Automobilies & Auto Ancillaries Setor Presentation

Unnati Sector Presentation

Automobiles and Auto Ancillaries
SSA- Selva Kumar
JSAs- Anish Surana, Varun Baxi

OVERVIEW



The Indian automobile industry is the seventh largest and the
second fastest growing in the world with the total production of
23.36 million units.



The contribution of the automotive industry to GDP has risen from
2.77% in 1992-93 to around 7% now.



The industry employees about 29 million people directly or
indirectly.



The Indian Automotive industry embarked on a new journey in
1991 with delicensing of the sector and subsequent opening up for
100 per cent FDI through automatic route.



Improving income levels, strong technological capability have been
boosting automobile demand in the country for past few years


 

India is emerging as an export hub.

INDUSTRY CLUSTERS
The automobile industry is concentrated in 4 key regions
•North: Delhi-Gurgaon-Faridabad
•West: Mumbai-Pune-Nashik-Aurangabad
•East: Kolkata-Jamshedpur
•South: Chennai-Bengaluru

Source: ACMA

SALES TRENDS
25000000

35
3573806

20000000

2898907

2937905

3110584

25

2319956

20

15000000
1804426

Sales

15

10000000
15481381
5000000

30

17361769

17793701

18423223

19752580

Percentage change

10
5

12295397

0
0

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

-5

Year
Domestic

Export

%DOMESTIC

%EXPORT

 AMP 2006-2016 trend shows the shortfall of about 25%
 Industry witnessed two difficult years, FY13 and FY14, in which
the segments across the industry witnessed de-growth, carrying
nearly 60% surplus production capacity

MARKET SEGMENTS
Motorcycles
Two Wheelers

Scooters
Mopeds

Automobile
s

Goods carriers
Three Wheelers

Passenger
carriers
Passenger cars

Passenger
Vehicles

Utility vehicles
Multi purpose
vehicles

Commercial
Vehicles
Tractors

Light
commercial
vehicles
Medium
commercial
vehicles
Heavy
commercial
vehicles

MARKET SHARE BREAKDOWN
Market Share by volume

Market Share by Revenue

Commercial
Vehicles

9%

13%
3%
3%

Passenger Vehicles
Commercial Vehicles
Three Wheelers

27%

45%

Two Wheelers

Passenger
Vehicles
Two Wheelers
others

81%

19%

 Two wheelers constitute the major portion of Auto industry with
around 81% of market share by volume.
 As far as revenue is concerned CV forms the major part of the
revenue earned thus the profit per unit is more in case of CV.
Source: ICRA research reports

COST BREAKDOWN
Cost Breakdown
 Raw Materials
 Power & Fuel Cost
 Employee Cost

34%

 Other Manufacturing
Expenses
57%

5%

 Selling and Administration
Expenses
 Miscellaneous Expenses

1%
2% 1%

 Major costs involved in case of the auto industry is raw material cost
 Lowering of commodity costs thus have resulted in the escalation of profit
margins for auto sector.

VALUE CHAIN
Transportation
Suppliers
(RM)

Tier 1&2
Suppliers

Automakers
(OEMs)

Regulations & certifications

Recycling

Source: Unnati Research

Repairs

Used Vehicle
buyers

Dealers

Customers

Financing & Insurance

Used Vehicle
Retailers

After Sales
Services

Porter’s Five Force
• High Competitive Rivalry: 100
% Fdi and proliferation of national
and international players.
• Moderate threat of new entry:
Low due to high capital requirement
but foreign players have done
considerably well
•Moderate threat of substitute:
Public transportation system
• High bargaining power of
customers: Multiple options
available and high competition
• Low bargaining power of
suppliers: High dependence
of suppliers on OEMs.

