Establishment of
Rotating Machine
Manufacturing Unit
Heavy Engineering
Government of Gujarat
Contents
Project Concept
3
Market Potential
5
Growth Drivers
6
Gujarat – Competitive Advantage
7
Project Information
9
- Location/ Size
- Infrastructure Availability/ Connectivity
- Key Players/Manpower required/Project structure
- Key considerations
- Potential collaboration opportunities
- Raw material suppliers
Project Financials
14
Approvals & Incentives
16
Page 2
Project Concept
Rotating machines
Rotating machines (majorly include electric motors) convert electrical energy into mechanical
energy (motion).The reverse of this (conversion of mechanical energy into electrical energy) is
done by electric generators*.
Electric motors find diverse applications ranging from propelling ships, driving heavy machinery in
industrial setting, powering electrical automotive, to domestic appliances (like fans, grinders)*.
►
►
Project overview
►
The Proposed project involves establishing a complete Electric Motor facility for manufacturing
rotating machines at Vatva Industrial Estate Ahmedabad.
►
The facility will have two main assembly processes, namely, Stator assembly and Rotor
assembly – the sub-processes include assembly of Laminated Core, Copper coil winding, Shaft
manufacturing, rotor assembly.
►
The total cost of setting-up of the rotating machines manufacturing facility is estimated to be
~INR 1070 million and the benefits from such an investment will become apparent considering
that the Electrical machinery industry is expected to grow at a CAGR of 14.0% between FY17FY22 due to Rising power generation capacity in India and demand from infrastructure, mining,
oil and gas, consumer durable and automotive industry.
Market segmentation by output power
Category
Power
rating
Major application
FHP (Fractional horse
power)
<1 HP
Home appliance, automotive,
agricultural
IHP (Integral horse
power)
>1 HP
Industrial applications, automotive
*This report will primarily focus on industrial electric motors ; ** Electro magnetic induction: production of electric current
across a conductor through its interaction with magnetic field
Sources:
Types of motors, http://www.electrical4u.com/electrical-motor-types-classification-and-history-of-motor/
Difference Between Single Phase and Three Phase Induction Motor, http://circuitglobe.com/difference-between-single-phase-and-three-phaseinduction-motor.html#ixzz4D3sJH0LS
http://www.ece.uah.edu/courses/material/EE410-Wms2/Electric%20motors.pdfr/
Page 3
Project Concept
Broad classification of electric motors (rotating machines)
Electric motors
Direct current
(DC) motors
Converts DC in to
mechanical power
Synchronous motors
Alternate current
(AC) motors
Converts AC in to
mechanical power
Induction motors
Rotation of shaft is synchronized with the
frequency of supply current; magnetic field is
provided by means other than induction
Also known as asynchronous motors, electric
current needed to produce torque is obtained
by electromagnetic induction (EMI**)
1 phase induction
motors
3 phase induction
motors
Uses three phases electricity supply for its
operations (used in medium to heavy industrial
applications)
Operate on single phase electricity supply
(used in drilling, lathe machines; smaller fans
and blowers)
Page 4
Market Potential
Global electric motors industry
Global IHP* market size (US$ billion)
CAGR:
6.8%
29.8
27.9
26.2
2014
2015
2016
Global IHP market size (US$ billion)
36.5
31.8
2017
Small motors (1 to
250 HP)
72.7%
Medium motors (250
to 470 HP)
10.3%
Large motors (above
470 HP)
17.0%
34.0
2018
2019
*Industrial electric motors and IHP are used interchangeably
a fraction of small motors IHP market also include non- industrial motors
►
►
Global IHP electric motor market is likely to grow at a CAGR of 6.8% between 2014-19
► The growth is expected to be led by demand from emerging economies and
replacement demand from enforcement of stringent energy regulations across the
world.
APAC is the largest electric motor market globally(contributing ~66.2% to the overall
market) followed by Americas (~21.4%) and EMEA (~12.4%).
