India Machine Tools Industry

India Machine Tools Industry

Contents Industry Overview

Structure of The Machine Tool Industry

Classes of Machine Tool Manufacturers ¾ Percentage of Companies in Various Classes

Key Players

New Players Entering Market

Scatter of Machine Tool Manufacturers

Production Capability ¾ Major Products ¾ Products Offered by Major Players

Machine Tools Production ¾ Production of Machine Tools over Years ¾ Production Break-up ¾ NC Machines and Non-NC Machines ¾ NC Machines Showing Highest Growth Rate

Machine Tools Consumption ¾ Per Capita Consumption ¾ Growth in Per Capita Consumption of Machine Tools of India

Factors Powering Growth ¾ Machine Tools Consumer Industries are Growing at a Good Rate ¾ Index of Industrial Production ¾ GDP Growth ¾ Other Factors

India Machine Tools Industry

Challenges

Import Market

Used Machine Tools Market

Technical Centres for Training

Government Regulations

Future Outlook

Sources of Data

Important Associations and Their Websites

About Us

Contact Us

India Machine Tools Industry

Industry Overview

India is the 18th largest producer of machine tools in the world. The Machine Tools industry consists of about 450 manufacturing units, of which about 150 are in the organized sector and international companies like Doosan, DMG & Makino amongst others which import machines for selling. The top ten manufacturers account for almost 70% of the output. Domestic manufacturers account for about 45% of the total Indian machine tool market.

The Indian Machine Tool Sector has had a stagnant growth since the beginning of 2000 as investment in the manufacturing sector slowed down considerably. In early 2002, Indian Engineering Sector, especially the automotive sector, witnessed increased investments as global majors started to outsource manufacturing to India. This led to a spurt in demand for machine tools. The machine tool industry, since then, has been growing at a healthy rate.

The machine tool Industry in India is now in a position to export general purpose and standard machine tools to even industrially advanced countries. With Index of Industrial Production touching new highs and emphasis on capital investment by the government, the Machine Tool Industry is all set to witness unprecedented growth.

India Machine Tools Industry

Structure of The Machine Tool Industry

General Purpose Machine Manual

Special Purpose Machine

Metal Cutting Numerically Controlled CNC* Flexible Manufacturing System

Machine Tools Manual Metal Forming NC*

*CNC : Computer Numerically Controlled

*NC : Numerically Controlled

Machine Tool Industry can be classified according to the types of machines i.e. metal cutting and metal forming. Both the types of machines can be further classified into manually operated machines and numerically controlled. As awareness about new technology is increasing, more and more people are opting for more advanced NC and CNC machines.

India Machine Tools Industry

Classes of Machine Tool Manufacturers

Class I Class I comprises of Large Multi National Companies with production set up in India. (Eg.: Bharat Fritz Werner Ltd., Kennametal India Ltd.)

Class II This class comprises of Large Indian Firms (Eg.: ACE Manufacturing Systems, Batliboi, HMT Machine Tools, Lakshmi Machine Works, TAL Manufacturing Solutions)

Class III Indian Mid-Sized Companies makes the Class III of Machine Tool Players. (Eg.: Jyoti CNC Automation Pvt Ltd., Macpower CNC Machine Pvt. Ltd., PMT Machines Ltd., Miven Machine Tools)

Class IV This class comprises of Small Indian Companies (Eg:. Accurate Systems, Anil Machines, Galaxy Machinery Pvt. Ltd)

Class V Companies directly importing in India and which have their after sales service division in India comes in Class V (Eg:. HAAS Automation, DMG India Pvt. Ltd., Mori-Seiki, Y. Mazak)

India Machine Tools Industry

Class VI Class VI comprises of companies which only import machines but do not have their after sales service division in India (Eg.: Dalian Machine Tool Group, Francis Klein & Co. Pvt. Ltd.)