TWO WHEELERS - Overview
•
•

•

•

•

•

Indian Two-Wheeler Industry is the largest in the world as
far as the volume of production and sales are concerned .
India is the biggest two-wheeler market on this planet,
registering an overall growth rate of 9.5 percent between
2006 and 2015
The volume growth recorded in the 2014-15 fiscal year
stood at a commendable 14.8 percent on a year-on-year
basis
The estimated revenue of the two wheeler segment has
grown to about Rs 755 Billion with the sales of about 18
million units in 2014-2015
Overall growth was mainly driven by the scooters segment
which saw a strong growth of 25.2 per cent CAGR 20142015
Motorcycle segment saw a modest growth of 7.9 percent
CAGR in FY 2014-2015.

TWO WHEELER – Sales Trends & Market segments

Sales

20000000
18000000
16000000
14000000
12000000
10000000
8000000
6000000
4000000
2000000
0

40

1975111

1956378

2084000

2457597

20

1140058
9370951

30
25

1531619

11768910

35

13409150

13797185

14806778

16004581

Percentage change

15
10
5
0

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

-5

year
Domestic

Export

%DOMESTIC

%EXPORT

Market segmentation of 2 wheelers
Motorcycle scooters Mopeds

5%
28%
67%

Key Players

KEY GROWTH DRIVERS


Rural Demand
The scope for rural penetration is huge as only 32 per 1000 inhabitants
have 2W. Good monsoon, increased penetration of the players in terms of
dealership network will fuel growth



Favorable demographics
Around 33% of India’s population of 1.2 billion belongs to the age bracket
of 20-40 years. 150 million people will be added to the working population in
the next five years. The increasing number of women in the urban work
force will lead to the growth of gearless scooters

.



Low fuel prices



Under Developed Public transportation
Due to underdeveloped public transportation system in the urban areas and
the congested traffic situation in the urban areas people are preferring
scooters which are easy to drive and maneuver

KEY GROWTH DRIVERS – Contd.


Growth in Scooter Segment





o Rapid urbanisation and growth in income is causing high sales in
scooter segment witnessing around 15-16% growth. New model
launches including Activa i, Yamaha Ray has helped this segment to
grow
Growing reach of established players.
Entry of new players.
Increasing options of consumer finance to aid low income rural consumers.

KEY CONCERNS




Distribution costs
Dependency on rural economy which in-turn is highly depended on natural
and policy factors.
Environmental and safety concerns

MARKET SHARE IN TWO WHEELER INDUSTRY
Scooters Market Share

Motorcycle MarketBajaj
Share
Auto Ltd.

3% 1% 7%
25%
1%
14%
4%
45%

Hero MotoCorp
Ltd.

Hero MotoCorp
Ltd.
Honda
Motorcycle &
Scooter India
(Pvt) Ltd
India Yamaha
Motor Pvt. Ltd.
Mahindra &
Mahindra Ltd.
Royal Enfield
Motors

1%
1%
5%

16%

Honda Motorcycle
& Scooter India
(Pvt) Ltd
19%

Mahindra &
Mahindra Ltd.
58%

Two Wheeler market
Hero Motorcorp

HMSI

Tvs Motors

Others

Bajaj Auto

9%
13%

40%

11%
27%

India Yamaha
Motor Pvt. Ltd.

Piaggio Vehicles
Pvt Ltd
Suzuki Motorcycle
India Pvt. Ltd.
TVS Motor
Company Ltd.

OUTLOOK
•

The two wheeler industry which grew at about 9.3 percent in FY 15 saw a
slowdown in the second half of the fiscal due to the weak rural demand
owing to poor and untimely monsoon the poor demand majorly impacted
the demand of the motorcycles. In the current fiscal also in the first half the
demand for the motorcycles is estimated to remain low.

•

Scooters are expected to drive the demand for the two wheelers owing to
the increasing urbanization, growing middle class and increase in female
work force, convenience factor, higher utility perceived in intra-city
transport, growth in demand from urban and semi-urban areas, and better
rural infrastructure.

•

Due to the lower commodity prizes the operating margins are expected to
increase in this fiscal.

•

Due to the slowdown in the global economy exports may get hit on the
wake of weak global demand.

