Presentation on theme: "Summer Internship Project Jayesh Halgekar FLAME School of Business"— Presentation transcript:
1Summer Internship Project Jayesh Halgekar FLAME School of Business Identifying and analyzing the market potential of forgings in the Non- Automotive sectorsSummer Internship ProjectJayesh HalgekarFLAME School of Business11th May 2009 – 11th July 2009
2Scope of the StudyThe study aims at analyzing the potential on the Non – automotive markets for forged productsThe sectors considered for the study includeOff- road equipment manufacturingDiesel Genset ManufacturingValve Manufacturing
3Indian Forging Industry Total installed forging capacity in India as of FY 2009: – 1.5 million MTTotal estimated forging production in India as of FY 2008: 1.1 – 1.2 million MTLargeMediumSmall9 – 11 units100 – 120 units230 – 250 unitsSource: Association of Indian Forging Industries (AIFI)
4Indian Forging Industry In ‘000 MTCUF:65%CUF:59%CUF:70%CUF:57%CUF:30%Year*CUF: Capacity Utilization FactorSource: Association of Indian Forging Industries (AIFI)
5Non Automotive sectors identified as potential market for forged products RailwaysOff – road equipmentOil & Gas refineriesDiesel Engines/ GeneratorsAviationSpace Exploration EquipmentDefense EquipmentAgricultural equipmentValvesShipping/ Ship BuildingPower GenerationIndustrial/ Heavy Engineering
6Open – die/ Hammer Forging/ Ring Rolling Forged products demanded by the Non Automotive industry commonly include following productsClosed – die ForgingsOpen – die/ Hammer Forging/ Ring RollingUnder-carriage components for excavatorsGround engaging tipsValve bodies and componentsEngine componentsChassis componentsAxle componentsFlanges (Weld neck/ Girth)RingsGearsNozzlesTube SheetsBlanksBlindsWheel sets for locomotivesBearing racesShaftsFly wheels
9Product – wise contribution in the industry Contribution in the industry which is estimated to beRs Crores as in 2008Excavator industry is thus valued at Rs Crores as in 2008Source: KPMG Analysis, CII – KPMG Report on Indian Infrastructure
10Excavator Manufacturing companies in India include Other potential entrants in the sector include:Liugong India Private LimitedGuangxi Liugong Machinery Company Ltd. (China), In association with Salgaocar Engineers Pvt. LtdXCMG Machinery India Pvt. Ltd.Terex VectraKobelco Construction Equipment Pvt. Ltd.Source: Primary survey and published news articles
11Share of individual companies in total excavator production in India for FY 2007 - 2008 Off-road equipment manufacturersEstimated annual production of excavatorsJCBTelcon Hitachi (Dharwad)Telcon Hitachi (Jamshedpur)L&T KomatsuBEMLOthersTotalSource: Primary survey and published news articles
12Components in an excavator which are generally forged SprocketsSpindlesRollersTrack linksIdlersGuide baseWheel hubsCounter pinsYokesLeversAxle beamsGearsShaftsTeeth
13Average no. of components per machine Number of individual forged components in an excavatorForged ComponentAverage no. of components per machineTrack links/ shoesRollersIdlers2Teeth5 - 10Sprocket wheelShafts15 – 30Counter Pin4Forged ring gear1Forged components contribute to not more than 5% of the total components in an excavator of which 90% is contributed by undercarriage components
14Components in an excavator which are generally forged Slewing bearing
15Estimated annual demand (in numbers) Total estimated demand for forged products in the excavator manufacturing industry in India for the FYForged componentEstimated annual demand (in numbers)LinksRollersSprocketsTeethIdlersRing gearExcel spreadsheet analysis
16Company-wise estimated demand for forged products in the excavator manufacturing industry in India for the FYCompanyUpper rollersBottom RollersIdlersBucket TeethTrack shoesSprocket wheelRing gearTATA Hitachi220008066711000270425236005500JCB India7000245003500110831458331750BEML11673833500137523917250L&T Komatsu10800432005400135002538002700Others9000405004500112502205002250
17Projected growth for the excavator manufacturing industry in India Projected production42%40%36%30%30%24%30%23%10%Year
18Greenfield projects in the sector BEML Ltd. has plans to set up a new manufacturing unit for defense products and parts for the Railways at the Kinfra Integrated Industrial Park.The company intends to invest Rs 260 crore in this venture. The first phase of the factory will come up on 400 acre at Sathyanathapalam in Kanjikode, Palakkad, provided on a long-term lease by Kinfra.Heavy equipment like bulldozers and earthmovers as well as heavy vehicles meant for defense use will be manufactured at the plant
19Greenfield projects in the sector Caterpillar India Ltd and the Tamil Nadu government have signed a Memorandum of Understanding (MoU) for a heavy engineering equipment manufacturing plant near Chennai with a capital investment of Rs 800 crore.The plant will manufacture equipment used in the construction and mining industry. Caterpillar India Ltd., will also be expanding its manufacturing capacity at its plants in Thiruvallur and Hosur in Chennai.
