CAGR: 5.2% E Installed capacity (GW) 27.5 CAGR: 15.4% E. Generation equipment (USD billion) CAGR: 13.

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3 Installed capacity is set to increase CAGR: 5.2% E Installed capacity (GW) By 2022, installed power capacity in India is expected to reach 350 GW from 211 GW in 2012 due to increasing industrialisation and economic development Demand for generation equipment on the rise Increasing power demand to drive T&D equipment market CAGR: 15.4% E Generation equipment (USD billion) CAGR: 13.6% E T & D equipment (USD billion) By 2022, the generation equipment industry in India is expected to increase to USD27.5 billion from USD5.7 billion in 2011 By 2022, the T&D equipment market in India is expected to increase to USD75 billion from USD18.5 billion in 2011 Source: Central Electrical Authority, Electrical Monitor, Government of India, Ministry of Heavy Industries, Aranca Research Note: T&D - Transmission & Distribution

4 Boiler market to almost triple by 2022 CAGR: 10.8% The boiler market in India is expected to increase to USD11.7 billion by FY22 from USD3.8 billion in FY11 FY11 FY22E Boiler market (USD billion) Power backup equipment to witness a eleven-fold rise by 2022 CAGR: 24.5% Demand for generators is expected to increase to USD6.7 billion by 2022 from USD0.6 billion in FY11 FY11 FY22E Generator demand (USD billion) Coal demand to remain high 460 CAGR: 8.9% 1180 Demand for coal is expected to increase to 1180 million tonnes by 2022 from 460 million tonnes in E Coal requirement (million tonnes) Source: Government of India, Ministry of Heavy Industries, Aranca Research

5 2012 Market Size: USD25 billion Growing Growing demand demand Power demand is estimated to reach 350,000 MW by 2022 Government programmes aimed at providing electricity to over 100,000 rural areas and 22.6 million households below poverty line will also boost demand for power Attractive opportunities Planned power capacity addition of around 188,500 MW by 2022 will provide significant opportunities Replacement or brownfield expansion could provide significant opportunities as well 2022E Market Size: USD100 billion Higher investments The sector has witnessed increasing entry of global players through the JV route Existing players are planning huge capacity expansion over the next few years Advantage India Policy support Electrical machinery sector is delicensed; 100 per cent FDI is permitted Significant number of SEZs have been approved for the sector Due to policy support, cumulative FDI of USD3.2 billion (1.7 per cent of total FDI inflows) has flown into the country between April 2000 to February 2013 Source: Government of India, Ministry of Heavy Industries, Aranca Research Notes: FDI - Foreign Direct Investment, FY - Indian Financial Year (April - March), USD - US dollar, SEZ - Special Economic Zone

6 Electrical machinery Generation machinery Transmission machinery Distribution machinery Boilers Transformers Switch gears Turbines Control gears Generators

7 The electrical equipment industry was worth USD13.4 billion in FY12 The market expanded at a CAGR of 10.5 per cent over FY07 12 Boilers (16 per cent), cables (15 per cent) and transmission lines and conductors (12 per cent) account for a large chunk of the revenue India s major electrical equipment industry (USD billion) Share of major electrical equipment in the industry (FY12) Boilers % 16% 15% Cables Transmission lines and conductors Transformers FY07 FY08 FY09 FY10 FY11 FY12 5% 8% 10% 12% Switchgear & controlgear Rotating machines Others Source: Government of India, Aranca Research Note: CAGR - Compound Annual Growth Rate

8 The generation equipment segment garnered revenues of USD7.6 billion in FY12 Market size of generation machinery (USD billion) The market is expected to expand at a CAGR of 12.7 per cent over FY12 22 CAGR: 12.7% FY12 FY17E FY22E Source: Government of India, Ministry of Heavy Industries, Aranca Research Note: CAGR - Compound Annual Growth Rate E - Estimate

9 Boilers are the major segment, accounting for 62.9 per cent of total industry in FY12 Generation machinery market break-up (FY12) Turbines accounted for 27.4 per cent, while generators constituted the remaining 9.7 per cent 9.7% Boilers 27.4% Turbines 62.9% Generators Source: Draft Indian Electrical Equipment Industry Mission Plan ( ), Aranca Research