THREE WHEELERS - OVERVIEW

India is the world’s foremost producer, consumer and exporter of threewheelers (3W) over 40 % of the worlds three wheeler ply on the Indian
roads.
 The domestic market has registered an impressive growth of 10.8 % during
FY 14-15 in contrast to de-growth of 10.9% witnessed during FY 2014
 The demand improvement during the last fiscal has primarily been led by
pick-up in the passenger carrier segment, which has benefited by fresh
permit issuances across various cities.
 During the year, three-wheeler exports, which contribute almost 43% to
industry sales, have also grown by a healthy 15.4% over the previous year
on account
ofcontinue
higher demand
frompressure
South-East
 primarily
Sales of goods
carriers
to be under
withAsian
new and African
markets
product
introductions


in the Light Commercial Vehicle (LCV) segment

SALES TREND
1000000

60

900000

50

800000
700000

269968

361753

303088

600000

sales

500000

407957
353392

30

173214

20

400000
440392

526024

513281

538290

480085

531927

0
-10

100000
0

Percentage change

10

300000
200000

40

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

-20

Year
Domestic




Export

%DOMESTIC

%EXPORT

Total 3W sales have grown at a CAGR 10% over the past five years
from 2008-09 to 2014-15
Export contribution has also risen from 30% in 2008-09 to 42% in
2014-15 with Bajaj Auto being the largest exporter of three
wheelers.

MARKET SHARE

The Passenger Carrier segment is
dominated by Bajaj Auto followed by
Piaggio and TVS

The Goods Carrier segment is
dominated by Piaggio followed by
M&M while Bajaj has a low market
share due to their focusing on
passenger carriers only
Source: Macquairie Research report

GROWTH DRIVERS AND CONCERNS
DRIVERS








Greater reach within the area compared to other public transport means like
metro, buses.
Ideal for congested roads of India particularly because of increasing
urbanization.
Inadequacy of public transport to server the last mile transportation needs of
population.
Feasibility of carrying goods from low accessible areas like Tier 3 cities.
Low cost of ownership compared to taxis and small commercial vehicles.
Self-employment opportunity for youth.
Low operating costs both for passenger and goods carriers.

CONCERNS





With the successful launch of four-wheeled Small Commercial Vehicles
(mainly Tata ACE), the industry dynamics have altered – especially for the
cargo segment, considerably over the last five years.
Introduction of Bajaj RE60 which is scheduled early next year is expected to
create some turbulence in passenger carrier segment
Safety concerns due to an open tubular structure in passenger carriers as
well as odd number of wheels which add to instability 

OUTLOOK
•

Passenger transportation segment has been the engine of growth for the three
wheelers market and is expected to continue to do so.

•

The future of the passenger transportation segment is going to depend a lot
on the market response to RE 60 a qudaricycle by Bajaj Auto which is
expected to be launched later this year. Quadricycle is going to open an entire
new segment in automobile industry.

•

The cargo transporters have started preferring LCVs over lorry for carrying the
freight. The goods transportation segment is facing a stiff competition from
the LCVs like Mahindra’s chota hati, Ashok Leyland’s LCV and many others

•

With the continual up- gradation in the LCV segment it is going to get tougher
for the goods transportation segment

PASSENGER VEHICLES - OVERVIEW







•

Indian passenger industry has seen a drastic change in the post liberalization
era with Indian manufacturers like Maruti Suzuki, Tata Motors, Mahindra &
Mahindra, expanding their operations and global manufacturers like Hyundai,
Honda, Skoda coming up with their range of vehicles from small cars to SUVs
and sedans.
The economic recovery coupled with introduction of new models, easy
availability of finance and aggressive pricing by almost all the players has
helped the industry to post strong growth over the past few years
The domestic PV market has grown at a CAGR of 11.6% in the past five years
and exports growth has slowed at a CAGR of 10.6%
Passenger vehicle penetration in India is as low as 17 vehicles per 1000
people making it one of the lowest penetration levels among the key
developed and developing countries.
The industry hit a low of 4.5% decline in sales during FY 13-14. In 2014-15, a
gradual improvement in consumer sentiments with expectations of a higher
GDP growth, lower vehicle prices following excise duty cuts, and launch of
new models led to a 3.7 per cent growth in sales of cars & UVs. Lower cost of
ownership following a drop in crude oil prices also aided the boost in demand.

