Market Research Report : Auto ancillary market in india 2013

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Auto Ancillary Market IndiaAuto Ancillary Market – India

March 2013

Executive Summary

Market Auto ancillary market in India is expected to reach INR a9 bn in 2015‐16, growing at a CAGR of z2 % from INR a5 bn in 2011‐12

Engine parts account for the largest share, representing b1% of the total auto component market

Drivers: Challenges:

Drivers & Challenges

Drivers:‐ Growing Automotive Industry

‐ Healthy Economic Outlook

‐ Auto Aftermarket Demand

‐ Growing Investments

Challenges:‐ Exposed to Cyclical Downturns in the Automobile Industry

‐ Rising Labour Costs and Price of Raw Materials

‐ Counterfeit Market

‐ Technical Inefficiency‐ Opportunity from New US IT Compliance Law

Government Union Budget 2012‐13 National Automotive BoardN i l A i T i d R&D I f P j (NATRIP)

‐ Depreciating Currency

Trends Diversification

Rising PE/VC Investments

Initiatives National Automotive Testing and R&D Infrastructure Project (NATRIP) Export Incentives ACMA Initiatives

Adoption of Green Strategies

Increasing Foreign Presence

Competition

Trends Rising PE/VC Investments

Focus on Quality

Market comprises of a large number of domestic players and steadily increasing participation from foreign players, mainly through mergers & acquisitions

Some of the major players in the market are Player 1 Player 2 Player 3 Player 4 Player 5 Player 6 Player 7


Changing Design

2AUTO ANCILLARY MARKET IN INDIA 2013.PPT

Competition Some of the major players in the market are Player 1, Player 2, Player 3, Player 4, Player 5, Player 6, Player 7, Player 8, Player 9, Player 10, Player 11, Player 12, Player 13, Player 14, Player 15, Player 16, Player 17, Player 18 and others

•Macro‐Economic Indicators•Market OverviewS t•Segments

• Major Segments• Major Sub‐Segmentsj g

•Opportunity Areas•Export‐Import•Drivers & Challenges•Government Initiatives•Trends•Trends•Competitive Landscape•Strategic Recommendations

3

g•Appendix

AUTO ANCILLARY MARKET IN INDIA 2013.PPT

SAMPLE Indian auto ancillary market, exhibiting rapid development and is expected …

Auto Ancillary Market – Overview

•Auto ancillary market is one of the fastest growing segment within the manufacturing sector in

India

Auto component market is expected to grow at a CAGR of z2 % to reach INR a9 bn in 2015‐16 from INR a5

bn in 2011‐12

• India has the potential to become one of the top auto component economies by 20‐‐

• There are ~x organized players contributing to y% of the total auto component output, while

the unorganized sector accounts for the restthe unorganized sector accounts for the rest

Unorganized auto component sector comprises of ~z players, mainly in the replacement market, or are Tier

p and Tier q manufacturers

Primarily, Type 1 dominate the Indian auto component market

I di t ill t h b l ti k t f th l b l i t th• Indian auto ancillary sector has become a lucrative market for the global investors as the

country’s overall automobile industry is expected to witness a u‐fold increase in demand by 20‐

along with the business friendly environment, favorable policies and availability of skilled

manpower at a comparatively lower cost


SAMPLE …to grow at a steady pace over the next five years

INR bn

+z2%

Auto Ancillary Market Size & Growth

+z1%

2016e2015e2014e2013e20122011201020092008

INR bn

Market Segmentation – Sector‐wise


ImportsAftermarketExportsSales to OEMs

Auto ancillary industry will generate employment opportunities and also contribute to country’s GDP

SAMPLECreating x to y mn

Contribution to Employment Generation Contribution to GDP

SAMPLE additional jobs

a3 – a4

‘000 Person %

+z1%

29%

a2

29%

+z2%

71%

29%

a1

28%

71%

2020e2009

72%

71%

2015e 2015e 2020e2009


Direct Indirect

Auto ancillary market in India is expected to witness robust growth in terms of production, exports as well as imports