Indian electric motors industry
India rotating machines industry (‘000 crore)
►
CAGR:
14.0%
6
CAGR:
16.4%
FY11
29
Electrical machinery industry is
expected to grow at a CAGR of
14.0% between FY17-FY22 led
by:
15
FY17
FY22
INR 0.25b
INR 0.41b
Rotating machines
exports from India
(FY15)
Rotating machines
imports in India
(FY15)
*Rotating machines include industrial motors as well as generators
Sources:
IEEMA- Indian Electrical and Electronics Manufacturers Association
Global electric motor market 2014-19 by Technavio via EMIS
Indian electrical equipment industry mission plan 2012-22
Electrical machinery industry report by IBEF, August 2015
Electrical machine, Make in India website, http://www.makeinindia.com/sector/electrical-machinery
US$ 1= INR 61.1; http://www.ukforex.co.uk/forex-tools/historical-rate-tools/historical-exchange-rates
Page 5
►
Favorable policy initiatives
by government of India
(GOI) to boost
manufacturing
►
Rising power generation
capacity in India
►
Demand from
infrastructure, mining, oil
and gas, consumer
durable and automotive
industry
Growth Drivers
Increase in power generation capacity is set to drive the demand for electrical machinery and
equipment in India
Installed electricity generation capacity (GW)
There is a direct correlation between
growth of power generation
and demand of electrical machinery
(including electric motors)
600
303
245 272
223
200
174
CAGR:
7.8%
FY11 FY12 FY13 FY14 FY15 FY16
Indian installed generation capacity is
likely to grow at a CAGR of 7.8%
between FY16-22
FY25T
Demand for industrial motors from manufacturing sector is likely to rise in future led by
favorable policy initiatives by GoI
Policy support:
~ 25%
~16%
Targeted contribution
of manufacturing by
2025
►
GoI “Make in India” initiative aims to make India
global manufacturing hub
Manufacturing sector
contribution to Indian
GDP
►
GoI plans to develop more
than 100 smart cities across
India at an investment of
around US$15b by 2020 to
support urbanization
►
Under the initiative, 100% FDI is allowed in
most of the manufacturing sub-sectors
(including electrical machinery)
►
Tax incentives to manufacturing companies
investing more than INR 1b in plant and
machinery
Delicensing of electrical machinery industry
Housing for all by 2022
initiative aims to build 20
million urban dwellings and 40
million rural houses over the
next eight years
Mining activity in India is
expected to revive after going
through slowdown as GoI fast
tracked the mining auction
process
Further, expected growth in infrastructure, oil and gas, mining, consumer durables and automotive
industry is likely to boost the manufacturing (which indirectly will create demand for electric motors)
in India
Sources:
National manufacturing, Make in India website,
http://www.makeinindia.com/policy/national-manufacturing, accessed 1
July 2016
Government policy support, http://www.makeinindia.com/article//v/defence-indigenisation-the-way-forward
India’s Total Cumulative Electricity Capacity To Reach 600 GW By 2025”,
Clean technica website, http://cleantechnica.com/2015/10/16/indias-totalcumulative-electricity-capacity-reach-600-gw-2025/, accessed 22 June
201
Indian Electrical Equipment Industry Mission Plan 2012-2022”
Central electricity authority, CEA website,
Page 6
http://www.cea.nic.in/reports/monthly/installedcapacity/2016/installed_cap
acity-03.pdf, accessed 22 June 2016
India wants to create 100 'smart cities' - how can it get there?, world
economic forum, https://www.weforum.org/agenda/2016/04/india-wantsto-create-100-smart-cities-how-can-it-get-there/, accessed 1 July 2016
”Leading the way: capital goods”, Make in India website,
http://www.makeinindia.com/article/-/v/defence-indigenisation-the-wayforward, accessed 1 July 2016
” New mining law to spur cement, steel M&As”, Live mint website,
http://www.livemint.com/Politics/O5axBKu65B9bkhOFsfq2eK/Indiaamends-mining-law-in-boost-to-cement-mergers-and-banks.html,
accessed 1 July 2016
Gujarat - Competitive
Advantage
Gujarat’s manufacturing industry, the strongest in India, is further
likely to grow on favorable government policies, robust infrastructure
and location advantage
Indian states with highest annual capital investment (INR trillion)
5.0
1.9
1.2
1.9
2.1
FY07
2.6
2.1
1.3
1.5
3.4
FY09
4.0
FY10
4.6
FY11
FY12
Gujarat
4.9
5.5
FY13
FY14
1.5 m
Registered manufacturing units in
Gujarat in FY14 (highest in India)
►
2.8
Maharshtra
230,000
►
2.9
2.6
2.3
Tamil Nadu
2.5
FY08
3.5
2.9
2.0
4.9
4.1
Micro small and medium
enterprise in FY14 (seventh highest in India)
Gujarat has attracted the highest capital investment among Indian states over the last
decade, with a significant proportion invested in manufacturing sector
Gujarat large manufacturing base which is further expected to grow is likely to create
demand for electrical machinery in the state
High availability of skilled manpower (engineers)
Engineering seats in Gujarat – by
specialisation (Academic year 2014-15)
23%
Mechanical
Computer
17%
Electronics &
Communication
17%
14%
Civil
13%
Electrical
Information
Technology
8%
Others
8%
Total seats: 46,069 for admission
through Gujarat Common Entrance Test
Page 7
As of June 2016, Gujarat had ~126
undergraduate engineering colleges and ~70
post graduate engineering colleges with
intakes of ~68,447 and ~6,694 students per
year, respectively.