10 Production of transformers grew at a CAGR of 9.6 per cent during FY08-11 During FY12 22, the market size of the transformers industry is expected to expand at a CAGR of 15.7 per cent to USD11.1 billion Domestic transformer industry has the capability to manufacture the whole range of power and distribution transformers including transformers used for HVDC transmission upto 500 KV Production of transformers (million KVA) Transformers market size (USD billion) CAGR: 9.6% CAGR: 15.7% FY08 FY09 FY10 FY11 FY12* FY12 FY17E FY22E Source: Department of Heavy Industry Annual report , Draft Indian Electrical Equipment Industry Mission Plan ( ), SIA, Aranca Research Notes: * - Data for FY12 is up to Feb 2012, HVDC is High Voltage Direct Current, KVA - Kilo Volt Ampere

11 The production of switch and control gears has expanded at a CAGR of 6.9 per cent during FY08-11 During FY12 22, market size of the switch & control gears industry is expected to expand at a CAGR of 15.2 per cent to USD8.2 billion The switch gear industry in India manufactures entire voltage range from 240 KV to 800 KV Significant advances have been made in control gears due to major developments in the field of technology Production of switch & control gears (million units) Market size of switch & control gears (USD billion) 18.9 CAGR: 6.9% CAGR: 15.2% FY08 FY09 FY10 FY11 FY12 FY17E FY22E Source: Department of Heavy Industry Annual report , Aranca Research

12 Exports of electrical machinery increased to USD3.6 billion in FY13 from USD3.4 billion in FY12 Boilers & parts and transmission line towers & parts were the primary drivers of the increase in exports Exports of electrical machinery (USD billion) 3.6 Indian manufacturers with capacity and advanced technology in industry, export a wide array of equipment, including transformers and cables 3.4 FY12 FY13 Source: Engineering Exports Promotion Council ( EEPC) India. Note: Export data Includes - Boiler & Parts, Electric Power Equipments & Parts, Electric Wires & Cables and Transmission Line Towers & Parts

13 Exports of electrical power equipment & parts worth USD2.3 billion in FY13 constituted the largest share Break-up of exports of electrical machinery and related items by segment (FY13) Exports of electric wires & cables worth USD490.4 million accounted for 14.0 per cent of total exports Exports of boilers & parts and transmission line towers & parts were worth USD513.7 million and USD272.9 million, respectively 8% 14% Electric power equipment & parts Boilers & Parts 14% 64% Transmission line towers & parts Electric Wires & cables Source: Engineering Exports Promotion Council ( EEPC) India, Aranca Research

14 Upgrading technology Industry players are upgrading their transmission capacities to the next higher voltage system of 765 kilovolts (KV), and are gearing up to supply transformers and related equipment of this class Increasing R&D expenditure Indian manufacturers are becoming more competitive with respect to their product designs, manufacturing and testing facilities Investments in research & development (R&D) in the electrical machinery industry are amongst the largest in India s corporate sector Diversifying product portfolio Increasing competitiveness in the industry and changing consumer demands have led to new versions of products being launched in the market Players are entering into strategic alliances and tie-ups with technology suppliers to upgrade capabilities Adoption of super critical technology Government of India is encouraging the adoption of super critical technology for thermal power plants due to its efficiency and reduced emissions During the 12 th Five Year Plan, 60 per cent of the total additional power is expected to be generated by supercritical technology Source: Department of Heavy Industries Annual Report , Aranca Research

15 Company Revenues (FY13) Products Larsen & Toubro USD11.3 billion Engineering & Construction, Cement, Electrical & Electronics Bharat Heavy Electricals Ltd USD9.1 billion Power Generation, Transmission, Transportation Siemens India Ltd USD2.1 billion Power Generation and Distribution equipment, Transportation Systems, Communication and Healthcare Products ABB Ltd USD1.4 billion* Transformers, Switch gears, Control gears Crompton Greaves Ltd USD2.2 billion Power Generation and Transmission Equipment Source: Company Annual Reports, Aranca Research Note: * - Revenue for CY12

16 NORTH: Delhi, Uttarakhand and Haryana are the main hubs for electrical manufacturing in North India Central: Madhya Pradesh hosts manufacturing units for Crompton Greaves and BHEL WEST: Maharashtra and Gujarat host manufacturing units for major players Major Electrical Manufacturing Plant SOUTH: Tamil Nadu and Karnataka are hubs for electrical manufacturing in South India Source: Aranca Research

17 Capacity addition for power generation Demand-side drivers Rise in demand for backup equipment Industrialisation leading to demand for boilers and turbines De-licensing of power Reduction in Tariff and Customs Hike in duty on foreign products Easy fuel linkages and faster regulatory clearance for power Policy Growth drivers Investment Entry of global majors through Joint Venture Increasing FDI inflow Easy credit and subsidised loans to power companies projects Source: Aranca Research

