IHS Automotive Regional Report Supplierbusiness the Indian Automotive Supplier Report

IHS Automotive Regional Report SupplierBusiness The Indian Automotive Supplier Report

2014 edition supplierbusiness.com IHS Automotive SupplierBusiness | The Indian Automotive Supplier Report

Contents Executive Summary...... 8 Introduction...... 9 Vehicle sales in 2012...... 9 Major players in light vehicle segment...... 12 Medium and heavy commercial vehicle segment...... 13 Competitive landscape...... 14 Vehicle sales decline in 2013...... 16 Factors behind declining vehicle sales in India...... 16 Declining economic growth ...... 16 High inflation and interest rate...... 17 Rising fuel prices...... 19 Medium to long-term outlook remains bright...... 19 Vehicle Production ...... 22 Emerging exports hub...... 23 Moderation of production in 2013...... 24 Long term production outlook remains strong...... 24 Investment plans of automakers...... 25 India’s Automotive Component Industry...... 28 Mixed performance in recent years...... 28 Diverse supply base...... 29 Exports remain robust...... 29 Imports have grown at higher rate...... 30 Investment declines as slowdown stretches ...... 32 Long-term growth outlook remains strong ...... 33 Joint-ventures...... 35 Mergers & Acquisitions ...... 36 OEM-Supplier Relationship...... 38 Involvement of automakers in supplier development ...... 38 Direct involvement declines post-liberalisation...... 38 Greater localisation driving better OEM-supplier relationship...... 39 Technology remains a big challenge for Indian suppliers ...... 39 Automakers’ close-knit suppliers ...... 40 Cost, quality, delivery (QCD) ...... 41 India’s emergence as a sourcing hub...... 41 Automotive Clusters in India...... 43 Cluster development...... 43 Three major clusters...... 43 Distribution of Indian auto components manufacturers across India...... 44 Northern cluster...... 44 Southern cluster...... 44 Western cluster...... 45 Competition among clusters...... 46 Challenges for the Indian Supplier Industry...... 49

IHS Automotive SupplierBusiness

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1. Demand fluctuations...... 49 2. Capacity expansion...... 49 3. High cost of capital...... 50 4. Fluctuating raw materials prices ...... 51 5. Exchange rate volatility...... 51 6. Rising operating costs ...... 52 7. R&D capabilities ...... 53 8. Free trade agreements (FTAs)...... 54 9. Skilled manpower shortage ...... 54 10. Growing competition ...... 55 Challenges and opportunities go hand in hand...... 55 Government Policy ...... 56 Policy environment...... 56 Tax policy ...... 56 Union Budget for FY2014...... 57 Direct taxes...... 57 Indirect taxes...... 58 Trade policy ...... 59 State policies...... 61 Labour laws...... 61 Land Acquisitions...... 62 Policy on fuel pricing ...... 63 Industry regulations ...... 64 Recent developments ...... 66 Auto Policy 2002 ...... 66 Automotive Mission Plan 2006-16 ...... 66 National Automotive Board ...... 67 National Manufacturing Policy ...... 67 Government Initiatives on skills development ...... 67 Infrastructure Development...... 69 Transportation...... 69 Roads:...... 69 Ports: ...... 71 Power ...... 72 Roadblocks in infrastructure development...... 72 Survey of Indian Supplier Industry...... 74 Supplier Profiles...... 80 Aisin Seiki...... 80 Alicon Castalloy...... 84 Amalgamations Group...... 86 Amtek Auto...... 88 Anand Group...... 91 Apollo Ty...... 95 Ashai India Glass...... 99 Ashok Iron Works...... 102 Ashok Minda Group...... 103 Auto Ignition Limited...... 106 Automotive Stampings...... 108 Axles India...... 110 Bagla Group...... 112 Bajaj Motors...... 113 Banco Products...... 114 Bharat Forge...... 116 Bharat Gears...... 119

