InfralineEnergy Business Report Series

Diesel & Gas Engines Market in India -2011

InfralineEnergy Market Research Report Series

Medium (5% to 10%) High (above 10%) Low (0 to 5%)

Future Volume Growth of Demand for Engines

Agriculture

Oil & Gas

Marine

Power Generation

Mining

Railways

ConstructionEquipmentIndustry

Equipment

Diesel Engines Used Both Diesel & Gas Engines Used

Diesel & Gas Engines Market in India -2011

Industry-fi rst Analysis On

Diesel Engine: Classifi cation and Technology Competition Presence in India New Initiatives and Developments User Sector Overview, Product Applications

and Market Future outlook for Diesel & Gas Engines

Market in India Natural Gas Scenario in India: Gas Demand

Outlook and Natural Gas Supply Situation Natural Gas Pipeline in India: Current and

Future Industry Emphasis Shifting to Environment

Friendly Products that meet Emission Norms

Comprehensive Data Points On

Market Size for Diesel and Gas Engines during 2010-11

Market Trends in Demand for Diesel and Gas Engines

Key Market Drivers and Enablers Expected Future Growth Rates Future Outlook: 2015 Application Across Segments: Industrial,

Construction Equipment, Industrial Equipment, Agriculture Equipment, Mining Equipment, Railways, Oil & Gas, Marine & Shipyard, Power Generation, etc

Key Highlights

Market Size and Share among Domestic and International Companies

Market Spread between Large, Medium and Small Players

Key Business Drivers Expected Market by 2015 Largest Company and its Strategy Operations and Services Model deployed by

Diesel and Gas Engine Manufacturers Detail on New Market Entrants, likely

Entrants and possibilities of consolidations in the Industry

Product Substitution Threat in the Immediate Future

Scope for Construction Equipment Manufacturers to build their own engines for In-house requirements and for the Market

Industry profi tability to invest in R&D, Plant and Machinery, Expansion and Up gradation of Service Network

Key Challenge: Providing Technology at reasonable Prices

Must Buy For

Engine Manufacturers Generator Manufactures Original Equipment Assemblers (OEAs) Original Equipment Manufacturers (OEMs) Bearing Manufacturers Relay Manufacturers Alternator Manufacturers Battery Manufacturers Consulting Companies Private Equity Investment Banks Brokerage Firms Industry Associations Casting Manufacturers Compressor Manufacturer

The engine industry is characterised by a strong organised sector with limited international presence. Market is mainly dominated by diesel engines. Petrol and kerosene engines are limited to lower rating and are used mostly in the agricultural sector. Gas engines are yet to take off due to issues of fuel availability. Emission norms in India are not very stringent but future expectations are likely to impact the sector.

Diesel Engines are the leading prime movers for agricultural construction, industrial and power generation applications. Diesel Engines are manufactured in both air-cooled and water cooled versions. Suppliers are regularly upgrading and improving engine manufacturing facilities to ensure the requisite quality at competitive cost. Suppliers are focused on offering eco friendly engines. There are around 20 players in the organised sector. Unorganised sector dominates the lower HP (<20 HP). 20-150 KW segment of engines used in industrial equipments. Key players in the industry includes Cummins, KOEL, Greaves, Simpson, M&M, Ashok Leyland, Escorts, CAT, Deutz, Volvo, GE Jenbacher, Rolls Royce, Wartsila, Waukesha(Triveni), Isuzu, Komatsu, Kubuto and Volvo.

Diesel engines are used either for stationary applications (captive power generation) or as prime movers (for pumps, harvesters, threshers, expellers, fl our mills etc.). Small (< 5 HP) engines use kerosene / diesel as fuel. Rajkot and Agra are major centres for small HP engines. Exports trends can be mainly noticed in the smaller engines category. Other centres are Ghaziabad, Kolhapur and Coimbatore.

On the fl ip side, there are no domestic manufacturers of Gas engines in India and hence all engines are imported. Major foreign brands are Catterpillar, Cummins and Ruston. Gas engines are gaining popularity in Gas pipelined areas. Gas engines are widely used in prime power generation, captive cogeneration, gas compression and other mechanical drive applications. Other applications are peak shaving and stand by. Gas engines are deployed all over India for various applications in Chemical, Pharma, Ceramic, textile, steel, oil and gas, commercial buildings etc. for power generation as well as prime mover. Waukesha is a major supplier of gas engines to ONGC and Indraprastha Gas for compression application.