18 India s energy requirement expanded at a CAGR of 6.8 per cent over FY06 13 to billion units Energy requirement (billion units) The rising demand for energy has led to increasing capacity addition for power generation CAGR: 6.8% FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Source: CEA, Aranca Research Note: CEA - Central Electrical Authority

19 Increasing investments in capacity has resulted in rising demand for power generation and transmission equipment Capacity addition for power generation in the recent Five Year Plans ( 000 MW) The government plans to add 885,000 MW and 100,000 MW of capacity by the end of the 12 th and 13 th Five-Year plans, respectively The increase in capacity during the 11 th Five Year Plan (FY07-12) stood at 45.3 thousand MW by the end of 11 th Five Year Plan 45.3 The figure is more than five times the corresponding one in 1990 (8.1 MW) During the first fourteen months of 12 th Five Year Plan (FY12-17), India has already added 22,500 MW or nearly 25 per cent of the targeted capacity addition of 88,500 MW during the five years FY90 FY97 FY02 FY07 FY12 FY17E FY22E Source: Ministry of Power Annual report , Aranca Research, Central Electricity Authority Note: E - Estimates

20 De-licensing The electrical machinery industry has been de-licensed; 100 per cent FDI is allowed in the sector This facilitated the entry of global majors into the electrical machinery industry in India Tariffs & custom duties Government has removed tariff protection on capital goods Government has lowered custom duties on a range of equipments Initiatives to increase power generation Planned capacity addition of 88.5 GW in the 12 th Five-Year Plan Through the Accelerated Power Development Reform Programme, the government plans to provide reliable, affordable and quality power to all National Electricity Policy (NEP) The government aims to achieve a per capita electricity consumption of 1,000 kwh through its Power for all by 2012 mission under NEP SEZ The government has cleared significant number of SEZs for the engineering sector across the country; electrical machinery is a part of the sector Delhi Mumbai Industrial Corridor being developed across seven states could boost engineering sector Source: Ministry of Power, Aranca Research

21 Vision statement To make India the country of choice for the production of electrical equipment and reach an output of USD100 billion by balancing exports and imports Focus on industry competitiveness To focus on technology and R&D and bring it on a par with global benchmark The government has lowered customs duties on a range of equipment Identify skills to support industry s requirement The government plans to set up the Electrical Equipment Skill Development Council (EESDC), which would focus on identifying critical manufacturing skills that are required for the electrical machinery industry Develop and strengthen support infrastructure The government plans to establish electrical equipment industry clusters Steps to enhance product-testing infrastructure in the country Increase share in export market The government plans to provide credit support to economically less-developed export markets To create a dedicated fund for EXIM bank to support exporters in the electrical machinery industry Source: Ministry of Power, Aranca Research

22 Developer Location Products M/s Essar Hazira SEZ Hazira, Gujarat Engineering Gujarat Industrial Development Corporation Ltd (GIDC) Gandhinagar, Gujarat Electronic products N.G. Realty Pvt Ltd Ahmedabad, Gujarat Engineering E. Complex Pvt Ltd Amreli, Gujarat Engineering Dishman Infrastructure Ltd Ahmedabad, Gujarat Engineering Ansal Properties and Infrastructure Ltd Sonepat, Haryana Engineering Raheja Haryana SEZ Developers Pvt Ltd Gurgaon, Haryana Engineering Ansal Kamdhenu Engineering SEZ Ltd Sonepat, Haryana Engineering Karnataka Industrial Areas Development Board Shimoga, Karnataka Engineering Suzlon Infrastructure Ltd Mangalore, Karnataka Port-based for high-tech engineering products Maharashtra Industrial Development Corporation (MIDC) Satara, Maharashtra Engineering Township Developers India Pvt Ltd Pune, Maharashtra Engineering Vividha Infrastructure Pvt Ltd Patiala, Punjab Engineering Source: SEZ India, Aranca Research

23 Developer Location Products New Chennai Township Pvt Ltd Kanchipuram, Tamil Nadu Engineering Perundurai Engineering SEZ by SIPCOT Erode, Tamil Nadu Engineering Uttar Pradesh State Industrial Development Corporation (UPSIDC) Kanpur, Uttar Pradesh Engineering Source: SEZ India, Aranca Research

24 Cumulative FDI inflows over FY00 13 stood at USD3.2 billion Cumulative FDI inflows from Apr 2000 (USD billion) FDI inflow in the first five months of FY14 stood at USD255.3 billion CAGR: 23.5% FY08 FY09 FY10 FY11 FY12 FY13 Source: Department of Industrial Policy & Promotion, Aranca Research Note: FY08 - Cumulative from April 2000 to March 2008 and so on