► More than 80% of the seats were in selffinanced private colleges, while 15% seats
were in Government colleges.
Leading engineering colleges in Gujarat:
► Indian Institute of Technology (IIT),
Gandhinagar
► Sardar Vallabhbhai National Institute of
Technology, Surat
► Gujarat Technological University, Ahmedabad
► Nirma University - Institute of Technology,
Ahmedabad
►
Gujarat - Competitive
Advantage
Other advantages
Ease of Doing Business
► Only state which complies 100% with Environmental procedures. Gujarat fares
highly when it comes to setting up a business, allotment of land and obtaining a
construction permit.
Flourishing Economy
► Gujarat contributes 7.2% of the Nation GDP and holds leadership position in many
areas of manufacturing and infrastructure sectors. Gujarat’s SDP (State Domestic
Product) at current price registered a growth of 11% during the year 2014-15.
Strategic location and excellent infrastructure
► Located on the west coast of India, Gujarat is well connected to the major cities of
the world by air and sea routes. The state has 45 ports, 12 domestic airports and 1
international airport in addition to an extensive rail and road network.
Sources:
“Principal Characteristics By Major States in ASI 2013‐14”,
http://mospi.nic.in/Mospi_New/upload/asi/Table%203%20%20Principal%20Characterstics%20By%20Major%20States%20for%20the%20year
%202013-2014.pdf, accessed 4 July 2016
“Quietly, Maharashtra, Tamil Nadu outrace Gujarat”, Business standard website,http://www.business-standard.com/article/economypolicy/quietly-maharashtra-tamil-nadu-outrace-gujarat-115011800283_1.html, accessed 4 July 2016
“'Number of factories in Gujarat grew by only 1.65% in 2012-13‘”, The Times of India website,
http://timesofindia.indiatimes.com/city/ahmedabad/Number-of-factories-in-Gujarat-grew-by-only-1-65-in-2012-13/articleshow/46364298.cms,
accessed 15 June 2016
“Budget brief Gujarat state FY17”, http://gujecostat.gujarat.gov.in/wp-content/uploads/2016/33%20%20Budget%20in%20Brief%20(English).pdf, accessed 3 July 2016
“https://www.dnb.co.in/SME_cluster_series2012_Indore/PDF/IndustryOverview.pdf
Page 8
Project Information
Electric motor manufacturing process1
Stator assembly
Laminated core
Stator is stationary
part of the motor. It
is made up of
silicon steel stacked
together using
welding and act as
a field magnet
Rotor assembly
Copper coil
windings
Copper /aluminium
wire are wounded
around the laminate
core; wire are insulated
from core using
varnish of oxide
coating
Final assembly
Both stator and rotor
are finally assembled in
in housing sourced as
raw casting from
foundry
Shaft
manufacturing
Rotor is a moving part
of the motor which is
facilitated by shafts ;
shafts are
manufactured on
computer numeric
control (CNC) machine
using steel bars
Testing
This step includes
testing the motor for
power delivery,
insulation proofing etc.