Market demand is directly linked to the investment in agriculture, infrastructure and industrial growth. It is also dependent on the power scenario in the country which is unreliable, insuffi cient and erratic, driving need for captive generation, hence for engines. Power generation segment accounts for 50 – 55 percent of the revenue of all major players and growth of the irrigation sector will drive the demand for engines.

Future Volume Growth of Demand for Engines

Diesel Engines Key Application AreasSegment Capacity Application Areas

Small Range 2-20 HP Pumpsets, Agricultural Machinery, Water Pumpsets, Threshers, Harvestors and Oil Expellers

Medium Range 20-25 HP Tractors, Power Gensets, Industrial Applications25-140HP Power Generation, Industrial Applications and Others

Large Range 140-400HP Power Generation (Captive Standby Sets), Industrial Application

400-750HP Power Generation and Marine ApplicationsVery Large Range 750-1200HP Power Generation

1200-7200HP Power Generation ( Base Load) and Marine Applications

Table of Contents and Storybroad

1. Executive Summary

2. Diesel & Gas Engines market landscape

Variants of Diesel & Gas Engines

Key business stakeholders

Application matrix across segments

– Industrial ( Construction equipments & Industrial equipments, Agriculture equipments / Machineries, Mining equipments, Railways, etc)

– Oil & Gas

– Marine & Shipyard

– Power Generation

– Others

3. Diesel Engine Market

Diesel Engine and its classifi cation

Current Technology & trends

Market characteristics

Market size in 2010-11 by companies – by value and volume

Market size in 2010-11 by ratings (upto 10,000 KW) – by value and volume

Market size in 2010-11 by end user segments

Market size in 2010-11 by region

Market trends

SWOT

4. Gas Engines Market

Gas Engines and its classifi cation

Current Technology & trends

Market characteristics

Market size in 2010-11 by companies – by value and volume

Market size in 2010-11 by ratings (upto 10,000 KW)– by value and volume

Market size in 2010-11 by end user segments

Market size in 2010-11 by region

Market trends

SWOT

5. Competition

Competition presence in India

Competition & Customer segments matrix across application areas

New initiatives & developments Business Practices M&A

6. Current and Future Innovations in Diesel and Gas Engines

7. Future Outlook for Diesel and Gas Engines Market in India

Key drivers and enablers

Likely future growth rates of end user segments

Future outlook - 2015

8. Key User Sectors Details

Construction sector overview

– Overview

– Application areas

– Market – By players & rating

– Market drivers & trends

– Future market

Oil and Gas

– Overview

– Application areas

– Market – By players & rating

– Market drivers & trends

– Future market

Marine and Shipyard

– Overview

– Shipyards in India – An overview

– Application areas

– Market – By players & rating

– Market drivers & trends

– Future market

Mining

– Overview

– Application areas

– Market – By players & rating

– Market drivers & trends

– Future market

Agriculture

– Overview

– Application areas

– Market – By players & rating

– Market drivers & trends

– Future market

Railways

– Overview

– Application areas

– Market – By players & rating

– Market drivers & trends

– Future market

Power

– Overview

– Application areas

– Market – By players & rating

– Market drivers & trends

– Future market

9. Opportunity in engine servicing business

Typical Annual spend on Services of engines – Spares and Manpower

Practices and expenses related to energy audit and engine retrofi tting

Positioning of key players

Industry best practices

10. Existing and Emerging Substitute & Competitive

11. Governments Regulations, Policies and Initiatives

Facilitative

Resistance

12. PESTEL Analysis

13. Fuel Scenario in India and its impact on Business Dynamics

Gas Demand outlook

Natural Gas supply situation

Diesel subsidy issue

Trend in Fuel price

14. Key OEM’s in India

Select OEM’s profi le – Top companies in construction equipments

15. Appendix

Detailed Company Profi le of Engine Suppliers

– Cummins India Limited

– Kirloskar Oil Engines Limited

– Caterpillar India

Detailed Company Profi le of OEs

– JCB India Limited

– Greaves Cotton Limited

– Bharat Earth Movers Limited

– Atlas Copco

– Telecon – Kirloskar Pneumatics

Emerging company in Diesel & Gas Engines market

Likely New Entrants

For Sales & Support

Richa Pasricharicha.pasricha@infraline.om+91 11 66250007+91 9818049679

For Research & Consulting

Amit Sharmaamit.sharma@infraline.com+91 11 47522485+91 7838268806

The report is priced at INR 1,00,000. Further, the report can be customised at an additional cost of 20%

Note: TDS will not be deducted. In case of payments to be made in USD, Euro, GBP the conversion rates on the date of purchase will be applicable.