25 Companies seek inorganic growth through targeting foreign and domestic players Major M&A deals Crompton Greaves acquired the smart grid automation company ZIV Group for EUR150 million In 2011, Schneider Electric bought a 74 per cent stake in Luminous Power Technologies Pvt Ltd for USD290 million In 2010, Legrand acquired the switch gear business of Indo Asian Fusegear for USD127.6 million Target Acquirer Type Year RS Infosystems Pvt Ltd Henikwon Corporation ZIV Group Schneider Electric Infra Ltd Advance Metering Technology Acquisition 2013 Larsen & Toubro Acquisition 2012 Crompton Greaves Energy Grid Automation Ltd Acquisition 2012 Acquisition 2012 Alstom T&D India Ltd Indian Hume Pipe Co Ltd Esab India Ltd Grid Equipments Ltd ECE Industries Ltd Colfax Corporation Acquisition 2012 Acquisition 2012 Acquisition 2012 Source: Thomson Banker, Edelweiss Research, Assorted News Articles, Aranca Research

26 Global majors entering through JV Joint Venture Indian partner Foreign partner L&T - MHI 51% 49% BGR-Hitachi 70/74% 30/26% Thermax - Babcock Bharat Forge - Alstom 51% 49% 51% 49% Toshiba - JSW 25% 75% Boiler capacities planned through JV Companies in JV Capacity (MW) L&T MHI 4000 BGR Hitachi 4000 Thermax- Babcock 3000 Bharat Forge - Alstom 2000 Turbine capacities planned through JV Companies in JV Capacity (MW) Toshiba JSW 5000 GB Engineering Ansaldo 3000 GB Engineering - Ansaldo 15% 85% L&T MHI 4000 BGR Hitachi 4000 Source: Edelweiss Research, Aranca Research Notes: JV Joint Venture, MHI Mitsubishi Heavy Industries

27 Salient features One of the largest engineering and manufacturing companies with Maharatna status One of the major integrated power plant equipment (IPPE) manufacturers in the world and references in over 75 countries Profit-making company since Installed base of more than 120,000 MW 15 manufacturing units, two subsidiaries, seven joint ventures, and over 150 project sites Accounted for over 59 per cent of India's total installed generating capacity in FY12 Net sales increased by more than 2.2x over FY07 13; this amounted to a CAGR of 17.6 per cent Net sales (USD billion) CAGR: 17.6% FY07 FY08 FY09 FY10 FY11 FY12 FY13 Source: Company Reports, Aranca Research Note: Maharatna is the title given to nine Public Sector Enterprises by the Government of India having comparative advantages 9.1

28 Recent awards and recognitions Awarded Maharatna status by the Indian government (2013) Golden Peacock Award 2011 for Occupational Health and Safety (2011) SCOPE Meritorious Award for Best Practices in Human Resource Management Intellectual Property Award from the Government of India (2011) Essar Steel Infrastructure Excellence Award (2011) DSIJ Gentle Giant Award from the Government of India (2011) CII-Thompson Reuters Innovation Award (2010) Lower auxiliary power consumption Lower life cycle cost Boiler efficiency Key success factors Lower design heat rate Better PLF Notes: PLF - Plant Load Factor, Navratna is one of the designations given to public sector enterprises based on their profitability and there by granted certain autonomy

29 Salient features India s largest E&C company, with interests in projects, infrastructure development, manufacturing, IT & financial services Enjoys AAA rating with stable outlook from CRISIL and LAAA from ICRA Turnover increased at a CAGR of 15.8 per cent to USD11.2 billion over FY09 13 In FY13, net sales increased to USD11.2 billion from USD11.1 billion in FY12 Net sales (USD billion) 11.1 CAGR: 15.8% Notes: E&C Engineering & Construction, CRISIL - Credit Rating and Information Services of India Ltd, ICRA - Investment information and credit rating agency of India FY09 FY10 FY11 FY12 FY13 Source: Company Reports, Aranca Research

