Construction equipment market in india 2014

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Construction Equipment Market – India
April 2014

2CONSTRUCTION EQUIPMENT MARKET IN INDIA 2014.PPT
Executive Summary
Market
Huge investment in infrastructure construction presents a major growth opportunity to the
Indian construction equipment market
Global construction Equipment market is expected to reach INR a1 bn in 20-- growing at a
CAGR of x% over 20-- - --
Domestic market is expected to grow at a CAGR of y% over 20-- - 20--
Drivers &
Challenges
Competition
Drivers
 Robust Economic Development
 Growth in Infrastructure
 Development of Mining Industry
 FDI Inflow in Construction Industry
 Growth in Housing and Construction Market
Challenges
 Land Acquisition Problems
 Project Bottlenecks
 Crude Oil Price Hike
 Rising Steel Prices
 Lack of Skilled Labor
Major Players
Player A Player B Player C
Player D Player E Player F
Government
Initiatives
Manufacturing Sector Policies
Upcoming Regulations
Required Initiatives

•Macro Economic Indicators
•Market Overview
 Global
 India
•Construction Equipment Segments
• Product – wise
• Service – wise
•Sector wise Demand
•Drivers and Challenges
•Government Initiatives
•Trends
•Opportunity Areas
•Recent Developments
•Competitive Landscape
•Strategic Recommendations
•Appendix

4
SAMPLEEconomic Indicators (1/3)
GDP at Factor Cost: Quarterly
Inflation Rate: Monthly
0.0
0.2
0.4
0.6
0.8
1.0
%
Dec 20-- - Jan 20--
E
Nov 20-- - Dec 20--
D
Oct 20-- - Nov 20--
C
Sep 20-- - Oct 20--
B
Aug 20-- - Sep 20--
A
ONLINE MARKETING IN INDIA 2014.PPT
Q3
d3
c3
b3
INR tn
Q4
c4
b4
a3
Q2
d2
a4c2
b2
a2
Q1
d1
c1
b1
a1
20-- - --20-- - --20-- - --20-- - --

5
SAMPLEConstruction Equipment Market – Global EXIM
Global Construction Equipment Market – Export Import Scenario
ExportScenario
Import Scenario
20-- yy1 y2 y3
20-- xx1 x2 x3
Country A
Country B
Others
Aa1 a2 a3
20-- Bb1 b2 b3 b4
20-- a4
Country A
Country B
Country C
Others
The USA, China are the top two countries in the worldwide construction equipment exports
Among the top ten exporters of construction equipment, Country M was the country that registered the highest
increase in its imports in 20-- with a rate of x%
CONSTRUCTION EQUIPMENT MARKET IN INDIA 2014.PPT

6
SAMPLEEarth Moving Construction Equipment (1/x)
Backhoe Loader Market Segmentation (2013) Backhoe Loader Market Share (2013)
• Backhoe loader comprises tractor, front shovel/bucket and small backhoe in the rear and constitutes a
multipurpose equipment which is extensively used in small to medium infrastructure projects
• Small Backhoe loader accounts for x1% of the total backhoe market but this segment is expected to grow over
next few years
• Large backhoe loaders account for x2% of the overall backhoe loader market
• CASE Construction equipment holds the 2nd position in overall backhoe loader market in India
Backhoe Loader – Market Overview (1/x)
y2
y1
y2y1
x1
x2
x2x1

7
SAMPLE
Crawler Excavator – Market Share
• Crawler Excavators is one of the largest segment in earth
moving construction equipment market
• The market accounted for about a% of the total earth
moving equipment market in 2013
• Telcon a joint venture of Tata and Hitachi Construction
Machinery is the market leader in excavators and mainly
produces crawler excavators
Crawler Excavators – Market Overview
Major Players
Player 1
Player 2
Player 3
b2
b1
b2b1
Crawler Excavator – Market Segmentation
Note: Share as of 2013Note: Share as of 20132
a2
a1
a2a1
Earth Moving Construction Equipment (3/x)