SALES TRENDS
3500000

35
30

3000000

559414

508783
444326

596142

622470
25

2500000
20
446145
2000000

15

1500000

10

Sales
2501542
1000000

2629839

2665015

2503509

2601111

5

1951333
0

500000

0

-5

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

Year
Domestic

Export

%DOMESTIC

%EXPORT

-10

Percentage change

MARKET SEGMENTATION

GROWTH DRIVERS


Low penetration levels
Currently the penetration levels in India for passenger vehicles is at 17 per
1000 compared to world average of 144 per 1000



Increasing per capita income
GDP growth rate of around 7-8% for the last four years has outpaced the
growth rate of many developed countries has been only next to China in terms
of percentage growth rate.





Favourable demographic profile
Around 40% of India’s population of 1.2 billion belongs to the age bracket of
20-55 years. This young population and changing lifestyles of the consumers,
provide a huge opportunity to OEMs to penetrate and expand their markets.
Low oil prices



Low Excise Duty



Low cost of ownership
Cheap financing costs available

MARKET SHARE
Passenger Cars Market Share
Maruti Suzuki India
Ltd.
12%

Hyundai Motors India
Ltd.

6%

Honda SIEL Cars
India Ltd.

8%
52%

Tata Motors
others

22%

UV Market Share
Mahindra &
Mahindra Ltd.

Vans Market Share

Maruti Suzuki
India Ltd.

11%
5%

30%

7%

Toyota Kirloskar
Motor Ltd.

14%

Maruti suzuki
MTBL

Tata Motors

7%

Ford India Ltd.
Renault India

11%
27%

others

53%
33%

Tata Motors

OUTLOOK
•

After witnessing tepid sales in 2014-15, passenger vehicles sales are expected to
improve in 2015-16 on the back of economic growth bolstering the consumer
sentiments

•

The lower penetration of Passenger vehicles provides a long term opportunity for
the Vehicle manufacturers. OEMS have lined up a slew of new launches in the
compact cars segment to attract first-time customers

•

While the prices of diesel and petrol have been sliding, the differential between
them has narrowed. This has led to consumers opting for cars operating on petrol
as diesel-operated cars are more expensive. The utility vehicles segment, which
majorly comprises of diesel-variants, will also suffer on account of this. The
segment’s sales growth is expected to decelerate during 2015-16.

•

Manufacturers have thus planned new launches in order to spur sales of the
segment. Most of the launches are in the compact utility vehicles segment, which
offers the features of a utility vehicle at a lower price and reduced size. These
vehicles are offered in petrol-variants as well. These will supplement sales of the
utility vehicles segment.

COMMERCIAL VEHICLES - OVERVIEW
•

The CV industry is cyclical in nature as the demand depends on the pace of
the overall economic growth (GDP) and industrial activity in particular (IIP).
Among segments, M&HCVs tends to be more influenced by the macroeconomic indicators than LCVs.

•

The current share of freight traffic in India through road is around 65%,
which is much higher when compared to other countries like US & China.

•

The domestic CV industry gradually came out of the down cycle during FY
2015 after two years of demand contraction. During the year, the M&HCV
segment recorded a growth of 16.0% in unit sales primarily led by sharp
uptick in replacement demand for Heavy Commercial Vehicles (HCVs) and
improvement in bus sales on back of STU orders

•

M&HCV segment seems to have bottomed out, the LCV Truck segment is
still experiencing sluggish trends (down 11.6% YoY) as significant capacity
addition over the past few years and constrained financing environment
amidst rising delinquencies remains a challenge for the segment

MARKET SEGMENTATION

SALES TRENDS
Sales Trend

Sales

1000000
900000
800000
700000
600000
500000
400000
300000
200000
100000
0

92,258

80,027

74,043

77,050

85,782

45,009

532721

2009-10

684905

2010-11

809499

793211

2011-12

2012-13

632851

614961

2013-14

2014-15

Years
Domestic

Export

%DOMESTIC

%EXPORT

70
60
50
40
30
20
10
0
-10
-20
-30

Percentage change

Market Share
CV Market Share

MHCV Market Share
Tata Motors

Tata Motors

6%
15%

25%

Ashok Leyland
Ltd.
47%

VECVs - Eicher
Force Motors
Ltd.

