An insight study of Aviation, Automobile, and Leather Industry of INDIA. Brief but precise information about INDIA as an economy in various defined sectors and how it is coming on the world platform and competing with global players.

1. Industry Analysis
Aviation, Automobile, Leather Industry

2. Aviation Industry
 Indian aviation Industry is highly growing industry and will become 3rd largest aviation market by 2020.
Civil aviation industry entering into the new technology era with various driving factors like low-cost
carriers, modern airport, FDI, advanced information technology.
Aviation Industry is Divided into:-
 Interational Carriers Regional Carriers Cargo Carriers
Market Size:-
The market size of Indian aviation Industry is US$16 billion and it is 9th largest civil aviation market in the
world expected to become 3rd largest aviation market by 2020.
Total aircraft movement at all India airport increased by 14.3%
According to Crisil India is among the five fastest growing aviation market
Indian aviation Industry is highly growing market and it is largely untapped thus having huge growth
opportunity
Total domestic passenger growth during Jan-Nov 2016 903.36lak against 933.82lak during the corresponding
period of previous year there by registering a growth of 23.10%

3. Growth Rate
Reasons for Growth rate:
 Increase in the Business Class booking upto75% YOY(2015-2016)
comparison for every month increase in corporate activity
 Increase in tourism:
 International from 2014-2015 4.44%
 Domestic from 2014-2015 11.63%
 PPP increased to 5730 USD

4. Penetration Level
 India’s penetration of 0.08 annual domestic seats per capita is low relative
to other developing markets like Brazil, Turkey, Indonesia and China,
where penetration rates are between 0.35 and 0.65 annual seats per capita

5. Market Segments-Size.
 Regional Carrier:
Passengers Carried 2015-2016: 85197675
Freight Carried 2015-2016: 590793.7
Mail Carried 2015-2016: 32770.9
 International Carrier:
Passengers Carried 2015-2016: 18625233
Freight Carried 2015-2016: 248441
Mail Carried 2015-2016: 3628.7
 Cargo Carriers:
Blue dart 2015-2016:
Freight Carried: 125526

6. Stake Holders
 Indigo:
Indigo is a utilitarian low-price domestic airline which offers feasible flying alternatives for millions. The
airline was facilitated by the Air Passengers Association of India (APAI) as the “Best Low-Fare Carrier in
India for the year 2007”. Indigo has 120 daily departures and a fleet of 19 Airbus A320.
 Go Air Airlines:
Like SpiceJet, a Go Air airline is also a low price airline endorsed by the Wadia group. It was inaugurated in
Mumbai in June 2004. It operates in 11 cities with 61 daily departures.
 Spice Jet
Spice Jet is basically a low cost airline which incorporates many Boeing 737-800 airplanes in its fleet. It
covers 14 destinations in India
 Jet Airways.
Jet Airways was established on May 5, 1993. It earns yearly revenue of Rs 2502.89 and total income of
approx ₹ 117868.8 Million. At present it id India's biggest private domestic airline with 62 aircrafts and a
market share of 25%. It covers 50 destinations with 340 regular departures

7. Porter 5 Force
New entrants’ threat- Low
Customers/buyers bargaining power- High
• This industry requires a huge capital and without a strong customer base there will be little to no profit in the first few years.
• There are two aspects that do however raise the threat level.
• First, there are extremely low switching costs.
• Second, there are no proprietary products or services involved.
• The airline industry is made up of two groups of buyers.
• First, there are individual flyers. They buy plane tickets for a number of reasons that can be personal or business related.
This group is extremely diverse; most people in developed countries have purchased a plane ticket by themselves.
• The other group of They can do this through the specific airline or through the second group of buyers; travel agencies
and online portals. This buyer group works as a middle man between the airlines and the flyers.

8. Level of rivalry among competitors- High
Threat of substitute products- high
• There are substitutes in the airline industry. Consumers can choose other form of transportation such as a car, bus, train, or boat
to get to their destination. There is however a cost to switch.
• Over this the main competitor for this industry is online chat industry.
• The fixed costs are extremely high in this industry. This makes it hard to leave the industry because they are probably in long
term loan agreements in order to stay in business. The products involved or the planes are highly complex which also heightens
the competition.
Bargaining power held by suppliers-Low
• Most firms have long term contracts with their suppliers. Planes are such high capital products that firms probably make long
term loan agreements and have more favorable credit terms when they don’t switch companies.
• The top two manufacturers in the world currently are Boeing and Airbus(Odell,Mark).
Industry Rivalry- Moderate
• Existing firms can and will use their high capital to retaliate against newer firms with whatever means necessary such as
skimming pricing technique , better services, low or no cancellation charges, etc.
• The fixed costs are extremely high in this industry. This makes it hard to leave the industry because they are probably in long
term loan agreements in order to stay in business. The products involved or the planes are highly complex which also heightens
the competition.