Rotor
Consists of laminated
core with parallel slots
for carrying rotor
conductor; motion is
produced in the rotor
by EMI
Painting &
shipping
The completed motor
is painted and is
shipped to the
specified location
Note: 1) The process depicted is illustrative and may involve further sub-steps (such as heat treatment) and other
processes as well
Sources:
“How Are Squirrel Cage Induction Motors Constructed?”, http://www.brighthubengineering.com/diy-electronics-devices/43723-how-are-squirrelcage-induction-motors-constructed/
MOTOR MANUFACTURING PROCESS FLOW, industrial electronics website, http://www.industrial-electronics.com/guide-small-electricmotors_3_1-5.html, accessed 4 July 2016
“Motor manufacturing”, http://www.pacontrol.com/Motor1.html
Page 9
Project Information
Location suggested: Vatva Industrial estate (Ahmedabad)
►
►
Vatva industrial estate and adjoining areas in Ahmedabad district is an indicative location for
establishment of electric motor manufacturing plant. Alternatively, other suitable location in the
State can also be considered for setting up of the plant.
The site is owned and managed by Gujarat Industrial Development Corporation (GIDC) and falls
DMIC**
under Ahmedabad district.
Vatva industrial estate: Key highlights
Area of
estate
Land price
527 hectares
~INR 4,780/ square meter (Apr’16)
►
Focus
sectors
►
►
Engineering (including electrical
equipment)
Foundries
Chemicals
Ahmedabad
Vatva GIDC
Dedicated
freight corridor
Reasons for suggesting location
Strong existing base for electric motor manufacturing
►
Vatva along with several adjoining industrial estates in Odhav (11 kms*), Navrangpura (12 kms*),
Saraspura (11 kms) and Naroda (19 kms*) is base to several electric motor manufacturing facilities.
This indicate to presence of robust supply chain in the region.
Hindustan Motor Manufacturing Company (Vatva), Kirloskar
Electric Company Ltd. (Navrangpura), Sabar Engineering Pvt Ltd
(Vatva), Elmech Industries (Odhav), Vinay motors (Naroda), Delta
Electricals (Vatva), NBE motors (Saraspura)
Major electric motor
manufacturers in and
around Vatva
*Distance from Vatva GIDC
Easy accessibility to raw materials
► Silicon steel, copper wires and fabricated metal products are the key raw materials used in the
production of rotating machines.
Industry
Steel re-rolled products
Location (Distance from Vatva)
►
►
►
Foundry & forgings
►
►
Copper
►
Bhavnagar (180 Kms)
Vadodara (106 Kms)
Anand (72 Kms)
Kheda (32 Kms)
►
Surendranagar (135 Kms)
Bhavnagar (180 Km)
►
►
►
Surat (258 Kms)
Bhavnagar (180 Kms)
Valsad (331 Kms)
►
Dahej (230 Kms)
►
Jhagadia (200 Km)
►
**DMIC: Delhi Mumbai industrial corridor
Page 10
►
Vadodara (106 Kms)
Panchmahal (120 Kms)
Ahmedabad (10 Kms)
►
Fabricated metal products
Ahmedabad (10 Kms)
Vadodara (106 Kms)
►
Please refer to Appendix for Vatvasite overview and sources referred to
Project Information
Logistics & Connectivity
Rail
►
Vatva has access to broad gauge
railway network from the following
railway stations:
►
Ahmedabad railway station: 10 Kms
►
Vadodara railway station: 106 kms
Road
►
►
Vatva is located on Delhi Mumbai Industrial
Corridor (DMIC). DMIC is intended to be the
manufacturing hub serviced with world class
infrastructure.
It also has a very good connectivity with other
cities of the state such as Vadodara and
Surat.
Air
►
►
Port
Ahmedabad international airport: 20
Kms.
Vadodara domestic airport: 100 Kms.
►
Vatva (Ahmedabad) is connected to the
following ports:
►
Dahej – 230 Kms
►
Kandla – 300 Km
►
Mumbai – 520Kms
Utility
Water
►
Gujarat Industrial Development
Corporation (GIDC) claims to provide 24
hour uninterrupted water supply.
Power
►
Electricity is supplied from an existing
132 KVA sub-station located in the
premises.
Gas
►
►
Gujarat State Petroleum Corporation (GSPC) is the gas supplier to the site through a well
established pipeline.