Bharat Seats...... 121 Bhushan Steel...... 123 Birla Corporation...... 125 Birla Tyres...... 127 Bohra Rubber...... 129 Bosch India...... 130 Brakes India Limited...... 132 Bridgestone India...... 134 Caparo India...... 136 CEAT...... 138 Clutch Auto...... 140 Continental...... 142 Cooper-Standard...... 144 DCM Engineering Products...... 146 Delphi...... 147 Denso India...... 152 Endurance Systems...... 158 EXEDY India...... 160 Exide Industries...... 162 Faurecia...... 165 Federal-Mogul Goetze...... 167 Fenner India...... 169 Fiem...... 171 Gabriel India...... 173 GKN Driveline India...... 175 Goodyear India...... 177 Guru Nanak Auto...... 179 Halonix...... 180 Harita Seating...... 182 Hi-Tech Gears...... 184 Imperial Auto...... 186 IP Rings...... 188 Jamna Auto...... 190 Jaya Hind...... 193 Jay Bharat Maruti...... 195 Jay-Ushin...... 197 JKM Automotive...... 199 JK Tyre...... 201 Johnson Controls...... 204 Johnson Matthey...... 206 Kalyani Forge...... 208 Kinetic Engineering...... 210 Krishna Maruti...... 212 LG Balakrishnan...... 215 Lucas TVS...... 217 Lumax Automotive Systems...... 219 Lumax Industries...... 221 Machino Plastics...... 223 Madras Engineering...... 225 Magna...... 227 Magnetti Marelli...... 229 Mahindra Systech...... 231 Mahle...... 233 Mark Exhaust...... 235

MRF...... 236 Munjal Auto Industries...... 238 Munjal Showa...... 240 Neolite ZKW Lightings...... 242 NRB Bearings...... 244 Omax Auto...... 246 Pricol...... 247 Ramakrishna Forgings...... 249 Rane Group...... 250 Rasandik...... 252 Remsons...... 254 Rico Auto...... 256 Ring Ring Plus Aqua...... 258 RSB Transmissions...... 259 Ruia Group...... 261 Saint-Gobain...... 263 Samvardhana Motherson Group...... 266 Sanden Vikas...... 269 Sandhar Technologies...... 270 Setco Automotive...... 272 Shriram Pistons and Rings...... 274 Sigma Group...... 276 SKF India...... 278 Sona Koyo...... 280 Steel Strips Wheels...... 283 Sterling Tools...... 285 Subros...... 287 Sunbeam Auto...... 290 Sundaram Clayton...... 292 Sundram Fastners...... 294 Talbros Talbros Automotive...... 296 Tata AutoComp...... 299 Tata Steel...... 302 TRW Automotive...... 305 UCAL Fuel Systems...... 309 Valeo...... 311 Varroc Group...... 314 Victor Gaskets...... 317 Visteon...... 318 WABCO India...... 322 Whells India...... 324 ZF India...... 327 Figures Figure 1: Vehicle sales recorded average annual growth of 14.5% between 2005 and 2012...... 10 Figure 2: Hatchbacks continue to dominate India’s LV market (LV segmentaiton based on body type)...... 11 Figure 3: A segment vehicles accounted for half of LV sales in 2012 (Global segmentation of LV sales)...... 11 Figure 4: Maruti Suzuki is the largest LV maker in India but its market share has declined amid intensifying competition...... 12 Figure 5: Trucks accounted for 85% of M&HCV sales in 2012 (M&HCV sales break up by vehicle)...... 14 Figure 6: Tata Motors accounted for more than half of M&HCV sales in 2012 (M&HCV sales break up by OEM). 14