3% 2% 2%

VECVs Eicher

11%
55%

29%

Swaraj Mazda
Ltd.
MTBL

Others

Others

Passenger Carriers
Market Share
Tata Motors

Ashok Leyland
Ltd.
Force Motors
Ltd.

13%
9%

40%

18%

VECVs Eicher
others

20%

Tata Motors

Ashok Leyland
Ltd.

MTBL
3% 4%

LCV Market Share

5%
7%

39%

MTBL

6%
43%

Ashok Leyland
Ltd.
Force Motors
Ltd.
Others

GROWTH DRIVERS
• Improved industrial activity
• Uptick in agricultural output
• Replacement demand
• Implementation of Regulations on Overloading
• Demand from STU
• Demand from unorganized sector
• Improved bus operator profitability

KEY CONCERNS

• Competition in LCV
• High Dependence on economic
scenario
• Stiff competition from railways
• Slow income growth
• High inflation rate

OUTLOOK
• Healthy growth in sales coupled with declining steel prices aided in
registering profit at the operating level. New launches in the passenger
vehicles segment along with strong medium & heavy commercial vehicles
(M&HCVs) sales, bolstered sales growth. Improving sales growth has
resulted in better capacity utilization levels, which accompanied by
declining steel prices aided in containing raw material costs
• The expected improvement in industrial activity, steady agricultural output
and strong focus on infrastructure project execution, along with continued
capacity constraints in Railways, is expected to drive demand for MHCVs
• A shift towards higher tonnage vehicles, commissioning of dedicated freight
corridors (DFCs), and the structural decline in transporter profitability over
the last 3-4 years are expected to restrict further rise in sales of LCV.
• Demand for buses is expected to be driven by steady growth in urban
population and demand from schools and corporate, improved road
infrastructure and increase in inter-city travel. However, implementation of
metro rail and mono rail projects in several cities could hit further rise in bus
sales

TRACTORS - OVERVIEW
•

The Tractor industry has always been a barometer for the state of rural economy in
India.

•

The tractor industry did well in the last 5 years because of good monsoons, easy
availability of finance and initiatives from government to boost up agriculture and
agricultural machinery industry

•

Scarcity of farm labour, healthy credit availability, moderate penetration and
shortening replacement cycle are the major demand factors

•

Domestic tractor sales volume declined by 13.0% during FY15 owing to host of
unfavorable factors which include delayed and deficient monsoons, decline in Kharif
output, softening commodity prices, modest increases in MSP of major crops, lower
realizations in cash crops, altered rabi sowing pattern owing to delay in Kharif
harvest and farm losses due to extensive crop damages due to unseasonal rainfall
and hail storms in several key rabi cropping states

•

The Indian tractor industry has been classified into small, medium and large tractors,
based on the engine's horsepower (hp)

Sales Trends
Tractors Sales Trend
800000

80
70

700000

62677

600000

70772

60
75376

63147

500000

Sales

400000

40
37622

62872

30
634151

300000
200000

536891
402586

527768

551463

402286

20
10
0

100000
0

50

-10
2009-10

2010-11

2011-12
Domestic

2012-13
Export

2013-14

%DOMESTIC

2014-15
%EXPORT

-20

Percentage change

MARKET SHARE
Market Share

Market Share (upto 30hp)

Market Share (31-40 hp)

Mahindra &
Mahindra Ltd.

others; 9%

TAFE

Johndeere; 7%
Mahindra & Mahindra Ltd.; 38%
Escorts Ltd.; 10%

10%

6%

11%

International Tractors Ltd.; 12%
22%

TAFE; 24%

Market Share (51 and above hp)

12%

31%

Johndeere
New Holland
India
Escorts Ltd.