9. Industry Life Cycle

10. Phases:-
Introductory Stage:-
 1910: The first Indian, or maybe even Asian, to have an airplane is the young Maharaja of Patiala,
Bhupinder Singh. Commercial aviation came in the year 1911.
 JRD Tata launches India’s first scheduled airline in 1932. Tata Airlines flies 160,000 miles, carries
155 passengers and 10.71 tones of mail.
 1946: Tata Airlines changes its name to Air India.
Growth Phase:-
 Legislation comes into force to nationalize the entire airline industry in India in 1953.
 East West Airlines becomes the first national level private airline to operate in the country after 37
years in 1990. Domestic Passenger traffic Compound Annual Growth Rate (CAGR) – 10.1% (FY 2006-
16).
 International Passenger traffic CAGR – 8.8% (FY 2006-16).
 Total freight compared to International air freight traffic CAGR in Domestic Sector – 7.6% (FY 2006-
16) and in International Sector 4.8% (FY 2006-16)
 India has more than 86 scheduled international airlines constituted of 5 Indian carriers and 81
Foreign carriers. Currently India has air connectivity with 55 countries through more than 300
routes.
 Passenger traffic is growing at 20% per annum in the last 2 years.

11. The forces of change in the industry and
their impact
 Price of aviation fuel
In FY2015 traffic increased and losses declined but this was largely a function of lower fuel
prices. Crude has fallen from a high of $105 per barrel in July 2014 to ~$30 per barrel in
February 2016.It is one of the major input cost.
 Government policy:-
The government raised foreign direct investment (FDI ) limit in scheduled commercial airlines
to 100 per cent from 49 per cent.
 Modernization of airport
100% FDI in Brownfield and Greenfield projects.
With a view to establish a high standard and help ease the pressure on the existing airports.
 Increase in PPP
The recent and forecast trends in per capita disposable income in India, the number of people for
whom air travel will become the rational choice will increase materially over the next few
years.

12. Automobile Industry

13. Automobile:
•Sixth largest producer in the world with an average annual production of 24 million vehicles in
2016.
•India has the fifth largest passenger vehicle and commercial vehicle market
•Contributes to 7.1 % of India's Gross Domestic Product (GDP) by volume.
•Six million-plus hybrid and electric vehicles to be sold annually, by 2020.
•Two-wheeler production has grown from 8.5 million units annually to 15.9 million units in the last
seven years.
• India is also a prominent auto exporter and has strong export growth expectations for the near
future. In April-January 2016, exports of Commercial Vehicles registered a growth of 18.36 per
cent over April-January 2015

14. Market Growth
 Sales of passenger vehicles increased by 16.7 per cent to 258,000 units in
August 2016 driven by better-than-expected monsoon and strong buying
sentiment*. Sales of commercial vehicles grew by 1.53 per cent to 52,996 units.
 Government of India aims to make automobiles manufacturing the main driver
of ‘Make in India’ initiative, as it expects passenger vehicles market to triple to
9.4 million units by 2026, as highlighted in the Auto Mission Plan
Market Segment
 Passenger Vehicles 14%
 Commercial Vehicles 3%
 Three-wheelers 3%
 Two-wheelers 80%

15. Reasons for Growth:
•A growing working population and an expanding middle-class are expected to
remain key demand drivers. GDP per capita has grown from USD 1,432.25 in
2010 to USD 1,500.76 in 2012, and is expected to reach USD 1,869.34 by 2018.
•India has the world's 12th largest number of high-net-worth individuals, with a
growth of 20.8%, the highest among the top 12 countries.
•Increasing disposable incomes in the rural agri-sector.
•Between 2009-10 and 2011-12, additional spending by rural India was Rs
3,75,000 crore, significantly higher than Rs 2,99,400 crore by urbanites.
•Favorable government policies like lower excise duties, automotive mission
plans, the constitution of NEMMP (National Electric Mobility Mission Plan
2020), FAME (Faster Adoption and Manufacturing of Hybrid land Electric
Vehicle)

16. Infrastructure
India has made remarkable progress in building new roads, highways, expressways and support infrastructure
like airports, ports, railways and power plants, infrastructure growth has not kept pace with growing
demand..
Tax reforms:-
Implementation of GST, replacing 17 different tax levies, logistics, warehousing and other aspects of the
supply chain will equate to lower costs for transport and a decreased need for storage overhead as well as
faster delivery to consumers
Urban to rural:-
India’s remarkable automotive growth has so far been fueled by urban consumers. On the other hand, rural
India, home to 70% of the country’s population
FDI
In order to keep up with the growing demand, several auto makers have started investing heavily in various
segments of the industry The industry has attracted Foreign Direct Investment (FDI) worth US$ 15.06
billion during the period April 2000 to March 2016.
Make in INDIA
Automotive industry is included in the “MAKE in INDIA “ initiative. It expects passenger vehicles market to
triple to 9.4 million units by 2026
The forces of change in the industry
and their impact