Class VII Small companies which buy used machines from outside India and Retro Fit form Class VII. (Eg.: Askar Microns Pvt. Ltd, Hark Ram Enterprises)

Percentage of Companies in Various Classes

8% 11%

5% 10% Class I Class II 14%

Class III Class IV Class V

24%

Class VI Class VII 28%

“Majority of the Machine Tool Players in India are small in size (Class IV) and majority of them form a part of the unorganized sector. With the industry growing at a healthy rate, these players are expected to move up higher in the chain i.e. Class II and III”

India Machine Tools Industry

Key Players

Name

Type of Company

Home Location

ACE

Private Limited

Bangalore

LMW

Public Limited

Coimbatore

BFW

Private Limited

Bangalore

Jyoti

Private Limited

Rajkot

Batliboi

Private Limited

Rajkot

TAL

Private Limited

Pune

Lokesh

Private Limited

Hyderabad

HMT

Public Limited

Bangalore

DMG

Importer

China

Mazak

Importer

Singapore

Makino

Importer

US

Feeler

Importer

Taiwan

Haas

Importer

US

Doosan

Importer

Korean

“Ace and HMT are the leading Machine Tool Manufacturers in India currently in terms of revenue.”

India Machine Tools Industry

New Players Entering Market

Company

Country of Origin

Status

MAG Industrial Automation Systems

USA

Sets up subsidiary in India

Heller

Germany

Forms JV with TAL Manufacturing Solutions

Glidemeister

Germany

Sets up tech centre in Bangalore

Schuler

Germany

To enter into Joint Ventures

MAUS

Italy

Enters into JV with TAL Manufacturing Solutions

Rosa Ermando

Italy

Enters into JV with UCAM of Bangalore

Citizen

Japan

Opens representative office in Bangalore

Amanda

Japan

To set up manufacturing facility on India

“India has emerged as the nerve centre of the machine tool industry in Asia and its technological capabilities are far superior to many other Asian countries. Our JV with UCAM will manufacture a special category of machines, which hitherto were not made in India.” - Ricardo Rosa President Rosa Ermando SpA

“We see the market for machine tools in India growing rapidly in the next few years. We are here because of its highly trained, efficient and skilled workforce.” Roger W Cope President MAG Industrial Automation Systems

India Machine Tools Industry

Scatter of Machine Tool Manufacturers

Scatter of Machine Tool Manufacturers

7%

14%

3%

5%

12% 2%

29%

28%

Andhra Pradesh

Delhi

Gujarat

Haryana

Karnataka

Maharashtra

Punjab

Tamil Nadu

“The majority of the Machine Tool Manufacturers are located in Karnataka and Maharashtra. Bangalore is the base for most of the Machine Tool Companies in India.”

Current Hubs

Upcoming Consumption Areas

Mumbai and Pune (Maharashtra)

Ahmednagar

Bangalore (Karnataka)

Rudrapur

Coimbatore and Chennai (Tamil Nadu)

Jaipur

Batala, Jalandhar and Ludhiana (Punjab)

West Bengal

Ahmedabad, Baroda, Rajkot, Jamnagar and Surendranagar (Gujarat)

India Machine Tools Industry

Production Capability

The Indian machine tools industry manufactures almost the complete range of metal-cutting and metal-forming machine tools. Customized in nature, the products from the Indian basket comprise conventional machine tools as well as computer numerically controlled (CNC) machines. There are other variants offered by Indian manufacturers too, including special purpose machines, robotics, handling systems, and TPM-friendly machines.

Major Products CNC Turning Centers The Indian machine tools industry produces a range of turning centers in all sizes, from the small to the very large, and for special applications.

CNC Machining Centers The Indian machine tools industry produces a range of CNC machining centers covering small to very large sizes. The current trend in machining centers is to have additional axes of movements to take on complex machining requirements. Internationally, machining centers are mostly built with at least 5 axes.

India Machine Tools Industry

CNC Grinding Machines The main emphasis in grinding machines is on accuracy, surface finish and high process capability. Such machines are required by the tool and die making industries, which are on a growth path in India at present.

Special Purpose Machines The Indian machine tools industry has been successful in developing the ability to design and produce special purpose machines for customers in almost

all

industry

segments.

The

special

purpose

machines

manufactured in India often incorporate the most advanced features of technology from all over the world. This segment of Indian machine tools can be a niche for exports, in view of the cost competitiveness of Indian designs and manufacturing capabilities for these machines.