30 Recent awards and recognitions Operational performance (FY13 ) CNBC TV18 Infrastructure Leader of the Year Award (2013) CNBC TV18 Infrastructure Excellence Award (2012) National Award for Export Excellence (2012) ICC Corporate Governance and Sustainability Vision Award 2012 (2012) Green Business Leadership Award (2011) Thought Leader Brands in India (2011) Golden Peacock Award for CSR (2011) India s Most Respected Company in Infrastructure (2011) India Shining Star CSR Award (Wockhardt Foundation, 2011) Up 25% Up 5% Order inflow Up 14% Order book Sales Up 200bps EBITDA (E&C) Up 10% Recurring PAT Note: CSR - Corporate Social Responsibility

31 Emerged as one of the leading companies in the Indian electrical engineering market Revenue base of over USD2.4 billion Global leader in offshore wind transformer applications, with 42 per cent market share Opened a manufacturing unit in Bangalore Consolidated revenue expanded at a CAGR of 28% during FY06 11 Among the world s top 10 transformer companies Made nine acquisitions after 2005, including Pauwels Group Europe and the US contributed 33 per cent to FY12 revenue Focus on R&D Strong brand presence in the consumer electric products market Strong presence in the Indian electrical equipment market Focused on motors and consumer products Entered into electrical engineering with manufacturing of transformers and power system products Focused on gaining technological edge, global market reach, and wide product portfolio Source: Crompton Greaves Website; Aranca Research

32 Crompton Greaves established its international manufacturing footprint in 2005 by acquiring Belgium-based Pauwels Group The company s successful acquisitions include Ganz, Hungary, in 2006; Microsol, Ireland, in 2007; Sonomatra, France; MSE, USA, in 2008; and PTS, UK, in 2011 Overseas market accounts for about 40 per cent of revenues Segmental revenue (FY13) Net sales (USD billion) FY09 FY10 FY11 FY12 FY13 Geographical revenue (FY13) 18.9% Power Systems 15.1% 2.2% Asia Industrial Systems Europe 16.2% 64.9% Consumer Products 17.9% 60.2% North America Others Source: Company Reports, Aranca Research

33 Nuclear power generation India currently operates 19 atomic reactors which produce 4,780 MW of electricity and has set an ambitious target of generating 63,000 MW nuclear power by 2032 With many bilateral nuclear agreements in place, India is expected to become a major hub for manufacturing nuclear reactors and associated components The Indian Government proposes to add 3,380 MW of nuclear power capacity by 2012 as part of its capacity addition programme in the 11 th Five-Year Plan Power capacity addition Market-oriented reforms, such as the target of Power for all by 2012 and plans to add 88.5GW of capacity by 2017 and 100 GW by 2022, provide high incentives for capacity addition in power generation, which would increase the demand for electrical machinery Foreign participation in the development and financing of generation and transmission assets, engineering services, equipment supply and technology collaboration in nuclear and clean coal technologies is expected to increase High-voltage technology Power transmission in India, which is currently carried out largely in the 220 KV and 400 KV range, is expected to move up to a higher range of 765 KV and high-voltage direct current This presents a significant opportunity to manufacturers with capabilities in high-voltage (HV) to develop technology that can handle the need of such high voltages in the country Source: Aranca Research Note: KV - Kilo Volts

34 Indian Electrical & Electronics Manufacturer s Association (IEEMA) 501, Kakad Chambers, 132, Dr Annie Besant. Road, Worli, Mumbai Tel: , / 6528 / 6529 Fax: mumbai@ieema.org Engineering Export Promotion Council (EEPC) Vanijya Bhawan, 1 st Floor International Trade Facilitation Centre, 1/1, Wood Street, Kolkata, West Bengal Phone: , Fax: eepc@eepcindia.org

35 BTG: Boilers, Turbines, Generators BHEL: Bharat Heavy Electricals Limited CAGR: Compounded Annual Growth Rate CEA: Central Electrical Authority DHI: Department of Heavy Industries E&C: Engineering & Construction EEPC: Engineering Export Promotion Council FDI: Foreign Direct Investment FY: Indian Financial Year (April to March) GW: Giga Watt HVDC: High Voltage Direct Current KV: Kilo Volts

36 KVA: Kilo Volt Ampere L&T: Larsen and Toubro MHI: Mitsubishi Heavy Industries PLF: Plant Load Factor SEZ: Special Economic Zone USD: US Dollar Wherever applicable, numbers have been rounded off to one decimal

37 Exchange rates (Fiscal year) Exchange rates (Calendar year) Year INR equivalent of one USD Year INR equivalent of one USD Average for the year

38 India Brand Equity Foundation ( IBEF ) engaged Aranca to prepare this presentation and the same has been prepared by Aranca in consultation with IBEF. All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF. This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of Aranca and IBEF s knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. Aranca and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation. Neither Aranca nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation.