1. Power Conversion Components atPower Conversion Components at
IndiaIndia
A dipstick study to determine state of market.
Soumya P. Dhar
Bangalore, India
26th
August 2008
2. AgendaAgenda
The Indian electronics components industry
Production figures & trends
Growth drivers
DC to DC power converters
Voltage regulators & detectors
Market structure
Key Findings
A Thai case study of investment at India
A reality check with Nokia
3. The Indian Electronics IndustryThe Indian Electronics Industry
India currently worth $10 Billion but estimates put it a
potential $ 40 billion by 2010.
Currently less than 1% (0.7 %) of the global electronic
industry and is miniscule by international comparison.
Indian market growing rapidly and investments are flowing in
to increase manufacturing capacity.
India however a major importer of electronic components
and finished equipment amounting to over US$12 Billion in
2005.
The output of the Electronic Hardware Industry in India is
worth $11.6 Bn at present.
Largest segment is the consumer electronics segment and the
largest export segment is components.
From ELCINA Electronic Industries Association of India (Formerly Electronic Component Industries Association)
4. State of the IndustryState of the Industry
Global Electronics Hardware production estimated
between US$1200 – 1400 Bn
India’s share @11.60 Bn < 1%
Share in GDP < 2% compared to 23% in Israel and 10%
in China
Components US$1.85 Bn (of which 50% exported);
Local components demand met largely by imports
Fastest growing segment – semiconductors – have small
manufacturing share in India
Market growing by ~ 25% ; Over half the demand is met
by imports
Production growing by 15% - Huge opportunity for local
manufacturing by domestic and global companies
6. Actual Production in ’01 to ‘04 (Rs Million)Actual Production in ’01 to ‘04 (Rs Million)
Sector 2001-02 2002-03 2003-04
Consumer
Electronics 127000 138000 152000
Industrial
Electronics 45000 55500 61000
Computer H/W 35500 42500 68000
Comm. &
Broadcasting 45000 48000 53500
Strategic
Electronics 18000 25000 27500
Components 57000 66000 76000
Total 327500 375000 438000
From ELCINA Electronic Industries Association of India (Formerly Electronic Component Industries Association)
7. Production Trends For Selected Components (RsProduction Trends For Selected Components (Rs
Million)Million)
From ELCINA Electronic Industries Association of India (Formerly Electronic Component Industries Association)
8. Top Ten EMS Companies worldwideTop Ten EMS Companies worldwide
Company
Revenue ($
Million)
Market share
(%)
SCI system 5,367 17.4
Solectron 2,934 9.5
Celestica 2,600 8.5
Jabil Circuit 833 2.7
Avex Electronics 717 2.3
Nm Steel 680 2.2
Venture Manufacturing 569 1.9
Manufacturers Services Ltd. 475 1.5
Flextronics International 463 1.5
Bull Electronics 425 1.3
Total Top Ten 15,063 49.0
From ELCINA Electronic Industries Association of India (Formerly Electronic Component Industries Association)
9. Growth DriversGrowth Drivers
Presence of international contract manufacturers and
design and development of hardware at India.
Electronic component industry growth is fuelled by millions
of users are resorting to e – commerce and online
electronic component sale and purchase.
Power electronic components sales have grown due to
mass cyber-marketing and easy availability of internet
resources.
Components like DC to DC converters, voltage detectors
& regulators have registered tremendous growth.
10. The Indian Scenario so farThe Indian Scenario so far
Under zero duty regimeUnder zero duty regime
Existing companies investments low
Fresh investment in EMS and Mobile Phones; large
investment in components required
New companies announcing mfg plans in phased manner
Inverted duties being corrected
Huge trade deficit in electronics > $10Bn & growing;
Domestic Mfg growth required @30% per annum
Demand growing at 25% per annum and will continue
due to low penetration levels
12. Source: Ernst & Young
Demand = US $ 22 Bn
Supply = US $ 11.6 Bn
With 30% CAGR
Supply = US $ 48 billion
GAP $22
billion
2004-05-- 2009-10-1
Total Demand = US $ ~70 billion
(Domestic & Export Demand
plus Imports)
Gap $ 10.4 Bn
Demand supply gap in Indian electronic hardware
15. Electronics Production- $150+ bn OpportunityElectronics Production- $150+ bn Opportunity
Indian electronics equipment production was estimated at $10.99 billion in 2005 and is expected to reach
$58 billion in 2010 and $155 billion in 2015 growing at a CAGR of 26.9%
Indian electronics production output had a share of less than one percent in 2005. The share is expected
to increase to 2.5 percent in 2010 and 5 percent in 2015
Note: The bubbles in the chart depict the share of Indian electronic equipment production as a percentage of
the global electronics equipment production.
Read Coordinates as (X, Y) = (Year, Share in percentage)
Source: ISA – Frost & Sullivan
16. India advantageIndia advantage
A very rapidly growing
domestic market: CAGR 30%
+
Global recognition for back-
end services:
◦ A proven case for IP, embedded
systems and IC design
Attractive for Manufacturing
Investments
◦ Skilled employee base
◦ Fast and upcoming modern
infrastructure (SEZs)
Proximity to EU and MEA
market
◦ Freight Cost; 20% cheaper than
China - Faster delivery and
lesser pipeline inventory
Local Market
Profit from
Local Sales
Manufacture
Harness low cost
manufacturing
base to service
local, European
and MEA markets
Back-end Services
Use India for IP and ITes
Services
-New Product
development
-Engineering services
-BPO
Advantage
India
India is a great Opportunity –Triple Advantage
17. DC to DC power converters:DC to DC power converters:
Players – many small Indian SME manufacturers,
distributors, samples:
◦ NiseTech Solutions: New Delhi, INDIA 110083 Telephone:
+919868370569,+91-011-27934973, web site:
http://www.nise-techsolutions.com
◦ UDAY UDYOG Padma Rao Nagar, Secunderabad - A P, INDIA.