8
SAMPLE
Mini Excavator Demand Share
• Mini excavators are slowly emerging as ideal equipments
for earthmoving purposes in the urban areas
• It was first launched in Europe followed by North America
• Mini excavators were first introduced in India by Telcon
• They are also referred to as lower end excavators
Mini Excavators – Market Overview
Major Players
Player 1
Player 2
Player 3
m2
m1
m2m1
Note: Mini Excavators: 14 tonnes
• x1
• x2
• x3
Earth Moving Construction Equipment (4/x)

9
SAMPLE
Concrete equipment market is further divided into various
segments
Concrete Equipment Market – Segmentation
Market Segmentation (2013) Market Segmentation (2014 e)
a2
a1
a3
a4
a2
a1
a4
a3
b4
b3
b1
b2
b1 b3
b4b2
Transit Mixers accounts for around x% market share, where as Concrete Pumps accounts for around y% market share
in the overall concrete equipment market in 20--

10
SAMPLE
Material Handling Market is further divided into various
segments
Material Handling Market - Segmentation
Market Segmentation (2013) Market Segmentation (2014 e)
a4
a5
a3
a2a1
a4
a5a3
a2
a1
a5 a2a1
a3
a4
a1 a5
a2
a3
a4
Pick and Carry accounts for around x% market share, where as forklifts accounts for around y% market share in the
overall material handling equipment market

11
SAMPLE
Cranes account for the highest share of demand in the
material handling equipment segment
Material Handling Equipment Market
Crane Market Regional Demand – 2013
Crane Market Ownership – Structure 2013
Crane Market - Overview
• Indian cranes market is highly fragmented and is
characterized by the presence of more than 200
manufacturers
• Crane rentals account for x%-y% of the total market
Crane Market Segmentation – 2013
y2
y1
y2y1
x2
x1
x2x1
d1
b1
c1 a1 d1b1
c1a1

12
SAMPLE
• Indian forklifts market is still at its nascent stage and is
primarily being driven by the growth in warehousing, retail
and infrastructure
• Forklifts operating in the Indian market are of three types,
diesel trucks, electric trucks and LPG trucks
• Being a small market major forklift technologies in
operation are slow in penetrating the Indian market leading
to rise in influx of Chinese forklifts
Forklifts – Market Overview (1/2)
• A
• B
• C
Forklifts Market Scenario
Major Players
Godrej
Voltas
Forklift Market Segments (2013)
a3
a2
a1
a3
a2
a1
Cranes Market Overview (5/7)

13
SAMPLE
Road Construction equipments segment accounted for a%
of the total construction equipment market in 2013
• Road construction equipment market is expected to
witness robust growth owing to surge in demand
from rise in infrastructure projects
• Government focus on infrastructure develop will
translate into higher demand for this market
• xx accounts for y% revenue in the overall domestic
market
Road Construction Equipment Market
Road Construction Equipment Market Size
0
10
20
30
40
INR bn
2018e
f
2017e
e
2016e
d
2015e
c
2014e
b
2013
a
x
y
x y
Revenue Share (2013)

14
SAMPLE
Capital constraints and strict project timelines are
promoting the demand for rental equipments
• Rental equipment market in India is still at its nascent
stage
• Equipment rental market is expected to reach INR f
bn in 2018 at a CAGR of x% over 2013 – 2018
• Rental market in India is highly fragmented with the
organised sector accounting for x1%of the market
Equipment Rental Market - Overview Equipment Rental Market Growth
Rental Equipment Market Segments (2013) Equipment Rental Market Share – (2013)
y2
y1
y2y1
0
20
40
60
80
100
120
2016e
d
2015e
c
2014e
b
2013
a
INR bn
+13.0%
2018e
f
2017e
e
x2
x1
x2x1