16%
26%

Others

14%

30%

Market Share (41-50 hp)

9% 15%
10% 43%
23%

Mahindra &
Mahindra
Ltd.

TAFE

Escorts Ltd.

International
Tractors Ltd.

others

TAFE
Escorts Ltd.
Others

others

Mahindra &
Mahindra Ltd.

5%

36%

International
Tractors Ltd.

International
Tractors Ltd.
10%

20%

VST
51%

Mahindra &
Mahindra Ltd.

GROWTH DRIVERS
•

Irrigation facility and monsoons

•

Landholding size

•

Stable farm incomes  

•

Easy availability of credit

•

Scarcity of farm labour

KEY CONCERNS AND SALES TREND
• Labour Cost: Labour forms the second most
important cost component for the tractor industry
it is a labour intensive industry. With the rising
labour costs the profitability of the tractor industry
gets hampered.
• Raw Material costs: Pig iron and steel forms 9095 percent of the total weight of tractor thus
becoming the major raw material used in tractor.
With the fluctuation in the commodity prices the
profitability of the tractor industry gets affected.

Source: ICRA research reports

OUTLOOK
•

Indian metrological department has released the monsoon
forecast and predicted there are 12 % of deficient
monsoons. Owing to the distributed and deficient monsoons
the sales for the tractors are expected to decline in this
fiscal. The third consecutive crop has been affected by the
monsoons in first quarter of FY16 the recovery for tractors
does not look promising in Q2 as well.

•

However on the account of rise in infrastructure
development projects and removal of bans from mining
sector the commercial demand for tractors is expected to
rise in FY 16.

Auto Ancillaries - Sector Overview
Rs. 2,348 billion (

Auto Ancillaries - Sector Overview

Industry Turnover
Turnover Breakup

2500

2348
2046

Organised

Unorganised

2160

2117

1883

2000

40
35
30
25

1500

1386

20

15%

15

1000

10
85%

5

500

0
0

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Industry Turnover (in 00' Cr)

Growth rate

-5

Market Segmentation

• OEM Market
• Capacities and Production in
line with schedule of OEM
• Requirements
• Quality
• Delivery Schedule
• Price Competitiveness
• Proximity
• Demand further segregated
based on various vehicle
segments

Market Segmentation
PVs
HCV
Three w heelers

2%
1%
4%
5%
45%
8%
22%
SCV

Two wheelers
MCV
Backhoe
loaders

Tractors
LCV
Others

Market Segmentation

• Replacement Market
• Acts as a Steadying Factor
• Better Bargaining Power
• Export Market
• India emerging as a Auto Component hub
• India Advantage:
• Lower Manufacturing Cost
• Superior Product Quality
• Shift to High-Tech products

Industry Classification

Industry Breakup

Segment Wise Production Breakup

19%
9%
10%
12%

Source: ACMA

31%
19%

Engine Parts
Drive, Transmission &
Steering Parts
Suspension and
braking parts
Equipment
Electrical parts
Others

Major Players by Segment
Component

Major Players

Engine Parts

Bosch, India Pistons, Rane Engine Valves,
Bharat Forge, Amtek Auto, Spaco
Carburettors,

Drive
Transmission &
Steering Parts

Axle India, Wheels India, Bharat Gears,
Sona Koyo, ZF Steering, Clutch Auto,
Rane Brake Lining

Suspension &
Braking Parts

Brakes India, Rane Brake Lining, Jamna
Auto, Munjal Showa

Equipment

Motherson Sumi, Phoenix Lamps, Lumax,
Premier Instruments and Controls, Jay
Bharat Maruti

Electrical Parts

Bosch, Lucas TVS

Value Chain

Base Raw Materials

Growth Drivers and Key Concern

Growth Drivers:
• Growth in Domestic Automotive Industry
• Replacement Demand
• Exports healthy growth of 15-20% - Rupee depreciation
• Rising share of revenues from non-automotive segment
• Onset of festive season

Key Concern:
• Threat of poor monsoon
• Spurious parts
• Free Trade Agreements

OUTLOOK
•

India a favourable destination for investment owing to


Infrastructure Development



Huge Domestic Market



Higher Purchasing Power

• Growing thrust on localisation and expanding businesses in new

geographies
• The components industry to grow at a relatively faster pace than the

auto OEM segment
• The auto component industry aims to cross the USD 100 billion mark

by 2020 as well as have exports amounting to USD 35-40 billion.