20Greenfield projects in the sector Terex Pegson & Powerscreen are opening a manufacturing plant in Hosur, India.The Indian plant is expected to start assembly operations in mid-2009 with additional manufacturing processes to be added over the long-term.
21Greenfield projects in the sector Escorts Construction Equipment will invest Rs 60 crore to set up plants in Vallabhgad in Haryana and Rudrapur in Uttaranchal.Another Rs 130 crore is likely to be invested in five years. The company, which exports some 100 units a year now, plans to increase exports to 500 units within a year.
22Greenfield projects in the sector JCB Chairman Sir Anthony Bamford officially opened the company’s newly extended $ 60 million backhoe loader factory in India, the largest plant of its kind anywhere in the world.The factory in Ballabgarh, Faridabad, has undergone huge expansion, doubled its capacity and enables JCB to produce 100 backhoes a day.The existing backhoe plant area was 24,000m2 but now totals 33,574m2 including assembly line, paint shop, fabrication, transmission, logistics, utility, pre-delivery inspection and hot test area.
23Greenfield projects in the sector Ashok Leyland Ltd has entered into a JV with John Deere, for manufacturing and marketing of construction equipment.
24Greenfield projects in the sector Telco Construction Equipment Company Ltd is setting up earth moving equipment factory in Kharagpur spread over 250 acre.
25Greenfield projects in the sector Liu Gong Group is planning to open a manufacturing facility at Indore in India, at an investment of Rs 150 crore which will be operational by May 2009.They plan to start with wheel loaders and hydraulic excavators, and increase their product profile later.The facility at Indore will have the capacity to produce 500 units of machines per annum, and will be increased as per the demand.The Liu Gong wheel loader was named China's top brand and sold about 32,000 such loaders in ‘08 globally to emerge as the second largest loader manufacturer in the world after Caterpillar
26List of excavator manufacturing facilities across the globe Prominent multinational companies in excavator manufacturingList of excavator manufacturing facilities across the globe
27Prominent undercarriage component suppliers in the world Berco SpAITR AmericaYantai Huhui Machinery Co. Ltd., ChinaParco Track Company, South KoreaITM ItalyDaechang Forging Co. Ltd., South KoreaIVA Johann GmbH, Baumaschinentechnik, GermanyTaiheiyo Seiki KK., Tokyo Japan
28Prominent undercarriage component suppliers in India Ramkrishna ForgingsIndia ForgingsVishnu ForgingsLocal (unorganized) forging companies in Kolhapur and Faridabad
29Marketing recommendations for MFL Forged components being priced higher than substitutive castings for similar application, Indian manufacturing facilities prioritize cost reduction over material physical properties thus giving a preference for usage of cast and fabricated components in excavatorsA similar scenario is not observed in manufacturing facilities in other parts of the globe where only forged components are used. This gives MFL a reason to focus on overseas excavator manufacturing facilities as potential marketsHowever, for an impressive and successful marketing plan for overseas excavator manufacturing facilities, MFL should be able to boast of serving the Indian operation divisions of MNCs like JCB, Hyundai, Komatsu, etc.If MFL foresees a potential in the industry sector, they may consider entertaining small quantity orders from PSUs like BEML and Ordnance factories who integrate undercarriage systems in their products
30Marketing recommendations for MFL Forged products demanded by the earthmoving equipment industry do not require high finishing, accurate machining or close tolerance considering their application. This enables the unorganized sector in the forging industry to easily cater to the demand thus making the competition severe in terms of priceEfforts for developing customer relationships moving from supplier to development partner and full service provider (design to development) of finished products would prove fruitful especially for overseas marketsCompanies like Caterpillar India Ltd. and BEML have in-house engine manufacturing facilities which can be targeted by MFL for supplying engine components if has not done so already. As a registered supplier to the engine division MFL may seize opportunities to market their capability for under carriage components to the excavator manufacturing facility under the same business houseWith an increase in rental services for earth-moving equipment, spares market too is on the rise. MFL may consider the opportunity of supplying to dealers and trading companies for excavator spares
31Allied recommendations for MFL Employing a dedicated marketing team for the non-auto sector which would not be independent of Mahindra Systech may be considered by MFLThe projected rates of growth for the sectors considered in the study provides a promising demand for forged products in the futureWith automation on the forefront at MFL, they should also consider branding themselves with Clean Development Mechanism (CDM) to provide an impressive carbon footprint on their portfolioEnergy conservation and efficiency mechanics can be considered for implementation for the high power consuming hydraulic pressesInvestment in renewable sources of energy like wind and solar power may be considered which would also provide tax benefits and portray MFL as an organization with green initiatives. CNG buses for employee transport too could be promoted. The green identity may prove to be a novel idea while marketing the MFL profile to global OEMs