15
SAMPLE
Construction Equipment – Infrastructure Demand
•Indian road sector is the second largest in the world
having a total length of x mn km
•As of August 2013, around a% of freight and b%
passenger traffic is carried by the roads
•National highways account for around m% of the total
road networks and handles around n% of road traffic
•NHDP projects are being implemented in seven
phases, which envisages to improve more than xx km
of arterial routes
Construction Equipment – Share of Expenditure
Planned Investment in RoadsNHDP Status
Roads - Overview
xx%-yy%
Construction
Equipment
Costs Share
0
2,000
4,000
6,000
8,000
10,000
INR bn
bb
B
bb3
bb2
bb1
aa
A
aa2
aa1
CCBBAA
0 10,000 20,000 30,000 40,000 50,000
yy
kms
xx xyzzz
yy zzxx
Note: Status as of 31st January 2014

16
SAMPLE
Corporate
• Demand for office spaces have increased
following the growth in IT and ITES sectors
• Off shoring operations of the foreign
multinationals have added to the demand
Residential Market
• Growing urbanization and income have
fuelled the demand for residential units
• This sector is witnessing a demand for
luxury and premium residential units
• Rise in housing finance penetration and tax
incentives to further expand this sector
a%-b%
Share of
Construction
Equipments
Costs in
Buildings
Metro Cities Office Demand
0
10
20
30
gh
2014e
h
2013
g
Mn sq ft
Note: Metro Cities include Delhi-NCR, Mumbai, Bengaluru, Chennai, Pune, Hyderabad and Kolkata
Real Estate Market – Segmentation (1/x)

17
SAMPLE
Foreign direct investment in construction industry and
construction equipments will ensure market growth
• Currently, x% FDI is permitted in the construction industry under the Foreign Investment
Promotion Board (FIPB)
 According to th FDI policy, a three-year lock-in period for investments in housing and townships is required
FDI Inflow in Construction Industry Impact
• FDI inflow for the construction industry is expected to increase owing to the following steps initiated by the GoI
 The housing ministry has proposed that the minimum lock-in period needs to be reduced in order to attract more FDI investment
 It has also proposed that the build up area should be reduced to x sq m from y sq m and the minimum capitalization should be reduced to INR aa mn from bb mn
for wholly owned subsidiaries
Cumulative FDI inflows in the
earth moving machinery
segment was INR xx mn during
Apr 2000 to Sep 2013
Sector Wise FDI Equity Flow (From 2000 – 2012 ) - %age with total FDI Inflows
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Service Sector a10
Construction Development a9
Telecommunications a8
Computer Software & Hardware a7
Drugs & Pharmaceuticals a6
Chemicals a5
Power a4
Automobile Industry a3
Metallurgical Industries a2
Hotel & Tourism a1
%

18
SAMPLE
Impact
Lower profitability due to rising costs of steel imposes a
major hindrance on market growth
Rising Price of Steel
• Construction equipment market is facing the impact of inflation in terms of hike in price of raw
materials
• Rise in steel prices adds to the cost disadvantage as steel is a primary raw material for the
construction equipment industry
• Steel prices have been increased by x-y % in Q3 20--
Price of raw materials is vital for determining the profitability of the Indian construction equipment market
80,000
60,000
40,000
20,000
0
INR
xy
2012
yy
2010
xx
60,000
40,000
20,000
0
INR mn
2012
nn
2010
mm
Chennai - Price Hike Kolkata - Price Hike
Rise in steel price across some of the
metros
Rise in Steel Price
0
10,000
20,000
30,000
40,000
aa
Dec 2012
d
Mar 2012
c
Dec 2011
b
Mar 2011
a
INR/ TN

19
SAMPLE
High price of fuels serves as a major bottleneck in the
growth of the Indian construction equipment market
Rise in Crude Oil Prices Impact
• Construction equipments are heavily dependent on the crude oil as it serves as a primary source
for fuel
• Presently, x% of crude oil demand is met through imports and it is expected that imports will
rise further
• High costs of crude oil pushes up the price of fuel which cuts into the profits of end users and
leads to reduction in the demand for equipments
• Thus, volatility in crude oil prices have a marked impact on construction equipment industry as
well
0
2,000
4,000
6,000
8,000
Jul 20--Jan 20--Jul 20--Jan 20-- Jan 20--Jul 20--Jan 20--Jul 20--Jan 20--Jul 20--Jan 20--
INR/barrel
Rise in Crude Oil Prices