The company needs to directly apply for gas to GSPC.
Sources:
“Vatva GIDC: Infrastructure”, http://www.vatvaassociation.org/?page_id=2167, accessed 5 July 2016
“Government of India Ministry of MSME District Industrial Potential Survey Report of Ahmedabad District”, MSME – Development Institute
(December 2014)
“GSPC to have gas distribution to industrial units in Central Gujarat”, http://old.projectsmonitor.com/detailnews.asp?newsid=7831, accessed 5 July
2016
Brief Industrial profile: Ahmedabad district, MSME development institute
Page 11
Project Information
Leading Players
Player
Plant location
►
Crompton Greaves
►
►
Kirloskar electric
company ltd
►
►
►
ABB India
►
►
►
Mandideep and Pithampur
(Madhya Pradesh),
Kanjur Marg (Mumbai),
Ahmednagar(Maharashtra)
Colvale and Kundaim (Goa).
Vadodara, Gujarat
Nashik, Maharashtra
Bengaluru and Mysuru,
Karnataka
Faridabad, Haryana
Savli, Gujarat
Haridwar, Uttrakhand
Key products
►
►
►
►
►
►
►
►
►
►
High voltage (HV) motor
Low voltage (LV) motor
Motor for hazardous areas
DC motors
HV/LV AC
synchronous/asynchronous motors
DC motors
HV induction motors
LV synchronous motors
Motors for marine applications
Other key players include Siemens, BHEL and Alstom T&D
*Products other than electric motors are also manufactured at mentioned locations
Project structure
Project is likely to a be a private investment by:
►
an existing rotating machines manufacturer
►
new entrant/s in the industry
►
foreign investor/s looking to enter Indian electrical equipment industry.
Manpower required (150-200)
Designation
President
General Managers
Sr. Manager, Manager, Assistant Manager
Sr. Engineers, Engineers, Assistant engineers
Skilled workers
Unskilled workers
Number of employee
1
2-3
5-10
25-30
50-70
50-70
Sources:
https://infrastructureindia.gov.in/projectlist?p_p_id=projectlist_WAR_Projectportlet&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&p_p_col_id=
column1&p_p_col_count=1&_projectlist_WAR_Projectportlet_jspPage=%2Fhtml%2Fprojectlist%2Fview.jsp&_projectlist_WAR_Projectportlet_searchT
ype=Sub+Sector&_projectlist_WAR_Projectportlet_id=45&_projectlist_WAR_Projectportlet_projectTypeeids=&_projectlist_WAR_Projectportlet_delta=
20&_projectlist_WAR_Projectportlet_keywords=&_projectlist_WAR_Projectportlet_advancedSearch=false&_projectlist_WAR_Projectportlet_andOpera
tor=true&_projectlist_WAR_Projectportlet_orderByType=asc&_projectlist_WAR_Projectportlet_resetCur=false&_projectlist_WAR_Projectportlet_cur=2
ABB inaugurates two new manufacturing plants for power products in India”, ABB (Nov 2013),
http://www.abb.co.in/cawp/seitp202/cf0dd835b969ae95c1257c210051e12c.aspx
http://www.thehindubusinessline.com/companies/abb-invests-rs-250-cr-in-two-new-plants/article5346915.ece
https://library.e.abb.com/public/acad5b7a89e5e36cc1257c580049983b/GIS%20and%20PASS%20Factory%20profile%20Savli.pdf
“L&T inaugurates its switchgear facility at Vadodara”, http://articles.economictimes.indiatimes.com/2012-07-12/news/32648616_1_low-voltageswitchgear-circuit-breakers-manufacturing
http://www.business-standard.com/article/companies/labour-trouble-brewing-at-l-t-vadodara-plant-113052901035_1.html
http://www.thehindubusinessline.com/companies/lt-expands-capacity-with-new-switchgear-facility-in-vadodara/article3631313.ece
Page 12
Project Information
Key considerations
►
►
Slowing industrial activity in India (Index of industrial production declined in four out of eight
months between Dec’15- Jul’16) can significantly impact the demand growth from end user
industries.
Copper and silicon steel are major raw materials used in manufacturing of electric motors.
Volatility in prices of input commodities can significantly impact the margins of manufacturers.