SAMPLEAuto Ancillary Market – Future Outlook

INR bnSAMPLE +z%

a3

i3%

e3%a2

e2%

i2%

a1

p3%

p2%

a1

p1%

e1%i1%

2021e2016e2011

Domestic ProductionExportsImports


pp

SAMPLE Value Chain Analysis

Raw Material 1, Raw Material 2, R Raw Material 3, Raw Material 4, Raw Material 5

Base Raw Material Producers

Semi Finished Material

Semi Finished Material1, Semi Finished Material 2, Semi Finished Material 3

T 1 T 2Type 3

Type 1

Tier p Manufacturers

Function 1

Type 2

Tier q Manufacturers

Auto part 1, Auto part 2, Auto part 3 etc.

Tier r Manufacturers

Function 3, Function 4, Function 5, Function 6, Function 7, Function 8,

Function 9Function 9

Market 1Type 4/ Type 5 Market

Market 2

Intermediaries


End Users

SAMPLE Opportunities differ across manufacturers positioned at various levels within the auto ancillary sector

India‐based global supplier

Domestic Tier 2/3 Supplier

Domestic Tier 1 Supplier

Small Local Entrepreneur

Opportunity 2Opportunity 3

Opportunity 4

Opportunity 1Opportunity 2


SAMPLE Auto Ancillary Market – Segments (1/3)

Auto Ancillary Market – Segmentation (2010‐11)

b7%b %

b1%b6%

b5%

b

Segment 2

Segment 1

Other

Segment 6

Segment 5

Segment 3b4%

b3%

Segment 4

• Auto components industry has been classified into six broad segments:

• Segment 1 represent the largest segment with b1% share of auto component market

• This is followed by segment 2 with b2% share

• Segment 3 and Segment 4 account for b3% share each in the entire product range

• Segment 5 and Segment 6 represent b5% and b6% respectively


Segment 5 and Segment 6 represent b5% and b6% respectively

SAMPLE Auto Ancillary Market – Segments (2/3)

Segment 1 Segment 2

• Finding 1 • Finding 1g• Finding 2• Finding 3• Finding 4

Outlook

g• Finding 2• Finding 3• Finding 4

Th f ll i h b d i• These fall into three broad categories: Category 1 Category 2 Others

•Major parts include:

•Major parts include: Part 6, Part 7, Part 8 and Part 9, Part 10, etc.

Sub‐segments


Major parts include: Part 1, Part 2, Part 3, Part 4, Part 5, etc.

SAMPLE Segment 1

•Sub‐segment 1g

•Sub‐segment 2

S b t 3•Sub‐segment 3

•Sub‐segment 4

•Sub‐segment 5

•Sub‐segment 6


Sub segment 6

SAMPLE Sub‐segment 1 (1/2)

Major Players & Strategic AlliancesSub‐segment 1 – Demand

Company Collaboration+z%

mn units

Player 1 Player 7, Country 1

Pl 8 C 2

Product Variation

Player 2Player 8, Country 2;

Player 10, Country 3;

Player 11, Country 42020e2015e2014e2013e20122011



Player 5 Player 14 Country 7

b8%

b1%

b7%b6%

b4%Type 3

Type 2

Type 1


Player 6

b1%b4%

b3%

yp

Type 7

Type 6

Type 5

Type 4


Type 8

SAMPLE Sub‐segment 1 (2/2)

Market Segmentation

Region‐wise Sector‐wise

c4%

c1%

d3%

c3% d1%

EastWestNorthSouth ExportOEReplacement


SAMPLE Opportunity Areas – Summary

State 1

Auto ancillary manufacturing plants should be built near the major automobile production or assembly facilities to capitalize on the growing opportunities provided by the existing as well as the emerging auto hubs in India

State 2 and Surrounding

Automobile Production Hubs

i I diState 3

in India

St t 4 d S di

Opportunity Area for the auto

State 4 and Surrounding


ancillary manufacturersState 5

SAMPLE State 1 – Opportunity Areas

•Company 1

State 1 – Auto Hub

Place 3

Place 1

Company 1

•Company 2

•Company 3

State 1 Place 3

Place 5Place 4

Place 2

•Company 4

State 1

Place 6

Auto ancillary units in Place 2, Place 5 and Place 6 play a

significant role in supportingsignificant role in supporting the development of State 1 as

an auto hub


Major Auto Hubs Major Auto ancillary Hubs Emerging Auto ancillary Hubs

Auto majors establishing manufacturing plants in State 1, resulting in a higher demand for auto ancillary units