•Market Overview
 Global
 India
•Trends
•Appendix

21
SAMPLE
Upcoming regulations to offer multiple benefits to the
construction equipment market
Impact
X1
z1
y1Y
Government has announced plans to ban imports of second hand equipment under subsidy
Schemes such as Textile Up-gradation Fund and the Credit-Linked Capital Subsidy Scheme
Z
X
AA
Upcoming Regulations Expected Benefits

22
SAMPLE
Reduction in construction equipment imports will benefit
the domestic players in the Indian market
Decline in CE import
Market has
witnessed decline
in imports
Cranes Import
•Government of India (GOI) is planning to restrict import to safeguard the productivity and
competitiveness of Indian manufacturers
 GOI has asked the commerce and industry ministry to either ban import of machinery more than
five years old or spell out the age limit for machinery in each sector
 The government is also considering an import duty on a% of the original value of machinery, which
will drive up costs for importers
•Import of cranes and concrete mixers has declined by a CAGR of x% and y% in value terms
between FY 2011 - 2012 and 2013 (Apr – Dec)
•Domestic production of construction equipments is expected to witness robust growth
over the next five years
Concrete Equipment Import
0
2,000
4,000
6,000
8,000
In mn
abc
2013*
c
2012-2013
b
2011-2012
a
Cranes Import
0
200
400
600 x
In mn
2011-2012 2013*
xyz
2012-2013
zy
Concrete Mixers Import
* Denotes, data taken between Apr - Dec

23
SAMPLE
West Bengal – Opportunity Areas (2/x)
West Bengal – Infrastructure Investment
•State government has formulated
“Industrial and Investment policy 2013” to
induce an inclusive economic growth in the
state
•The focus of this policy is to improve
infrastructure of the state by additional mn
km of highway and bridges, ports, airports
and water transport in Public Private
Partnership (PPP)
•Infrastructure development in the power
sector has witnessed a x% increase from FY
2012
•A major initiative adopted by the state
include construction of affordable housing
for the economically weaker section
•Around zz housing units are expected to be
completed by the end of the financial year
under Integrated Housing for Slum Dwellers
Programme (IHSDP)
Proposed Budget Allocation (2014 – 2015)
Sector Wise GSDP Growth
Sectors Amt (In Bn)
Waterways a
Road b
Power and Irrigation c
Housing d
Transport e
Note: * Proposed Plans for Next Financial Year (2014 – 2015)
0
2
4
6
8
10
a1
%
Z
b3a3
Y
b2
a2
X
b1
BBAA

24
SAMPLE
Orissa – Opportunity Areas (2/x)
Orissa – Infrastructure Investment
•Orissa has emerged as a major investment
destination in India and as of Sep 2013, it
accounts for aa% share of all over India
investment
•Orissa government expects bulk of
investments in different sectors such as coal
mining, steel and a few port projects
•Annual plan outlay (2014 – 2015) of the
state has been tentatively pegged at INR
aa1 bn, which include INR x bn for public
sector undertakings
•The government of Orissa plans to invest
INR x mn to develop a required power
transmission Infrastructure for the proposed
ITIR near Bhubaneswar
•State government has formulated an
Affordable Housing Policy to provide
affordable housing facilities to the poor
 Under this policy, BDA is planning to structure
and bid out a PPP project with an estimated
cost of INR bb mn
PPP Project Status in Orissa as of Sep 2013
Note: ITIR: Information Technology Investment Region; BDA: Bhubaneswar Development Authority
Sector – Wise GSDP Growth
Sectors Particulars Under
Implementation
In Pipeline
Urban
Development
Number a b
Cost (mn) c d
Transport Number e f
Cost (mn) g h
Roads Number i j
Cost (mn) k l
0
5
10
15
%
C
b3a3
B
b2
a2
A
b1a1
X Y

