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T&D : A Global Market


T&D Equipment Market (2011)
Total Regions Americas (25%)
~$72 Bn

CAGR% (08-10)(10-15f)(15f-20f) 4.6 6.6 7.2 3.7 (1.2) 6.1 2.6 (2.3) 16.3 6.3 3.8 5.9 3.6 3.2 4.9 6.4 5.4 2.2 5.1 2.7 5.2 8.6 3.9 3.1 6.5 7.5 6.3 3.5 7.4 5.0

Latin Am. North Am. Europe Russia + CIS Africa Middle East Rest of Asia India China

India accounts for 6% of the Global T&D Market India a fast growing market

EMEA (36%)

Asia (39%)

World T&D Market

With Global Competitors.


T&D
World market, $bn
CAGR% (2011-15f)

Players
World market, $bn
72

87 8 72 6 10 10 9 10 12 15 2011 14 18 2015f 11 14 10 12

Total

4.3

Others CG Baoding Tianwei Hyosung GE XD Hyundai Schneider Toshiba TBEA Alstom

Automation 6.5 PE System MV SW HV SW DT PT 1.0 8.2 3.2 4.8

Siemens

3.2 4.0

ABB

Source:2011 forecast, L.E.K. Research, Interviews & Analysis

Changing Rules for Indian Players


3% 14% 19% 64%

Emerging Competition
Growing market share of Asian Imports stronger than Export
2007-12 CAGR Import --- 19% 2007-12 CAGR Export --- 11%

PGCIL Market Share FY 08/09 FY 11/12 ( 765 kV TX, S/S) Major Competitors PBT % (2011.03-2012.06)
16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Mar 11 Jun 11 Sep 11 Dec 11 Mar12 IT; Jun12 Source: Annual Reports, Quarterly results, Presentations to analysts

Decreasing Profitability
Major T&D PBT % (2011.03-2012.06)

Industry Key Challenges


Because Cost Competitiveness Labor Material Mature markets open to low cost suppliers Chinese / Korean competitive threat

Technology/Innovation

New needs for Strong Indian Power Quality Standards Affordable technologies

Critical Mass

Global needs Scale effects Credibility

Keeping Labour Costs Competitive


While supply of labour will keep wage growth moderate overall, the skilled sector will be in serious demand causing real average wage increases. While China will lose its competitiveness to India but other regions gain these are a threat to export market manufacture. Especially given logistics advantages.
Rp pa Indexed return per unit of wage Output per Average India China Indonesia Poland Mexico worker wage 2002 103,733 86,314 1.20 2007 156,418 114,741 1.36 2012 206,832 150,643 1.37 1.83 1.45 1.29 1.26 2017 269,951 191,785 1.41 2022 332,414 232,281 1.43 1.51 1.50 1.32 1.27 2027 391,265 270,100 1.45 2032 447,425 305,917 1.46 1.30 1.54 1.34 1.28
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Skilled Workforce: A Threat and Market Opportunity

Raw Material Cost Availability in India


105 100 95 90 85 80 75 T&D index

Get Critical Raw materials Available

Technology/ Innovation

UHV

HVDC

FACTS

Renewables

Smart Grid

Becoming Global: Size Matters


Generalist players

Local Reach

Global Reach

Estimated 2011 sales $5bn

Specialist players
Note: *Motors, generators, drives and automation; **Network Power, Industrial Automation and Appliances divisions Source: L.E.K. Research, Interviews and Analysis

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Take Away

T&D A Growing Market Driven by Asia India Market Requesting Indian Specific Solutions Indian Industry active but. collective action required

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