Approximately Rs. 5 to 10 crores of business average ($
1 – 2 million) per player.
18. Types of DC – DC converters:Types of DC – DC converters:
1. Step-up DC/DC converters
2. Step-down DC/DC converters
3. Step-up/down DC/DC converters
4. Multi channel DC/DC converters
19. Voltage Regulators & DetectorsVoltage Regulators & Detectors
An electrical regulator designed to maintain a
constant voltage level and detect voltage
levels.
Some regulators have the detector function
built into it and used in SMPS.
Many small to medium manufacturers at India.
20. Market & Distribution structureMarket & Distribution structure
Large MNC players and local domestic manufacturers.
MNCs have sales infrastructure and pursue active sales
strategies.
Smaller domestic players use passive strategies like internet
platforms, ELCINA manufacturers directory etc. and reach
customers directly.
Distribution is also similar – MNC distributors and local
domestic ones – however the order process is usually
internet based with no credit terms.
Distributor has the highest margins at gross of 30%
Manufacturer Distributor Consumer
21. Key Findings:Key Findings:
Technologies in the power converter electronics
market change regularly.
Currently, this market is rife with dynamics that will
create shifts that provide both opportunities and
threats for power supply makers.
In the past, this market has thrived on innovation,
which provided growth for the power supply industry,
but today a number of economic and business model
changes provide a plethora of possibilities.
Industry consolidation, both in end markets and in the
power converter electronics market, is creating a
number of disruptions.
22. Taxes & Support to IndustryTaxes & Support to Industry
Well defined tax policies
Major Tax reforms post liberalization:-
Sharp Reduction in Duties over last 10 years
Customs duty Reduced from Avg of 90% to 20%
Excise Duty isVatable -Avg rate 16%
Corporate Tax rationalization – 35%
Upgradation of Tax administration - EDI
Double Taxation Relief: DTAA with 65 countries including
USA, UK, Japan, France, Germany, etc.
Support in the form of Duty Drawback, DEPB and Advance
Licensing to exporters
StateVAT introduced from 1st April 2005; CompositeVAT
within next 2-3 years
23. Foreign investor entry – a case studyForeign investor entry – a case study
Delta Electronics Plc, Thailand’s biggest listed electronics
business, is planning to expand in India with an investment of
$50 million in 2009.
1996 - Set up wholly owned subsidiary Delta Energy Systems
(India) at Gurgaon,Haryana to make and sell power systems.
2007 - Set up Delta Power Solutions India Pvt. Ltd to make
and sell telecom power systems, uninterrupted power supply
(UPS) units and other products.
2008 - operates two plants at India
◦ Rudrapur, Uttarakhand - telecom power supplies and UP units,
◦ Pondicherry,Tamil Nadu telecom power supplies and magnetic components.
24. Mr.Anusorn MuttaraidMr.Anusorn Muttaraid
Director & EC Member at Delta speaksDirector & EC Member at Delta speaks
“We've already invested about 300 million baht in India and are
preparing to allocate $50 million more to set up a new plant in
Chennai,''
''India is a very promising market and its tax incentives are very
attractive.”
“Our investments are granted a tax holiday for five years and a 50%
tax cut for another five years”
“On top of that, India allows 100% foreign ownership and tax
waivers are also available for imported machinery if the plants are
located in industrial estates.'‘
“Another advantage is relatively low labour cost.The monthly wage of
non-skilled labour is just 1,800 to 2,000 baht.”
“Last year's sales in the Indian market were outstanding, more than
doubling to $96 million. Sales are expected to top $150 million at the
end of this year, about $2-5 million from exports.”
25. Delta – looking aheadDelta – looking ahead
Pondicherry plant due to start production
on Aug 28 output destined mainly for China.
Company in talks with the central
government to look for a site in Chennai to
make low-end electronic components to
supply the group's production base in
Slovakia.
Set an ambitious target to raise its sales in
India to top $1 billion over the next seven
years.
26. A reality check at NokiaA reality check at Nokia
◦ “If our demand for semiconductor is 1 per cent of global demand, then we can target
4 to 5 per cent global market share at least in terms of manufacturing. But we are not
thinking about it. In every forum where we talk about it, I am asked what is your
demand for semiconductor? Just 0.7 per cent and you need policy for semiconductor.
That is where we need to bring change in our thinking,”
◦ “EMS players like Jabil, Flextronics are great OEMs who have put up their shop in
India but they have put up their shop with virtually everything getting imported.
Is this the right direction through which we can sustain our manufacturing? Is this the
right direction taking which we can say we will grow? I don’t think so,
◦ “There is no one bothered for airport strike. Our material keeps lying in the rain, and
no one is bothered about it. If we put some extra people we get threat from union
leader, "don’t touch it, you will lose your life."Then tell me should I export?”
Sachin Saxena, Operations
Director Nokia India
http://energy.sourceguides.com/businesses/byGeo/byC/India/byP/dcdc/byB/mfg/mfg.shtml this link will give you a list of several manufacturers across India