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 Transmission
Indian Electrical Equipment
Machinery Industry
Electrical Motors
Wires & Cables 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 Share of Installed Power Generation Capacity 2007-08

outstripped capacity addition leading to a 8%

significant gap 25%

64%
3%

n Thermal n Nuclear
n Hydro 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

2003-04 558

2002-03 531
2001-02 515

2000-01 500

0 100 200 300 400 500 600 700 800

Billion Units (BU)
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 Expected Investment in Capacity Addition
plan period, the existing capacity would increase Total 104.54

by about 50 per cent. Rural Electricfication 4.43

Distribution Network
Augmentation & Upgradation 16.20
Transmission Network 22.63
Creation
Generation Capacity Addition 61.27

0.00 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’05 42

FY’04 287 FY’04 34
FY’03 266 FY’03 26 CAGR 27%

240 250 260 270 280 290 300 310 0 10 20 30 40 50

Source: Ministry of Heavy Industry, GoI, Source: Ministry of Heavy Industry, GoI,
www.indiastat.com 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’05 449 FY’05 11

FY’04 395 FY’04 9
FY’03 335 CAGR 16% FY’03 6 CAGR 35.4%

0 100 200 300 400 500 0 2 4 6 8 10 12

Source: Ministry of Heavy Industry, GoI,

www.indiastat.com 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 Transmission Equipments, Exports US$ Million

2004-05 830 2004-05 43

2003-04 653 2003-04 36
2002-03 328 2002-03 26
2001-02 306 CAGR 42% 34 CAGR 5%
2001-02
2000-01 203 2000-01 35

0 100 200 300 400 500 600 700 800 900 0 10 20 30 40 50

US$ million US$ million

Source: Engineering Exports Promotion Council Source: Engineering Exports Promotion Council

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December 2008

Apart from domestic demand, Exports have also been growing

Key factors favouring India as a manufacturing Electric Wires/Cables, Exports US$ Mn

base include India’s labour cost advantage and
2004-05 88
adequate supply of key raw materials such a steel 2003-04 80
and other metals 2002-03 38

2001-02 23 CAGR 45%

2000-01 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
Factor Conditions
Government
• Large scale investment in
power and related infra-
structure planned
• Ministry of Power aims to
build FDI and competition
in the electrical machinery
sector
• Efforts are on to make nu-
clear energy legally open for
private sector with assured
supplies
Source: KPMG Analysis
Firm Strategy, Structure,
and Rivalry
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
10
• Strong local and MNC
players
• Highly competitive industry
• Scale and Scope of product
offerings are a key
differentiator
Demand Conditions
• 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
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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

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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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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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December 2008

Attractive States for Investment

Factors used to assess states for the sector: Funds Released for Capacity generation by Individual States

• Demand conditions 2% 2%2%

3%
3% 17%
• P
 resence of supply sources of power like Hydro, 4%
Thermal, Wind, etc 4%

6% 11%
• P
 resence of supporting engineering industries
6%
in the states 11%
9%
Based on these, the following states emerge as 9% 11%

attractive locations:
n Gujarat n Haryana
• Gujarat n Maharashtra n Uttar Pradesh
n West Bengal n Rajasthan
• Maharashtra n Tamil Nadu n Andhra Pradesh
n Chhatisgarh n Karnataka

• Uttar Pradesh n
n
Himanchal Pradesh
Jammu & Kashmir
n Delhi n Assam
• Tamilnadu n Madhya Pradesh

Source: Ministry Of Power, GOI

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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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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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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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December 2008

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