Metal Forming Presses Metal forming presses for sheet metal working form one of the most important classes of machines required by the industry. With the explosive growth of the consumer durables, electronics and auto industries,

these

machines

requirement for these sectors.

represent

the

core-manufacturing

India Machine Tools Industry

Turning Machines

■

■

■

■

IMI

■ ■

■ ■

Flexible Manufacturing Systems Milling Machines

■

Drilling Machines

■

■

■ ■ ■

Gear Cutting & Finishing Machines

■

Boring & Milling, Broaching Machines ■

Grinding Machines

■

■ ■

Spark Erosion & Electric Discharge Machines ■

Honing, Lapping & Polishing Machines

■ ■

Heat Treatment Equipment Testing Equipment

HMT

FINECRAFTS

FIE

EMI INDIA

ELECTROPNEUMATICS

ELECTRONICA

BFW

■

■

Machining Centres

BATLIBOI

BAKER

ASKAR

ARIHANT

AMS

AMC

ALEX

ACUMAC

ACE

ACCURATE

ABRO

Product Categories

ABHIJAT

Products Offered by Major Players

■

■

Die Casting Machines

■

Plastic Injection Moulding Machines

■

Special Purpose Machines ■

CNC Systems Cutting Tools / Holders Accessories, Components & Gauges

■

■

■

■

■ ■

Tool Room Machines / Attachments Press Brake, Shearing Machines

■

■

■

Sheet Metal Presses

■

■

■

■

India Machine Tools Industry

Machining Centres

■

■

■

WIDIA

WELDOR

UNIVERSAL TOOL

TAL

■

TACO

■

SHARDA

■

SECO

PAL

OMTEC

NISSEI ASB

QUA-TECH

■

PRAGA

■

PMT

Turning Machines

MGTL

LMW

KENNAMETAL

KAWA

JYOTI

Product Categories

ISGEC

Products Offered by Major Players

■

Flexible Manufacturing Systems ■

Milling Machines ■

Drilling Machines ■

Gear Cutting & Finishing Machines

■

■

■

Boring & Milling, Broaching Machines

■ ■

Grinding Machines

■

■

■

Spark Erosion & Electric Discharge Machines Honing, Lapping & Polishing Machines Heat Treatment Equipment Testing Equipment Die Casting Machines ■

Plastic Injection Moulding Machines

■

Special Purpose Machines

■

■

CNC Systems Cutting Tools / Holders

■

■

Accessories, Components & Gauges

■

■

■ ■ ■

Tool Room Machines / Attachments

■

■

■

Press Brake, Shearing Machines

■

■

■

Sheet Metal Presses

■

■

■

India Machine Tools Industry

Machine Tools Production

Production of Machine Tools over Years

+15% +20% +37%

20,958 18,192

15,164 11,042

Value in Rs. Million

2003-04

2004-05

2005-06

2006-07

Production of Machine Tools in India

Due to outsourcing of auto-components by foreign automobile manufacturers to India, there was a spurt in demand for machine tools. As a result, the production of machine maintained a high growth rate till 2004-05. After that the growth rate came down and remained fairly high. This growth rate is expected to continue in the coming years and might see another spurt if there are some favourable changes in the government policies.

India Machine Tools Industry

Production Break-up*

“NC Machines constitute 57% of the production in terms of value.”

Production Break Up in 2006-07

3% 2%

6% 12%

31%

64%

Volume Total : 156859 Units

25% NC Machines Non NC Machines Spares Tools

Value Total : Rs 20958.06 Million

In 2006-07, spares constituted 64% of production in terms of units, NC machines, Non NC machines and Tools constituted 3%, 2% and 31% respectively. NC machines constituted 57% of the total value of production. This is because spares lie in the ‘High Volume Low Value’ category and NC Machines lie in ‘High Value Low Volume’ category. The remaining 43% of value of production in contributed by Non NC Machines, Spares and Tools at 25%, 12% and 6% respectively.

