E L E C T R I C A L M A C H I N E RY December 2008
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ELE C TRI C A L M AC H I N E RY December 2008
The Electrical Machinery Industry in India can be classified into the following segments Generation Equipment Boilers Turbines Generators
Others Electrical Motors Wires & Cables
Indian Electrical Machinery Industry
Transmission Equipment Transformers
Distribution Equipment Switch Gears Control Gears
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ELE C TRI C A L M AC H I N E RY December 2008
India uses several sources of power and power generation has been growing steadily over the years However, growth in demand for power has outstripped capacity addition leading to a significant gap
Share of Installed Power Generation Capacity 2007-08 8%
25%
64% 3%
n Thermal n Hydro
n Nuclear n Other Renewable
Source: Ministry of Power, GoI
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ELE C TRI C A L M AC H I N E RY December 2008
India uses several sources of power and power generation has been growing steadily over the years Growth in Power Generation 2007-08
705
2006-07
664
2005-06
618
2004-05
587 558
2003-04 2002-03
531
2001-02
515
2000-01
500 0
100
200
300 400 500 Billion Units (BU)
600
700
800
Source: Ministry of Power, GoI
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ELE C TRI C A L M AC H I N E RY December 2008
Significant investment in capacity addition across segments is planned It is expected that by the end of the current plan period, the existing capacity would increase by about 50 per cent.
Expected Investment in Capacity Addition 104.54
Total
4.43
Rural Electricfication Distribution Network Augmentation & Upgradation Transmission Network Creation Generation Capacity Addition 0.00
16.20 22.63 61.27 20.00 40.00
60.00 80.00 100.00
120.00
US$ Billion
Source: Ministry of Power, Gol
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ELE C TRI C A L M AC H I N E RY December 2008
All segments in the Electrical Machinery sector have been experiencing robust growth Turbines Production, US$ Million
Switchgears & Control-gears production, US$ Million
FY’05
302
FY’04
FY’05
287
FY’03
FY’04
266 240
250
260
270
42 34
FY’03 280
290
300
310
26 0
Source: Ministry of Heavy Industry, GoI, www.indiastat.com
10
20
30
CAGR 27%
40
50
Source: Ministry of Heavy Industry, GoI, www.indiastat.com
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ELE C TRI C A L M AC H I N E RY December 2008
All segments in the Electrical Machinery sector have been experiencing robust growth Boilers Production, US$ Million
Motors - Power Consumnption, Million HP
FY’05
FY’05
449
FY’04
FY’04
395
FY’03
335 0
100
200
300
400
11 9
FY’03
CAGR 16% 500
0
Source: Ministry of Heavy Industry, GoI, www.indiastat.com
CAGR 35.4%
6 2
4
6
8
10
12
Source: Ministry of Heavy Industry, GoI, www.indiastat.com
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ELE C TRI C A L M AC H I N E RY December 2008
Apart from domestic demand, exports have also been growing Electrical Machinery Exports, US$ Million 2004-05
Transmission Equipments, Exports US$ Million 830
2003-04
2004-05
653
2002-03
328
2000-01
CAGR 42%
100
200
300
26
2000-01 400
500
600
700
800
900
35 0
US$ million
CAGR 5%
34
2001-02
203 0
36
2002-03
306
2001-02
43
2003-04
10
20
30
40
50
US$ million
Source: Engineering Exports Promotion Council
Source: Engineering Exports Promotion Council
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ELE C TRI C A L M AC H I N E RY December 2008
Apart from domestic demand, Exports have also been growing Key factors favouring India as a manufacturing base include India’s labour cost advantage and adequate supply of key raw materials such a steel and other metals
Electric Wires/Cables, Exports US$ Mn 2004-05
88
2003-04
80 38
2002-03 2001-02
23
2000-01
CAGR 45%
20 0
20
40
60
80
100
Source: Engineering Exports Promotion Council
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ELE C TRI C A L M AC H I N E RY December 2008
India offers several advantages that contribute to growth in the sector India’s comparatively cheaper and skilled workforce can be effectively utilized to set up large low cost production bases for domestic & exports market
Firm Strategy, Structure, and Rivalry
Factor Conditions
• Strong local and MNC players • Highly competitive industry • Scale and Scope of product offerings are a key differentiator
Demand Conditions
Government
• Large scale investment in power and related infrastructure planned • Ministry of Power aims to build FDI and competition in the electrical machinery sector • Efforts are on to make nuclear energy legally open for private sector with assured supplies
Related and Supporting Industries
• High level of capability in engineering sector • Highly developed steel and other metals production units with adequate supplies of ores • High private sector interest in distribution and transmission