Product Launches
2011
Crane Launches
•X1
•X2
•X3
•X4
Backhoe Loaders
2013
2013
•Y1
•Y2
•Y3
•Y4
Recent Developments (1/3)

•Market Overview
 Global
 India
•Trends
•Appendix

27
SAMPLEKey Ratios of Top 3 Companies – Operational Basis (FY 20--) (1/3)
Competitive Benchmarking (1/4)
-30
-20
-10
0
10
%
Player C
q3
Player B
q2p2
Player A
q1p1
Net MarginOperating Margin
• X
• X

28
SAMPLE
Public: Foreign Company – Company ABC (x/x)
Key People
Products and Services
Company Information Offices and Centres – India
Corporate Address
Tel No.
Fax No.
Website
Year of Incorporation
Ticker Symbol
Stock Exchange
Category Products/Services
Milk Products &
Nutrition
Confectionery
Beverages
Name Designation
Head Office
Gurgaon

29
SAMPLEFinancial Snapshot Key Ratios
Financial Summary
• The company incurred a net profit of INR x mn in FY 2013, as compared to
net profit of INR y mn in FY 2012
• The company reported total income of INR a mn in FY 2013, registering an
increase of b% over FY 2012
• The company earned an operating margin of m% in FY 2013, a decrease of
n percentage points over FY 2012
• The company reported debt to equity ratio of c in FY 2013, a decrease of
d% over FY 2012
Key Financial Performance Indicators
Indicators Value (25/03/2014)
Particulars
y-o-y change
(2013-12)
2013 2012 2011 2010
Profitability Ratios
Operating Margin
Net Margin
Profit Before Tax Margin
Return on Equity
Return on Capital Employed
Return on Working Capital
Return on Assets
Return on Fixed Assets
Cost Ratios
Operating costs (% of Sales)
Administration costs (% of
Sales)
Interest costs (% of Sales)
Liquidity Ratios
Current Ratio
Cash Ratio
Leverage Ratios
Debt to Equity Ratio
Debt to Capital Ratio
Interest Coverage Ratio
Efficiency Ratios
Fixed Asset Turnover
Asset Turnover
Current Asset Turnover
Working Capital Turnover
Capital Employed Turnover
Improved Decline
Net Profit/LossTotal Income
00
2013201220112010
INR mnINR mn

30
SAMPLE
Key Business Segments Key Geographic Segments
100%
50%
0%
2013
A%
Business Highlights
Food
Description News
Overview • xxx
Manufacturing Facilities • xxx
xxx
2013
x4
y
2012
x3
2011
x2
2010
x1
IndiaOutside India

31
SAMPLE
Description News
Manufacturing Facilities • xxx
Investment • xxx

32
SAMPLEPublic: Foreign Company – Company ABC (x/x)
• xxx • xxx
• xxx• xxx
TO
WS

33
SAMPLE
Private: Domestic Company – Company ABC (x/x)
Key People
Products and Services
Company Information Offices and Centres – India
Name Designation
Corporate Address
Tel No.
Fax No.
Website
Year of Incorporation
Head Office
New Delhi
Category Products/Services
Toffee
Gum
Candy

34
SAMPLE
Business Highlights
Private: Domestic Company – Company ABC (x/x)
Description News
Overview • xxx
Manufacturing Facility • xxx
Distribution Network • xxx

35
SAMPLE
Private: Domestic Company –Company ABC – SWOT Analysis
(x/x)
• xxx • xxx
• xxx• xxx
TO
WS

36
SAMPLE
Strategic Recommendations (1/x)
Focus on Research and Development
•A
•B
Introduce India Specific Products
Construction equipment manufacturers need to adopt several initiatives to tap the latent potential of the
Indian Construction Equipment Market
•X
•Y

Thank you for the attention
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Construction equipment market in india 2014

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