*NC Machines : Numerically Controlled Machines Non NC Machines : Non Numerically Controlled Machines

57%

India Machine Tools Industry

NC Machines and Non NC Machines

Number of Machines Produced 7,799 8,000 7,563 7,000 6,000

2,455 3,240

Value in Rs Million 20,000

17,217

Non NC

15,000

13,521

5,000

Non NC

12,053

NC

4,078

4,000

10,000

3,000 2,000

5,164

5,344

4,323

NC

5,000

9,443

1,000 0

0

2005-06

2006-07

2005-06

Volume Turnover of Machine Tools in India

2006-07

Value Turnover of Machine Tools in India

The number of Non NC machines produced in India has gone down. This trend is expected to continue as accuracy becomes more important and people become more technology literate.

NC Machines Showing Highest Growth Rate

Rate (%)

NC Machines Growth Rate in 2006-07 180.00 160.00 140.00 120.00 100.00 80.00 60.00 40.00 20.00 0.00

152.51 108.43 85.19

83.82

EDM,CNC

Horizontal Machining Center

SPM CNC's

Shearing

Machine Type

The production of Shearing Machines and Special Purpose Machines (SPM) has more than doubled over the last year. This is mostly due to the growth in demand by the manufacturing sector.

India Machine Tools Industry

Machine Tools Consumption “Currently India ranks 29th globally in terms of per capita machine tool consumption and lags far behind the top five countries.” Per Capita Consumption of Machine Tools in 2006 Top Five Countrie and India 140 120

116

112

104

USD

100 80

63

61

60 40 20

1

0 Switzerland

Taiwan

Soth Korea

Germany

Italy

India

Country

USD

Growth in Per Capita Consumption of Machine Tools of India 12 10 8 6 4 2 0

10.29

1.49 200607

1.98

200708

2.58

200809

3.43

200910

4.38

201011

5.58

201112

6.84

201213

8.39

201314

201415

Year

Country Russia Argentina Brazil China

Current Per Capita Consumption 2.7 3.6 5.8 9.9

India will reach this level in 2009-10 2010-11 2012-13 2014-15

India Machine Tools Industry

Factors Powering Growth

Machine Tools Consumer Industries Are Growing At a Good Rate Auto & Auto Component industry and Capital Goods industry form the major market for machine tools in India. Consumer Durables and Aviation Industry are the other industry segments where the machine tools are used. Out of these, auto & auto component industry form about 40% of the machine tools market. All these industries are currently growing at a healthy rate and the trend is expected to continue in the coming years.

Percentage

Growth Rates 30 25 20 15 10 5 0

25

25 20 13

Auto

Auto Component

Capital Goods

Electronics

Industry

“Apart from the above mentioned industries, defence and computer hardware manufacturing are the other industries which will which will fuel Machine Tool Industry’s growth in the coming years.”

India Machine Tools Industry

Index of Industrial Production The index of industrial production, lead by the manufacturing sector is showing unprecedented growth. This growth is fuelling the demand for all capital goods.

Index of Industrial Production 16

300

14

250

Index

10

150

8 6

100

Percentage

12 200

4 50

2

0

0 2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

Apr-07

Period Index

Growth of Index

“Industrial production in April bucked the traditional lean-month trend and hit an 11-year high on the back of a strong upsurge in manufacturing. Growth in industrial production in April 2007 has been largely fuelled by manufacturing, which grew consistently in double digits in 2006-07 (except October). Year-on-year growth in manufacturing in April was 15.1 per cent, over 11 per cent in the previous year.” -Business Standard (13th June, 2007)

India Machine Tools Industry

GDP Growth The Indian Economy has been growing at an average rate of more than 8.5% over the last four years. This growth is percolating down to all the industries and as a result demand for capital goods is also on a high.

3000000

10.00

2500000

8.00

2000000

6.00

1500000

4.00

1000000 500000

2.00

0

0.00 2003-04

2004-05

2005-06

Growth Percentage

(Rs., Crores)

GDP of India (At Factor Cost) and its Growth

2006-07

Year

“India's economy should grow at a faster pace than previously expected in the fiscal year to March 2008 on buoyant manufacturing and services, but that pace will be slower than the strong 2006-07 expansion, a Reuters poll shows.” -The Economic Times (27th June, 2007)

India Machine Tools Industry

Other Factors

Growing per-capita income and disposable income which is resulting in increase in consumption Growing stature of India in the global market as a sourcing hub for auto components and other manufacturing industry products. Increase in export of cars, especially small cars, from India to the rest of the world. Strong and growing domestic demand for mobile phones, personal computers,

consumer,

medical,

strategic

and

automotive

electronics and other consumer durables Increasing demand for telecom infrastructure equipment due to increase in tele-density from the present 100 per 1000 to 220 by 2007. Push to the infrastructure of the country by the government resulting in demand for capital goods. Rising defence expenditure and opening up of the defence equipment manufacturing to the private sector. Increasing awareness of the technologically efficient products and the adaptation of same by the manufacturers.