State 1 – Auto Industry Scenario

• Finding 1

Sub‐finding 1

Sub‐finding 2

• Finding 3

• Finding 4Finding 4

Sub‐finding 3

Sub‐finding 4

• Finding 5

Sub‐finding 5

• Finding 6


SAMPLE State 1 is likely to attract investment owing to its favourable environment

•Finding 1• Finding 2

Government Support

Location Advantage

`

• Finding 1• Finding 2

State 1 –Growth Drivers

H R D l t

• Finding 1 Sub‐finding 1

• Finding 2

Human Resource Development

g

• Finding 1

Availability of Land


Finding 1• Finding 2

Growth of exports have been hampered by the turbulent global economic scenario

•Finding 1

Sub‐finding 1

Exports (Value)Exports – Overview

INR bn

Sub‐finding 2

• Finding 3

Sub‐finding 3

Sub‐finding 4

+z%

Sub finding 4

• Finding 5

Export Destinations 20‐‐

2021e2008 20102009 2016e20122011

b6%b5%

b4%

b1%R i 4

Region 3

Region 2

Region 1

b3%

Region 6

Region 5

Region 4


Drivers & Challenges – Summary

Challenges

Drivers

Exposed to Cyclical Downturns in the Automobile Industry

Rising Labour Costs and Price of Raw MaterialsDrivers

Growing Automotive Industry

Healthy Economic Outlook

Materials

Counterfeit Market

Technical Inefficiency

Auto Aftermarket Demand

Growing Investments

O t it f N US IT

Depreciating Currency

Opportunity from New US IT Compliance Law


Growth in the automobile industry is expected to generate huge order…

ImpactGrowing Automotive Industry (1/3)

• Finding 1

Sub‐finding 1

• Finding 2

Sub‐finding 2

• Finding 3

Growing Automotive Industry Turnover Rising Passenger Vehicle Production

INR tr

+z1%

‘000 units

+z1%+z2%


2011 2016e 2021e2016e2012201120102009

SAMPLE Union Budget 2012‐13 has hit the auto ancillary industry in both advantageous as well as disadvantageous ways

Union Budget 2012‐13

• Finding 1

• Finding 2

• Finding 3Finding 3

Negative Impact Positive Impact

• Impact 1

• Impact 2

• Impact 3

• Impact 1

• Impact 2

• Impact 3• Impact 4

Impact 3


SAMPLE Trends – Summary

Diversification

Rising PE/VC Investments

`

Focus on Quality

Key Trends

Adoption of Green Strategies

Ch i D i



Changing Design

SAMPLE Public: Domestic Company – Company 1(1/4)

Company Information Offices and Centres – India

Corporate Address Address 1

Tel No. +91‐xx‐ yyyyyyyyy

Fax No. +91‐ww‐zzzzzzzz

Website www.xxx.com

Year of Incorporation ‐

New Delhi

Products and Services

Ticker Symbol ‐

Stock Exchange Bombay Stock Exchange (BSE)Head Office

Key People

Products and Services

Products

Product 1, Product 2, Product 3, Product 4, Product 5, Product 6, Product 7, Product 8, Product 9, Product 10, Product 11, Product 12 P d t 13 P d t 14 P d t 15 P d t 16 P d t 17 N D i ti12, Product 13, Product 14, Product 15, Product 16, Product 17, Product 18, Product 19, Product 20, Product 21, Product 22, Product 23, Product 24, Product 25 and Product 26

Name Designation

Person 1 MD and Executive Director

Person 2 VP of Finance and Accounts

Person 3 CEO of Subsidiary 1


Person 4 MD of Subsidiary 2

SAMPLE i i l S h K i

Public: Domestic Company – Company 1(2/4)

Financial Snapshot Key Ratios

Particulars y‐o‐y change (2011‐10)

