Machine Tools September 2006 . MACHINE TOOLS Market Overview Government regulations & policy Advantage India and business opportunities

Machine ToolsSeptember 2006

www.imacs.in

MACHINE TOOLSwww.imacs.in

• Market Overview

• Government regulations & policy

• Advantage India and business opportunities

Contents


Market Overview• Market Overview




Indian Machine Tools sector is very small in comparison to the global market sizeGlobal 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%)

Market Overview

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


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

Market Overview

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.


Production has grown at a high rate during the period 2002 to 2005

Market Overview

CNC Conventional

Meta

l F

orm

ing

Meta

l C

utt

ing

Production Rs 528 mn CAGR 47%

Production Rs 860 mn

CAGR 30%



70% of production

87% of production

bending machines, presses, cold-heading machines,, shears, coil slitters, and

stamping machines

Turning centres, Machining centres, grinding centres (70% of total metal cutting

output)


Metal Cutting constitutes bulk of the exports

74

320

75

472

61

463

0

100

200

300

400

500

600

2002-03 2003-04 2004-05

Metal Forming Metal Cutting

Export of Machine Tools (By Operation)

Machine centres, Lathes, Electro discharge machines and HSC drilling tools together account for ~75% of exports ( in FY 2005 )

Market Overview


Shortage in production capacity has resulted in rising imports

4507

5093

9655

7420

18208

10360

0%

20%

40%

60%

80%

100%

2002-03 2003-04 2004-05

Imports Domestic Production

• The surge in domestic demand, capacity constraints and lowering of import duties have led to a doubling of imports

• The percentage share of imports in total consumption has also risen from 47% in 2002-03 to 64% in 2004-05

Market Overview

Consumption Breakup - Machine Tools India


Domestic demand fuelled by growing end user industries

Auto Components

Automotive

Capital Goods

Consumer Durables

Domestic market grown at a CAGR of over 11% ( FY 2000 - FY 2005). Exports have grown even higher at about 25% CAGR

Domestic market size at USD 8.7 bn and growing at a rate of 15% per annum. Industry estimated to grow at 25% till 2010.

Grown at about 20% in FY 2006. Government’s thrust on infrastructuredevelopment, 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. The growing middle class, rising affordably, changing lifestyles have all contributed and continue to contribute to this sectors growth pace.

Market Overview


Government regulations & policy• Market Overview




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

Government regulations & policy


Advantage India & business opportunities• Market Overview




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

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


Leading players have built substantial capabilities

Pioneer in Machine tools business in IndiaLeading manufacturer of conventional and CNC machines Revenues of INR 2902 mn

Largest machine tool manufacturer in the Private sectorCollaboration 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 IndiaMachine tool business revenues of INR 400 mn



Leading players have built substantial capabilities

Kennametal India

Lakshmi Machine Works is a leading engineering and machine tool manufacturing CompanyProduces CNC machine toolsAlso has supporting foundry division to manufacture castingsMachine tool revenues close to Rs.1000 mn

Kennametal India Limited is the largest cutting tools manufacturer in India and is a Subsidiary of Kennametal, GermanySales revenues of INR 3631 mn

Other Leading Players are:

Heavy Engineering Corporation; Motor Industries Company Limited; Lokesh Machines LimitedPremier 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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Machine Tools September 2006 . MACHINE TOOLS Market Overview Government regulations & policy Advantage India and business opportunities