India Machine Tools Industry

Challenges

Used machinery market is big in India and is expected to grow at around 30% this year. As the cost of new machines is still high due to import duties, used machines are a big challenge for machine tool companies importing new machines. Time required to deliver a machine after placing an order is about 8- 10 months which is a concern for the Industry. Technical Support and Service of players importing machines is a major concern as Indian customers are very specific about the servicing and usage aspect aligned with purchase of machinery. Price is another important area of concern. Indian companies prefer to pay premium on a machine which has product features second to best but is excellent in terms of technical service. This again poses problem for technically sound international companies as they don’t have a good service network compared to Indian companies. Dollar depreciation is a concern for Indian Machine Tool Players. Local players are upgrading themselves technologically by entering into collaboration with other International players. This would increase the competition in the market.

India Machine Tools Industry

Due to slow down in the machine tool market till early 2002, the vendors of machine tools companies reduced production. The vendors have not been able to ramp up the capacity since then. As a result, machine tool manufacturers haven’t been able to expand as desired. This shortage in supply is a big concern for machine tool companies aspiring to expand rapidly. Even though India produces one of the largest numbers of engineers in the world today, most of them of opt for IT related fields. As a result, machine tool industry is facing a crunch of engineers. Also there is shortage of CNC machine operators in the country which is hampering technology adoption.

India Machine Tools Industry

Import Market

Imports account for about 40-50 per cent of total consumption of machine tools. In the calendar year 2006, a total of 20,050 metal cutting machine tools worth Rs.27,847 million and 3,717 metal forming machine tools worth Rs.10,089 million were imported. By and large, imports are restricted to specialized requirement not produced in India. These include high speed, high precision machines and heavy-duty machines. A few users, who export their products, do import their capital goods under the Export Promotion and Credit Guarantee scheme on price consideration. Due to price advantage, several companies have imported pre-owned machines. The current import tariff on machine tools is about 33 percent. Industry sources expect it to be lowered in the coming years. This would result in increased competition from foreign multi-national even though the implementation of VAT has worked towards the advantage of local manufacturers. Growth of Machine Tool Imports over Years +65%

Values in Rs. Million

+22% +109% +75% +174% +129%

22,914

27,847 Metal Cutting

13,074 5,699

1,068

2003

2,927 2004

6,122

2005

10,089

2006

Metal Forming

India Machine Tools Industry

Used Machine Tools Market

As India is a cost sensitive country, the demand for used machinery in the country is very high. Seeing the potential, international big names like DMG have started giving guarantees on there used machines. Apart from this, used machines of almost all the international companies are being imported into the country. Used machine tools form a major chunk of the machine tools market of India currently. High import duties coupled with long delivery time are only adding to the demand for used machines. There are large numbers of retro-fitters and used machine dealers in India who import machines and after some repairs sell them to the local customers. The cost of retro-fitting is very low in India as compared to other countries. This helps in keeping low cost of used machine tools. With the demand for machine tools reaching new heights due to burgeoning economy, the demand for used machine tools is only going to increase.

India Machine Tools Industry

Technical Centres for Training

Due to shortage of skilled manpower and growing demand of Tools and dies in the country, particularly in the SSI sector, Government of India have decided to assist the State Governments to set up Mini Tool Room and Training center. There are about 20 centers all over India catering to the requirement. These centres have proved to be a boon to Machine tool Industry. It has provided the base for training and development of the manpower in the industry and thus improve productivity.