Making the Payment

Payment in Indian Rupees (INR): We accept Cheques / Demand Draft. However, we prefer payment through RTGS.

Account Name Infraline Technologies India Pvt. Ltd

Account Type Current Account

Account No. 503011022657

Bank Branch IFSC Code VYSA0005030

Name of Bank ING Vysya

Address ING Vysya Bank Ltd. Ground Floor Narain Manzil, Barakhamba Road, New Delhi-110 001

Payment through Cheques / Demand Draft: Payment should be made in favour of ‘Infraline Technologies (India) Private Limited’ through Cheques / DD payable at New Delhi (or ‘at Par’ cheques) and send it to the below mentioned address.

For Payments in Foreign Currency

Through Wire Transfer: The wire transfer instructions are available at http://www.infraline.com/WireTransferInstructions.htm

Through Credit Card: We accept Visa, Master, Amex Cards and all major Net Banking cards. Additional 7% Gateway processing charge applicable along with additional shipping/courier charges.

For more details, please contact: Richa PasrichaPh: +91 11 6625 0007Fax: +91 11 4625 0099Mobile: +91 9818049679Email: richa.pasricha@infraline.com

Payment Details

Index

Executive Summary1 3-6

Diesel and Gas Engines Market Landscape2 8-12

Diesel Engines Market (2010-11)3 14-46

Gas Engine Market (2010-11)4 48-80

Competition5 82-89

Current and Future Innovations in Diesel and Gas Engines6 91-94

Future Outlook for Diesel and Gas Engines Market in India7 96-107

Government Regulations, Policies and Initiatives11 196-197

Existing and Emerging Substitute and Competitive Products 10 191-194

Fuel Scenario in India and its impact on Business Dynamics13 201-207

Key OEMs in India14 209-224

Key User Sectors Details8 109-184

Opportunity in Engine Servicing Business9 185-189

PESTEL Analysis12 199

Appendix15 226-286SAMPLE S

LIDES

Overall Market Scenario in India for Diesel & Gas Engines : 2010-11

Domestic production

Exports ImportsDomestic Market

XX,35,XXX XX,XXX 3X,X3X XX,32,XXX

X,730 1,060 XXX X,250

Volume (Units) Value (INR cr)

Diesel Engine

Gas Engine

Total Engines (Diesel & Gas)

0 0 325 325

0 0 400 400

XX,XX,XXX 40,770 37,960 XX,XX,XXX

X,7X0 1,060 980 X,XXX

SAMPLE S

LIDES

Domestic Market Size (2010-11) : By capacity range

Diesel Engine

Gas Engine

Market Size0-20 kW

21- 150 kW

1001 -3000kW

INR X,XXX Cr

INR XXX Cr

12.9% 49.3% 2.2%

* Market for 2010-11 (April 2010 to March 2011)

INR X,XXX CrTotal Engines (Diesel & Gas)

151-500kW

27.6%

501-1000kW

7.7%

3001-10000kW

0.3%

0.8% 1.0% 21.3%5.5% 8.3% 63.8%

12.3% 46.8% 3.2%26.4% 7.8% 3.6%

Capacity range 21 to 500 kW dominates the market with over 73% of the overall marketSAMPLE S

LIDES

Diesel Engine : Industry Classification

Function

Rating

Life

Technology

Cost

Is an internal combustion engine that uses the heat of compression to initiate ignition to burn the fuel, which is injected into the combustion chamber. Used for power back-up application & as mechanical drive

1 to 10,000 kW

5 – 15 years; depending upon the number of operating hours

Medium to High

Diesel Engine Classification

Application Construction & Industrial equipments, Power generations (power gensets), Oil & Gas, Marine

, Railways, Agricultural machinery and other industrial applications

Industry follows IS & CE Standard for manufacturing

Engines are used predominantly for standby power generation, off-grid temporary source of power generation or as mechanical drive in construction equipment / and other applications

Sine wave

Fuel Diesel

SAMPLE S

LIDES

Market Size : Domestic production (By capacity range)

Value

Value – INR X,XXX crs

Volume

Volume – XX,XX,XXX units

Capacity range (KW) Value- INR crs Volume – Units

0-20 X X

21-150 X X

151-500 X X

501-1000 X X

1001-3000 X X

3001-10000 X XSAMPLE S

LIDES

Market Size : Domestic production (Players vs. capacity) - Value

SAMPLE S

LIDES

Market Size : By players vs. Capacity

Player vs. Capacity – Volume (Nos.) Player vs. Capacity – Value (INR crs.)

