ministry of Science & Technology and Pakistan Electric Fan Manufacturers

Association

Dated: November 2001


Gujrat Fan Cluster

Name & Place of Cluster Cluster Council for Fan Industry, Gujrat,

Pakistan. Sector of Industry

Electrical Fan Manufacturing. How many units in your cluster

400 How many people are employed in your

cluster Approx. 50,000


Gujrat Fan Cluster (cont)

The size of largest unit in the cluster 500,000 fan/annual Workforce: 600 Employees Productive Assets: N/A

The size of smallest unit in the cluster 30,000 fans/annual Workforce: 30 Employees Productive Assets: N/A


Manufacturers’ Demands and Problems The fan industry should be given the status

of zero rated sales tax like textile, leather, surgical, sports and carpet industries.

The local fan manufacturers have enhanced the prices of fans by 20 per cent due to increase in raw material prices.

The increase has been made due to what the manufacturers called a ‘100 per cent’ increase in raw materials’ cost.


Manufacturers’ Demands and Problems An exporter of electric fans and allied goods

can not survive if he does not have sufficient stock of imported raw materials as well as finished goods so as to cope with the requirements of its buyers both at home and abroad.

The prices of the imported raw material had risen in the international market and it had become very difficult for exporters to export electric fans and other allied items unless the industry is given the zero tax rate status so that they could purchase and import their raw materials without paying sales tax.


Government Incentives

In addition to duties on the inputs used for the manufacturing of the different products have also been reduced to 0%, 5% and 10%.In order to boost local manufacturing.

The previous rate of duty on these inputs ranged between 5% and 25%.

Duties on the raw material/inputs have also been reduced/exempted for growth and development of the industrial sectors.


Government Incentives (cont) Creation of New PCTs for Tariff

Rationalization To avoid the mis-declaration, accommodate the

inputs of industry and to facilitate the capital goods industry around 96 New Tariff Lines (Annexure-I) have been created.

This includes stainless steel, petrochemical, ceramics industry, articles of stationery, paper & paper board, chemicals and plastics, heavy

engineering industry, footwear, Fan Industry, Electronic Sector, foundry & forge, steel and telecom sector etc.


Problems Non-availability of skilled labour in the fields

of: Dies and mould making. Designing and production of gauges and their

calibrations. Machine operators in the fields of injection

molding, die casting, painting and heat treatment. CNC machine operators.

Industry focus on metal based manufacturing. Weak R&D and Design capabilities. Technologically weak vendor segment.


Problems (cont)

International marketing support. Product Certification (UL, CE,

SASO, PSI, JIS etc.)


Recommendations

PITAC to establish common facility centers in Gujrat and Gujranwala: Plastics Decorative fans Efficient electric motors Moulds and dies Calibrations and designing of gauges Painting Packing

Facilitate relocation of major Global Manufacturers in Pakistan with domestic manufacturers.


Recommendations (cont) Certification

Government should subsidize the costs of various certifications UL, SASO, CE, etc (as in case of ISO 9000)

FDI should certify the quality of fans being exported on voluntary basis.

TEVTA to proactively develop human resource in following fields in Gujrat and Gujranwala District: Plastic technologies Moulds and Die making Painting, printing and surface finishing Sheet metal stamping, motor winding Heat treatment


Recommendations (cont) International marketing support through

appointment of consultants to develop marketing strategies of at least five leading players to enable them to enter in the N. American, L. American, European and Japanese market.

SBP to allow retention of 10% of export receipts for international marketing and for paying salaries to employees working abroad.

Accelerate rural electrification in Pakistan. Construction Industry be assisted to attain a

growth rate of above 5%.


SWOT Analysis


Strength

Extensive labor is available Produces at lower cost Capacity of Production Self Sufficient


Weakness

Unskilled labor Weak research and development Weak technology No innovation in designs Cost of imported raw material is high Lack of policy framework Low capital-output ratios


Opportunities

Environmental changes WTO will allow to export more Potential markets like US & EU could

be explored Increase in demand with increase in

population Industrial Fans could be focused


Threats

No focus on industry Technological shifts Quality of Fans

Thank You…


Any Question…

fan industry of pakistan

Business