Potential collaboration opportunities
Company
Danaher Motion
Emerson Electric
Baldor Electric
Johnson Electric
Maxon Motors
Faulhaber
Regal Beloit
ABB
Siemens
Alstom
Base country
The US
The US
The US
Hong Kong
Switzerland
Germany
The US
Switzerland
Germany
France
Raw materials suppliers
Material
Suppliers (location)
►
Silicon steel
►
►
►
Copper
►
►
Aluminium
►
►
Essar Steel, Hazira (Gujarat) (one of the largest steel producer in India)
Gujarat Iron and steel company, Ahmedabad (Gujarat)
Panchmahal steel ltd, Panchmahal (Gujarat)
Hindustan Copper Ltd, Khetri (Rajasthan)
Sterlite Industries Ltd, Thoothukudi (Tamil Nadu)
Bharat Aluminium company (Balco), Jasugora (Odisha)
Hindustan Aluminium company (Hindalco), Alupuram (Kerala)
National Aluminum company (Nalco), Mundra* (Gujarat
Sources:
Global electric market 2015-19 by Technavio via EMIS emerging markets
https://infrastructureindia.gov.in/projectlist?p_p_id=projectlist_WAR_Projectportlet&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&p_p_col_id=
column1&p_p_col_count=1&_projectlist_WAR_Projectportlet_jspPage=%2Fhtml%2Fprojectlist%2Fview.jsp&_projectlist_WAR_Projectportlet_searchT
ype=Sub+Sector&_projectlist_WAR_Projectportlet_id=45&_projectlist_WAR_Projectportlet_projectTypeeids=&_projectlist_WAR_Projectportlet_delta=
20&_projectlist_WAR_Projectportlet_keywords=&_projectlist_WAR_Projectportlet_advancedSearch=false&_projectlist_WAR_Projectportlet_andOpera
tor=true&_projectlist_WAR_Projectportlet_orderByType=asc&_projectlist_WAR_Projectportlet_resetCur=false&_projectlist_WAR_Projectportlet_cur=2
http://www.thehindubusinessline.com/companies/abb-invests-rs-250-cr-in-two-new-plants/article5346915.ece
https://library.e.abb.com/public/acad5b7a89e5e36cc1257c580049983b/GIS%20and%20PASS%20Factory%20profile%20Savli.pdf
http://www.business-standard.com/article/companies/labour-trouble-brewing-at-l-t-vadodara-plant-113052901035_1.html
http://www.thehindubusinessline.com/companies/lt-expands-capacity-with-new-switchgear-facility-in-vadodara/article3631313.ece
http://entrance-exam.net/top-copper-producing-companies-in-india/
Page 13
Project Financials
Cost of setting-up a rotating machines manufacturing facility (250 large
machines*) is likely to be around INR 1070 million
Project cost
Project components & specifications
Land1 (Area: approximately 10,000 sq. meters)
Rate: (INR 4,780 per sq. mtr.)
Cost (INR million)
50
Building, plant and machinery2
360
Total investment in land, machinery and working capital
410
Working capital investments3 (for 3 months cycle) and miscellaneous
expenses
540
Total investment required : ~INR 950 million*
Means of finance for capital Investment
Estimated industrial average (Debt)
70%
Debt raised (INR million)
287
Equity invested (INR million)
Estimated debt raised (INR crore): ~287
123
*Large rotating machines include motors above 470 hp
Sources:
Comparable project:
1) “Crompton Greaves Mandideep manufacturing facility”, CG website, Annual report FY15 (Land requirement)
2) “CG Inaugurates New Plant for AC Drives at Bhopal, India
“http://www.cgglobal.com/frontend/news_detail.aspx?cntr1=U96qPziE2mU=&cntr=R6Yl/56Jszo= (For investment)
Note: The article talks about partial project size 30,000 sq. feet (approx. 3,000 sq. meters), plant and machinery expense scaled up in accordance
with the total area of the project (10,000 sq. meters from the annual report)
3) “For working capital and fixed capital calculation”, (WCInv for three months is assumed to be approximately 1.5 times of initial PPE, based on
similar manufacturing unit details in the report)
http://sagar.nic.in/image/Industry/2-%20ENGINEERING%20&%20ALLIED%20PRODUCTS/Aluminium%20conductors.pdf