2011 2010 2009 2008

Profitability RatiosOperating Margin ‐ ‐ ‐ ‐ ‐

Net Profit/LossTotal IncomeINR mn INR mn

Net Margin ‐ ‐ ‐ ‐ ‐

Profit Before Tax Margin ‐ ‐ ‐ ‐ ‐

Return on Equity ‐ ‐ ‐ ‐ ‐

Return on Capital Employed ‐ ‐ ‐ ‐ ‐

Return on Working Capital ‐ ‐ ‐ ‐ ‐

Return on Assets ‐ ‐ ‐ ‐ ‐20112009

b3b1 b4

2008 2010

b2

Financial Summary

• The company incurred a net profit of INR a4 mn in FY 2011, as compared to net profit of INR a3 mn in FY 2010

• The company reported total income of INR b4 mn in FY 2011, registering an increase of x% over FY 2010

Return on Fixed Assets ‐ ‐ ‐ ‐ ‐

Cost RatiosOperating costs (% of Sales) ‐ ‐ ‐ ‐ ‐

Administration costs (% of Sales)

‐ ‐ ‐ ‐ ‐

Interest costs (% of Sales) ‐ ‐ ‐ ‐ ‐registering an increase of x% over FY 2010

• The company earned an operating margin of p% in FY 2011, an increase of q percentage points over FY 2010

• The company reported debt to equity ratio of r in FY 2011, an increase of z% over FY 2010

Interest costs (% of Sales)

Liquidity RatiosCurrent Ratio ‐ ‐ ‐ ‐ ‐

Cash Ratio ‐ ‐ ‐ ‐ ‐

Leverage RatiosDebt to Equity Ratio ‐ ‐ ‐ ‐ ‐

b i l iKey Financial Performance Indicators

Indicators Value (‐‐/07/2012)Market Capitalization (INR mn) x1Total Enterprise Value (INR mn) x2EPS (INR)

Debt to Capital Ratio ‐ ‐ ‐ ‐ ‐

Interest Coverage Ratio ‐ ‐ ‐ ‐ ‐

Efficiency RatiosFixed Asset Turnover ‐ ‐ ‐ ‐ ‐

Asset Turnover ‐ ‐ ‐ ‐ ‐

Current Asset Turnover ‐ ‐ ‐ ‐ ‐


EPS (INR) x3PE Ratio (Abs) (‐‐/07/2012) x4

Working Capital Turnover ‐ ‐ ‐ ‐ ‐

Capital Employed Turnover ‐ ‐ ‐ ‐ ‐

Improved Decline

SAMPLE Public: Domestic Company – Company 1(3/4)

Key Business Segments Key Geographic Segments

100%

India

100%

Automotive Components

0%

50%

100%

x2% Finding 2

0%

50%

100%

x1% Finding 1

Business Highlights (1/2)

0%2011

0%2011

Description News

Overview

• Company is engaged in manufacturing and sales of integrated automotive components primarily in Country 1, Country 2 and Country 3 It produces parts for segment 1, part 1, part 2 and part 3 for segment 2,segment 3, and segment 4 and segment 5 Also, it manufactures components for various sectors, such as the sector 1, sector 2, sector 3, sector 4, sector 5, sector 6 and sector 7

• In Mar 201‐‐, company had raised ~INR x bn via issuance of foreign currency convertible bonds to fund acquisitions and other capital investments


Fund Raising bonds to fund acquisitions and other capital investments Previously, in Jan 20‐‐, company’s board was allowed to raise ~INR y bn via foreign debt instruments, such as GDRs, ADRs, FCCBs or other securities convertible into equity

SAMPLE Strategic Recommendations – Summary

Recommendation 1

Recommendation 2

` Recommendation 3Key

Recommendations

Recommendation 4


Recommendation 5

Thank you for the attentionThe Auto Ancillary Market – India 2013 report is a part of Netscribes’ Automotive and Transport Industry Series.For any queries or customized market research requirements, contact us at:Phone: +91 33 4027 6214/6215

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Disclaimer: This report is published for general information only Although high standards have been used in the preparation “Netscribes” is


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Date post:	19-Jan-2015
Category:	Automotive
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