Figure 7: Vehicle sales growth has moved in tandem with real GDP growth in India ...... 17 Figure 8: RBI has been reluctant to cut rates significantly as CPI remains high...... 18 Figure 9: Both petrol and diesel prices remain high affecting vehicle demand (Movement of petrol and diesel prices in Delhi from April 2010 to August 2013)...... 19 Figure 10: Despite immediate concern vehicle sales outlook in India remains strong in medium to long term (LV and M&HCV sales forecast 2012-–2020...... 20 Figure 11: Vehicle production in India has recorded consistent growth between 2005 and 2012...... 22 Figure 12: Maruti-Suzuki’s market share has eroded between 2008 and 2012 (Light vehicle production market share by OEM)...... 23 Figure 13: Vehicle exports from India has tripled over the past eight years (Vehicle exports from India 2006– 2012)...... 24 Figure 14: Vehicle production in India is expected to by 9.8% between 2014 and 2020...... 25 Figure 15: Most automakers expect to see strong growth in production capacity by 2020 (Vehicle production growth projection by 2012 compared with 2020 by OEM)...... 26 Figure 16: After three years of strong growth, turnover of Indian supplier industry took a hit in FY2013 amid continuing weak domestic vehicle sales (Indian supplier industry turnover 2008–2013)...... 28 Figure 17: Most suppliers produce Powertrain components in India (Figures for financial year ended 31 March 2012)...... 29 Figure 18: Europe remains biggest market for Indian suppliers (India’s Export Market 2010 and 2012)...... 30 Figure 19: Asia and Europe together accounted for more than 90% of total auto component imports in FY2011 (India’s Import Market 2012)...... 31 Figure 20: Gap between exports and imports of auto component has widened over the past six years (India auto components trade: 2007-08 and 2012-13)...... 31 Figure 21: Suppliers have invested USD7bn between FY2007 and FY2012...... 33 Figure 22: Northern region has the highest concentration of auto parts suppliers...... 44 Figure 23: Supplier Parcs in India Mapped...... 46 Figure 24: Raw material prices has remained moderate in 2012 and 2013 so far ...... 51 Figure 25: Indian rupee has depreciated significantly against major currencies...... 52 Figure 26: Power leads allocation for infrastructure in 12th FYP (Sectoral investment planned in 12th FYP).. 69 Figure 27: Cargo handled in India has grown on average 8.5% between FY2006 and FY2012 (Cargo handled in India between 2006–2012)...... 71 Figure 28: Q1. India’s economic growth has come under pressure in the past few quarters. By when do you see a recovery?...... 74 Figure 29: Q2. High inflation, a major issue for the Indian economy over the past five years, has seen some moderation in the past few quarters. Do you expect this trend to continue in the coming quarters?...... 74 Figure 30: Q3. The Reserve Bank of India (RBI) has cut policy rates in the past few quarters in response to softening inflationary pressure. Do you see room for further cuts?...... 75 Figure 31: Q4. The Indian rupee has depreciated significantly in the past few months. Do you see this as a significant threat to economic growth?...... 75 Figure 32: Q5. Do you believe the Indian government’s policy regarding the automotive industry is supportive towards automakers in India?...... 75 Figure 33: Q6. India is negotiating a Free Trade Area (FTA) agreement with the EU, which is feared to result in substantial reduction in import duty for European-made cars. Do you think this would discourage vehicle manufacturing in India?...... 76 Figure 34: Q7. Vehicle sales in India have been declining since the beginning of 2013. What are the major reasons behind this weakness? ...... 76 Figure 35: Q8. By when do you expect a recovery in vehicle demand?...... 76 Figure 36: Q9. The decline in vehicle sales has prompted local automakers’ association SIAM to seek a stimulus package – similar to the one given in 2008-2009 – from the Indian government. Do you think SIAM’s demand is justified?...... 77 Figure 37: Q10. Considering falling sales, do you believe in the Indian automotive industry’s long-term growth potential?...... 77 Figure 38: Q11. Where do you see vehicle sales in India by 2020 compared with the 3.62 million units in 2012?. 77

Figure 39: Q12. Automakers are adjusting production capacity in India in response to recent declines in vehicle demand. Has this impacted your company’s business?...... 78 Figure 40: Q13. Has it become more challenging to secure contracts from customers amid the weak economic outlook for the Indian automotive industry?...... 78 Figure 41: Q14. Have recent cuts in repo rates and cash reserve ratio (CRR) helped your company to cut financing costs?...... 78 Figure 42: Q15. What has been the net financial impact (export value - import value) of recent the deprecia- tion of the Indian pupee on your company’s business?...... 79 Figure 43: Q16. Are OEMs in India willing to negotiate contract prices due to a change in the following factors? ...... 79 Tables Table 1: Investments by automakers in India (from 2012 onwards)...... 27 Table 2: Recent Supplier Investment Announcements...... 33 Table 3: Recent Supplier Joint-Venture Announcements...... 35 Table 4: Recent Supplier Merger and Acquisition Announcements...... 36 Table 5: Maruti Suzuki has close knit of 18 suppliers in which it has some stake...... 38 Table 6: Automotive Clusters in India...... 47 Table 7: Interest rates in some key automotive market as on 20 September 2013...... 50 Table 8: Most Indian suppliers spend less than 1% of their total revenues in R&D...... 53 Table 9: Tax structure for foreign and domestic companies in Inida...... 57 Table 10: Development of length and surface area of roads in india 2005–2011...... 69 Table 11: Development of length of national and state highways in india 2005–2011...... 70 Table 12: Annual Energy Generation...... 72