India Machine Tools Industry

Government Regulations

100% FDI is allowed in the Machine Tool Industry. Machine tools manufacturers are exempt from obtaining an industrial licence to manufacture. Machine tool Manufacturers are free to select the location of their project. Only specific items under machine tools are reserved for production by the small scale industry. Import duties have been constantly reduced to promote increased import and usage of machine tools. Manufacturing units of machine tools and consumer companies can take benefit of the EPCG scheme. EPCG scheme allows import of capital goods for pre production, production and post production at 5% Customs duty which otherwise would be 12.5% subject to an export obligation equivalent to 8 times of duty saved on capital goods imported under EPCG scheme to be fulfilled in 8 years reckoned from Authorisation issue-date.

India Machine Tools Industry

Future Outlook

Machine Tool Industry is in a position to export general purpose and a standard machine tool to even industrially advanced countries. The industry, however, lacks in design and engineering capability to undertake very high precision CNC Machines. Some companies have taken up manufacture of CNC Machines, but there is a need to upgrade research and development in this field. Indian machine tools are manufactured to the international standard of quality / precision and reliability. A number of collaborations have also been approved for bringing in the latest technology in this field of modern machine tools and the industry is now exporting conventional as well as NC/CNC high - tech machine tools.

With the boom in the manufacturing sector, and growth in exports due to growing acceptance of India’s technical prowess, the demand for machine tools is only going to increase. By overcoming some of its engineering and designing deficiencies, and utilizing the available skilled manpower fully, India can become the global hub for machine tools in the coming years.

India Machine Tools Industry

Sources of Data

D’Essence Research Indian Machine Tool Manufacturers Association Website Department of Heavy Engineering (Govt. of India) Report IBEF report on Machine Tools International Business Strategies Report Business Standard The Economic Times Economic Survey – Govt. of India Cygnus Report on Heavy Engineering Gardner’s Report on Machine Tool Consumption China Machine Tool Market Report - KPMG Automobile Component Manufacturers Association (ACMA) Website Society of Indian Automobile Manufacturers (SIAM) Website

India Machine Tools Industry

Important Associations and Their Websites

Indian Machine Tools Manufacturers’ Association http://www.imtma.in/

Rajkot Machine Tools Manufacturers’ Association http://www.mtmarajkot.org/

Ludhiana Machine Tools Manufacturers’ Association http://www.lmtma.org/

Auto Component Manufacturers Association http://acmainfo.com/

Society of Indian Automobile Manufacturers http://www.siamindia.com/

Tool and Gauge Manufacturers Association of India http://www.tagmaindia.org/

India Machine Tools Industry

About Us

D'Essence Consulting is a Management Consulting, Business Advisory and Talent Management Consulting Boutique firm. We have been operational since 1998 with our base in Mumbai, India.

We assist Corporate organizations, Government institutions and Industry associations to build, grow and remain competitive. We advise

companies on building

their sales, improving their

productivity and increasing their bottom line.

Majority of our work is focused on the areas of growth, leadership, strategy and confidential projects. We also help organizations in M&A dealings & forming Joint Ventures, Strategic alliances and partnerships.

In case of Machine Tools, we have an experience of working with a Global Machine Tool Giant. We are very well versed with the MacroMicro Linkages that affect the Demand & Supply of Machine Tool Industry. We have In-Depth Knowledge of the Industry right from its Supply

Chain,

Sourcing

of

Human

Resource,

and

Vendor

Management to Customer Needs & Requirements.

WE CAN HELP YOU WITH: ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾ ¾

Turn Around Strategy India Entry Strategy Start Up Strategy and Implementation Create a Business Plan to suit your strategic policies Valuing your firm for various purposes and Due Diligence Finding a Strategic Partner Mergers and Acquisitions Research & Assessment Marketing and Sales Strategy

India Machine Tools Industry

Contact Us Office Address Office No. 2, Building No.1, New MHADA Complex, Near PMGP Colony Off Mahakali Caves Road, Andheri-East, Mumbai (Maharashtra) India Pin - 400093 Telephone : +91-22-28347425 Fax : +91-22-28228142 Email : [email protected]

Contact Persons Chandni Sahgal Managing Proprietor & Chief Consultant Mobile : +91-9820075332 Email : [email protected] Ravi Jain Project Associate Mobile : +91-9867635868 Email : [email protected] Shirish Bhakare Project Associate Mobile : +91-9820432499 Email : [email protected]