“http://www.cguniverse.info/pdfs/annual-report/ar1011/Pg12-35.pdf
“Nidec to Set Up Its First Manufacturing Foothold in India”, https://globenewswire.com/news-release/2014/06/04/641646/10084467/en/Nidec-to-SetUp-Its-First-Manufacturing-Foothold-in-India.html, accessed 11 July 2016
“Rotor price”, http://www.made-in-china.com/products-search/hot-china-products/High_Voltage_Motor.html, accessed 12 July 2016
“Latest Gujarat rates”, http://www.gidc.gov.in/pdf/tenders/PDF/16-17/Allotment-Price-2016-17.pdf
Page 14
Project Financials
Minimum viable size
EBIT margin (Industry average)
10.0%
Total operating costs (as% of revenues)
90.0%
Total costs (90.0% @ 90) (INR million)
810
Depreciation cost (4.8%* of 360 million)
17
Employee costs (7.1%+ of TC)
29
Finance cost (16% of debt)
43
Others (including insurance and miscellaneous)
(2% of total investment)
19
Total fixed cost (FC) (INR million)
108
Variable cost (VC= TC-FC) (INR million)
702
Variable cost/Unit (INR million)
3.5
Average revenue/unit (INR million)
4.5
Minimum viable size (FC/(AR-VC))
Estimated minimum viable size: ~109 units
*Plant and machinery life is assumed to be 21 years and straight line method is considered for depreciation for
estimation purposes
+50%
of total employee cost is assumed to be fixed, while rest is considered under variable cost
Sources:
1) CG price list, http://baviskar.com/wp-content/uploads/pdf/crompton_greaves_motors_price_list.pdf, accessed 12 July 2016
Seimens price, http://www.industry.usa.siemens.com/drives/us/en/electric-motor/anemamotors/specification/Documents/Siemens_Pricing_Guide_Horizontal_ANEMA_ANSP-60000-1112_R0.pdf
500 hp (for ~INR 20 lakh); 1000 hp (50 lakh); 5000 hp (1.5 crore)
Assuming 50% of motors are produced in the range of 500hp, 40% of motors in 1000 hp and 10% in heavy range of 1.5 crore
Average price coming to be: 45 lakhs
Crompton Greaves Annual report FY15
ABB India Annual Report FY14
2) Industrial average include average financials for: ABB India and Crompton Greaves
Page 15
~109
Approvals & Incentives
► Indicative
List of Approvals
Approvals/clearance required
Department to be approached and consulted
Incorporation of company
Registrar of companies
Registration/Industrial license
Secretariat if industrial assistance (SIA) for large and
medium scale industries
Allotment of land
State industrial development corporation
No objection certificate (NOC) under
air and water pollution control acts
State pollution control board
Approval of construction and country
planning
►
►
►
►
►
Town and country planning
Municipal and local authorities
Chief inspector of factories
Pollution control board
Electricity board
Finance
For loans higher than INR 1.5 crore, all India financial
institutions like Industrial Development Bank of India(IDBI),
Industrial Credit and Investment Corporation of India(ICICI),
Industrial Finance Corporation of India(IFCI) etc.
Registration under state sales tax act
and Central and State excise act
►
Code number for export and import
Regional office of director general of foreign trade
Environmental clearance
Ministry of environment, forest and climate change after
conducting environment impact assessment (EIA) for any
project
Hazardous waste import and export
approval
Ministry of environment, forest and climate change
Exiting business
Ministry of corporate affairs
►
Sales tax department
Central and state excise department
Government of Gujrat has introduced single window facilitation portal for investors providing
undermentioned benefits:
► Centralized system to monitor applications.
► User friendly and simplified application process for investors.