• High demand as larger parts of the country are coming under electrification • GDP growth at above 9per cent and industry growth touching two digit levels • Major parts of national and urban railway systems switching to electric power
Source: KPMG Analysis 10
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ELE C TRI C A L M AC H I N E RY December 2008
The sector offers opportunities for growth, but will require investment in technology Threat of New Entrants • Well established players • Technology intensive sector • Requires significant investment Supplier Power • Adequate supplier base • M ost suppliers are small in scale and size as compared to manufacturers Competitive Rivalry
HIGH
• T echnology and product range are the key differentiators
MEDIUM
• Ample opportunities for growth
LOW
• Well established players 11
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ELE C TRI C A L M AC H I N E RY December 2008
The sector offers opportunities for growth, but will require investment in technology Customer Power • Number of players and product range • M anufacturers extending offerings to include services as well Threat of Substitutes • No substitutes currently for products in the sector Source: KPMG Analysis
HIGH MEDIUM LOW
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ELE C TRI C A L M AC H I N E RY December 2008
Critical success factors for manufacturers in the sector Capability to Invest • B uyer segments are very large players and prefer an assured supply with scale benefits from a consolidated supplier base. Technology • F actors like upgradation of transmission lines to higher capacity levels, larger scale generation units, etc are leading to significant changes in technology requirements Spectrum of Products and Services • U ser industries differentiate on scale and scope access to a business relation with any such player would entail build up of a range of capabilities and products
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ELE C TRI C A L M AC H I N E RY December 2008
Attractive States for Investment Factors used to assess states for the sector:
Funds Released for Capacity generation by Individual States
• Demand conditions
3% 3%
• P resence of supply sources of power like Hydro, Thermal, Wind, etc
2% 2%2% 17%
4% 4% 11%
6%
• P resence of supporting engineering industries in the states
6% 11%
9%
Based on these, the following states emerge as attractive locations:
9%
n n n n n n n n n
• Gujarat • Maharashtra • Uttar Pradesh • Tamilnadu
Gujarat n Maharashtra n West Bengal n Tamil Nadu n Chhatisgarh n Himanchal Pradesh Jammu & Kashmir
11%
Haryana Uttar Pradesh Rajasthan Andhra Pradesh Karnataka
Delhi n Assam Madhya Pradesh
Source: Ministry Of Power, GOI
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ELE C TRI C A L M AC H I N E RY December 2008
Profiles of Key Electrical Machinery Players in India Bharat Heavy Electricals Ltd • B HEL has, emerged as the forerunner in technology on equipment for power plants, contributing to about 70 per cent of market requirements • T echnology absorption through technical collaborations with world leaders has contributed to BHEL’s achievements. The collaborations include Prommashenport of CIS; General Electric, Combustion Engineering, National Oil Well, all from the USA; Sulzer of Switzerland; Hitachi and Toa of Japan; Siemens of Germany; Asea Brown Boveri of Canada; Flakt of Sweden; Alstom and Neypic Creusot-Loire of France; and Weir of the UK
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ELE C TRI C A L M AC H I N E RY December 2008
Profiles of Key Electrical Machinery Players in India Crompton Greaves • It is India’s largest private sector enterprise, extensively engaged in designing, manufacturing and marketing high technology electrical products and services related to power generation, transmission, distribution as well as executing turnkey projects • It is one of the largest supplier of industrial systems • C G acquired Pauwels and Ganz to complete its product range in transformers, enabling it to leverage both in domestic and exports markets
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ELE C TRI C A L M AC H I N E RY December 2008
Profiles of Key Electrical Machinery Players in India ABB • W ith a wide product range, global competence and ability to provide end-to-end solutions, ABB is also one of India’s leading power systems producer • Its ability to provide end-to-end solutions (from design to execution from its wide range of power systems and automotive technology products), gives ABB a sustainable competitive edge • A BB also has capabilities in design, procurement and implementation of automation drives for process industries
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ELE C TRI C A L M AC H I N E RY December 2008
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