Tyre Industry - Overview
Overall Market Share

• The size of the Indian tyre
industry is estimated at
around Rs 450bn

4% 3% 2%
12%
27%
13%
19%
20%

• India has thirty-nine large and
medium tyre manufacturing
companies
• Top 10 players account for
over 95 percent of the

country's total tyre production
• Major Players – MRF, Apollo
tyres, JK tyres, Ceat, Birla
Source: Crisil

MRF Tyres
Others
CEAT Ltd
Goodyear India

Appollo Tyres
JK Tyres
TVS Srichakra
Ltd.
Falcon Tyres Ltd.

Value Chain

Value Chain

• Major Inputs
• Natural Rubber
• Petroleum Based Products

Breakup of Operating Costs

17%
6%
14%

62%

Raw Material Cost
Operating Margins
Employee Costs
Other Expenses

Value Chain

• Major Products
 

Value Chain

• Major Products
 

Industry Share - Market Wise

11%

Replacement
OEM
Export

28%
61%

Tyre Industry – Radialisation

• A radial tyre is a particular design of the tyre which reduces the
rolling friction of the tyre
• Achieves better fuel efficiency than vehicles with cross-ply tyres.
• The current levels of radialisation in India are:
 

• In the US, China and Europe, up to 90% of trucks run on radial
tyres
• Radial tyres cost 25% more than Crossply(or bias) tyres as the
proportion of synthetic rubber/natural rubber is more for radial
tyres. But the margins from radial tyres are also higher.
• Hence it presents a great opportunity for tyre manufacturers
especially in commercial vehicles segment.

Tyre Industry – Growth Drivers and Key Concerns
Growth Drivers:
•

Demand from OEMs

•

Demand from Replacement Market

•

Low Raw Material Costs

Key Concerns:
•

Cheaper Imports

•

Inability to pass on the price rise to OEMs

•

Radialisation

•

Competition in Export Market

 

OUTLOOK
•

A softer input costs regime over the past one year
 Huge Domestic Market
 Higher Purchasing Power

• Indian tyre industry is expected to show some healthy growth in
coming years
• Hurdles towards attaining growth could be raw material related price
volatility, rupee appreciation and the looming threat of cheap Chinese
imports
• The Indian tyre companies have to make a growth strategy of
continuous innovation and increasing emphasis on product
differentiation

Battery Industry – Segment wise Breakup

Battery Industry – Major Players

• Major Players -Exide industries, Amara Raja Batteries, HBL
Power Systems Ltd Luminous Power Technologies Pvt Ltd, SuKam Power Systems Ltd, Base Corporation Ltd
• Virtual duopoly in the industry with the top two players, Exide
and Amara Raja commanding over 80% of the organized market
share
• Unorganized sector contributes 60-65% of the replacement
market. It dominates the tractor and commercial vehicle
segments

Source: ICRA research reports

Battery Industry - Growth Drivers & Key Concerns

Growth Drivers:
• Growth in Automotive Industry

Battery Industry Cost Structure

• Growth in telecom and UPS
segments
• Power Shortage

18%

Lead &
Alloys
Polypropyle
ne
Others

2%

• Newer product applications
• Government policy
Key Concerns:
• Cheaper Imports from China
• Unorganized Market
• Uncertainty in lead price

80%

OUTLOOK
•

The battery market in India is experiencing growing demand Huge
Domestic Market

 Conventional sources
 Non-Conventional sources
• A healthy rise in the sale of batteries can be expected
 Both Exide Industries and Amara Raja Batteries are expected to
report a healthy rise in sales
• However, the growth in profits will be restricted
 Drop in lead prices

Thank You!