► The unit shall be facilitated through ‘Investor Facilitation Portal’ for obtaining all the
necessary state approvals/ clearances - https://www.ifpgujarat.gov.in
Sources:
1. “Gujarat Textile Policy”, Industries and Mines Department, Government of Gujarat, 5 September 2012
2. Approvals required for setting up plant,
http://dipp.nic.in/English/Investor/Investers_Gudlines/approval_clearances_required_for_new_projects.pdf, accessed 8 July
2016
3. “Environment clearance” http://envfor.nic.in/major-initiatives/environmental-clearances, accessed 8 July 2016
4. “Gujarat single window clearance, https://www.ifpgujarat.gov.in/portal/jsp/aboutUs.jsp, accessed 8 July 2016
5. “Exiting business, http://www.mca.gov.in/MinistryV2/CloseCompany.html, accessed 9 July 2016
6. “Manufacturing Sector – Profile”, Vibrant Gujarat website, 7 October 2014
Page 16
Approvals / Incentives
Gujarat Industrial Policy 2015
Government of Gujarat has announced an ambitious Industrial Policy, in January 2015, with the
objective of creating a healthy and conducive climate for conducting business and augmenting the
industrial development of the state.
Quantum of incentives
The incentives under this policy will be available to all the Talukas listed in Government Resolution
dated 25/7/2016 except areas falling within municipal corporations.
% of eligible fixed
Category of
% of Net VAT % of Net VAT to be
capital investment
Incentive period
Project Location
reimbursement to
paid to
(no. of years)
entitled for
(Taluka)
the unit
Government
Incentive
1
100
90
10
10
2
80
80
20
10
3
70
70
30
10
Net VAT incentives
Net VAT incentive will be reimbursed to the industrial undertaking in one financial year will not
exceed one-tenth of the total amount of eligible incentive.
Classification of the Project
Amount (in INR crore)
Ultra Mega Industrial Unit
500
Mega industrial Unit
400
Large Industrial Unit
150
Micro, Small or Medium Industrial Unit
50
Industries in the Sector can opt for either the general incentives under the Gujarat
Industrial Policy- 2015 or the incentives provided below if the proposed plant is an MSME
(i.e. Plant and Machinery cost is less than INR 10 crore): :
As per the Gujarat Industrial Policy-2015, following are the key incentives provided to the
manufacturing sector (including rotating machines manufacturing):
►
Interest subsidy of 5% with the maximum amount of INR 25 lakhs (~US$ 37,5001) per annum for
5 years on the term loan of machinery and equipment anywhere in the state which fall outside
municipal areas.
►
Capital investment subsidy of 10 % loan amount disbursed by Bank/Financial Institution with a
maximum amount of INR 15 lakhs in Municipal Corporations areas.
►
Assistance for technology acquisition from recognized institution for manufacturing products will
be provided by way of 50% of the cost payable subject to a maximum of INR 5 million, including
royalty payment for first two year.
►
Assistance for venture capital to raise promoter contribution in the form of equity or loan through
Gujarat Venture Finance Limited (GVFL).
Page 17
Appendix
Vatva Industrial estate map
Source:
Vatva GIDC website, http://www.vatvaassociation.org/
TECO Group to set up electric motor plant in Gujarat, Business standard website, http://www.business-standard.com/article/companies/teco-groupto-set-up-electric-motor-plant-in-gujarat-111022000083_1.html, accessed 4 July 2016
“Vatva industrial estate”, http://www.magicbricks.com/property-for-sale/Industrial-Land-real-estate-Vatva-in-Ahmedabad, accessed 5 July 2016
“land prices”, http://www.gidc.gov.in/pdf/tenders/PDF/16-17/Allotment-Price-2016-17.pdf
“Electrical motor manufacturers in Gujarat” shttps://www.google.co.in/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF8#safe=active&q=electric%20motor%20manufacturers%20in%20vatva&rflfq=1&rlha=0&rllag=22985772,72642798,4837&tbm=lcl&tbs=lf:1,lf_ui:2
Page 18
Industries & Mines Department
www.imd-gujarat.gov.in
Gujarat Industrial Development Corporation
www.gidc.gov.in
Office of Industries Commissioner
www.ic.gujarat.gov.in
Industrial Extension Bureau
www.indextb.com
This project profile is based on preliminary study to facilitate prospective entrepreneurs to assess a prima facie scope.
It is, however, advisable to get a detailed feasibility study prepared before taking a final investment decision.
Office of The Industries Commissionerate
Block No. 1, 2nd Floor, Udyog Bhavan,
Gandhinagar 382 010. Gujarat
Ph.: 23252683/23252617
Email ID: [email protected]