17. Major Player

18. Porter 5 force
New entrants’ threat- Low
• High capital requirement
• High sunk costs that limit competition
• Requirement of advanced technologies
• Patent limit for new competition
• Economies of scale
• Need to brand names that are strong
Customers/buyers bargaining power- High
• The buyer price sensitivity is High
• There is a low distributors dependency
• The number of customers is large
Bargaining power held by suppliers-Low
• High level of competition among suppliers
• Low suppliers concentration
• Critical inputs production
• Critical volume to suppliers

19. Level of rivalry among competitors- High
• Product differentiation
• Low costs of storage
• Limitations by the government to curb competition
• Large size industry
• Fast growth rate in the industry
• Entry of few competitors
Threat of substitute products- High
• There is a high threat in terms of making a switch to substitutes
• The substitutes are limited

20. Leather Industry Analysis

21. 1.Size of the industry:-
a. Indian leather sector stands at USD 17.85 billion
(Exports – USD 5.85 billion, Domestic Market – USD 12 billion).
2. Growth rate of the industry
a. As per officially notified DGCI&S monthly export data, the export of
Leather and Leather products for the financial year April-March 2015-16
touched US$ 5853.96 mn as against the performance of US$ 6494.84 mn
in the corresponding period of last year, recording a negative growth of -
9.86%. In Rupee terms, the export touched Rs. 383250.52 mn in April-
March 2015-16 as against the previous year’s performance of Rs.
397118.71 mn registering a negative growth of -3.49%.
b. CAGR: - Cumulative annual growth rate of about 14.77% (5 years).
c. Growth rate:- 27.99% from 30.97%

22. Percentage share of various countries in
India’s Leather & Leather Products Exports
(2013-14)

23. Percentage Share of Leather & Leather
Products (2013-14)

24. Market Size
 Indian leather sector stands at USD 17.85 billion
(Exports – USD 5.85 billion, Domestic Market – USD 12 billion).
 India accounts for 12.93% of the world’s leather production of hides/skins.
 High Growth projected in the next five years.
 Indian leather industry has one of the youngest workforce with 55% of workforce below 35 years of age.
 India is the second largest producer of footwear and leather garments in the world.
 Strong Raw Material Base:
 A strong base for raw materials – India is endowed with 20% of the world’s cattle and buffalo and 11% of the
world’s goat and sheep population.
 India produces 2.5 billion sq. feet of leather, accounting for about 13% of global production.
 The Indian Leather Industry comprises of major segments namely Footwear, Finished Leather, Leather Goods,
Leather Garments, Footwear Components and Saddlery and Harness. All these segments have high growth
potential.
 Per capita consumption of footwear in India projected to increase upto 4 pairs and total domestic consumption
is expected to reach upto 5 billion pairs by 2020.
 Great opportunity to set-up manufacturing facility of footwear components, considering increasing demand
for fashion footwear in India.

25. Cont…
 High growth potential on exports, the ready availability of leather, the abundance of essential
raw materials and rapid strides in the areas of capacity modernisation and expansion, skill
development and environment management, coupled with a favourable investment climate
has made the Indian leather industry a favourable investment destination.
 Youth Power: With 55% of the workforce below the age of 35, the Indian leather industry has
one of the youngest and most productive workforces.
 Favorable government policies for promotion of leather sector.
 Increasing domestic market for Fashion Accessories like Hand Bags, Wallets, Purses etc.

26. (Value In Million Rs)
CATEGORY APR-MARCH 2014-15 APR-MARCH 2015-16 % VARIATION
FINISHED LEATHER 81263.05 68509.14 -15.69%
LEATHER FOOTWEAR 139296.09 140574.13 0.92%
A Statement showing the Product-wise Export performance during April-March 2015-16 vis-à-vis April-
March 2014-15 is given below:
Product wise Growth

27. Major Market Segments-size
FOOTWEAR COMPONENTS 22090.86 18613.91 -15.74%
LEATHER GARMENTS 36952.09 36288.62 -1.80%
LEATHER GOODS 88831.47 89626.45 0.89%
SADDLERY AND HARNESS 9948.33 9583.6 -3.67%
NON-LEATHER FOOTWEAR 18736.82 20054.67 7.03%
TOTAL 397118.71 383250.52 -3.49%
Source: DGCI &S

28. 81263.05
139296.09
22090.86
36952.09
88831.47
9948.33
18736.82
68509.14
140574.13
18613.91
36288.62
89626.45
9583.6
20054.67
0 20000 40000 60000 80000 100000 120000 140000 160000
FINISHED LEATHER
LEATHER FOOTWEAR
FOOTWEAR COMPONENTS
LEATHER GARMENTS
Chart Title
APR-MARCH 2015-16 APR-MARCH 2014-15