Volume – XXX units Value – INR XXX crsSAMPLE S

LIDES

SWOT

100% imported technology

Technology driven market

Proven brand & technology awareness

Growing market supported with better application &

technology support & service network

Regular technical innovation from global manufacturers to

cater to Indian market

Products conforming to International standards

Strength

No major domestic manufacturing of product

Import dependent

Very high price product offerings in the market

Availability of NG across country is an issue – Limiting

market penetration

Weakness

Threats from New Technology developments & increase in

awareness about Solar & Wind energy and Fuel cell

technology for Back-up / Standby power applications

Threats

Growing power crisis across states, affecting industrial

development activities

Planned NG pipeline network of across country will boost

demand in coming years

Easy availability NG through piped network from GAIL &

RIL will create market opportunities across segments

Opportunities

SAMPLE S

LIDES

Competition: Segments matrix in C&I equipment

Players CR BL DU EX CP P MG WL SSL TM CP DO COM PMP TT Remarks

Cummins To market

KOEL To market

CAT Captive usage

Perkins To market

BEML Captive usage

Ashok Ley To market

Simpson To market

AL-Hino To market

Deutz To market

Mahindra To market

Isuzu To market

Tata Captive usage

Komatsu Captive usage

Tatra Captive usage

Volvo Captive usage

High presence Medium presence Low presence No presenceSAMPLE S

LIDES

Innovations in the Diesel & Gas Engines Technology – Low Emission Technologies

As part of its global emissions strategy, Cummins Power Generation focuses on meeting or exceeding U.S. EPA and EU emissions standards, as these standards are the world’s most stringent and all-encompassing

The real challenge in designing cleaner diesel engines is to reduce NOx and PM emissions while maintaining performance

The Cummins Quantum engine technology meets this challenge by reducing emissions without sacrificing engine performance or reliability, or complicating maintenance

Advanced In-Cylinder Combustion Technology

•New combustion bowl geometry and multiple-event fuel injection capability provide more combustion control than ever before

•This has resulted in improved or maintained power ratings without increasing engine displacement or fuel consumption

Advanced Fuel Injection System

•The new solenoid-controlled, electronically-actuated injectors precisely deliver fuel at 23,000 psi and provide fast response with multiple injection capability

Advanced electronic engine controls

•New electronic sensors and microprocessor-based controls have greatly improved fuel efficiency and power output while decreasing the production of both NOX and PM.

Durable, FCD cast iron pistons

•All of the high-horsepower Cummins engines utilize a new FCD (ferrous cast ductile) single-piece, cast iron piston for an increase in power cylinder durability of up to 15%

Quantum Engines

SAMPLE S

LIDES

Future Market : Diesel engines (By segments)

223,285 254,545 285,090 327,855 367,195 411,2605001,350

310275240215195180

2012-13

605 665

2013-14

745

2014-15

835

X,XX,XXX

2015-16

+14%

+12%

+9%

+10%

X,XX,XXX

+12%

+11%

2011-12

X,XX,XXX

540

2010-11

RailwaysConstruction & Industrial EquipementsMarineOil & GasPower GenerationAgriculture

Volume - Nos

X,XX,XXX

X,XX,XXX

X,XX,XXX

SAMPLE S

LIDES

Shipyards in India – An overview

Large sized Government Shipyards

Mid sized Private Shipyards

Small private shipyards

Shipyards - legend

Shipyard industry overview

In India there are 28 large, medium and smallshipyards

8 Public sector units

20 Private sector units

Public sector shipyards that include HindustanShipyard and Cochin Shipyard, primarily buildmerchant class ships

3 naval shipyards under the purview of the India’sministry of defence are Goa Shipyard, MazgaonDock and Garden Reach Ship builders & Engineers

3 mid-sized shipyards - ABG Shipyard, BharatiShipyard and Chowgule & Co are leading theprivate sector space

There are around 20 odd small shipyards whichbuild smaller barges, tugs, patrol & fishing ships

Almost all the shipyards are also engaged in theship repairing activity

1 Garden Reach

Hindustan Shipyard

Cochin Shipyard

Tebma Shipyard

2

3

45

6

1. Alcock Ashdown

2. ABG Shipyard , L&T Shipyard

3. Mazgaon Dock

4. Bharati Shipyard

5. Chowgule & Co

6. Goa Shipyard

Hooghly Dock & Port Engineers

SAMPLE S

LIDES

Production Trends in Liquid Fuel and Naphtha

(Units in ‘000 tonnes)

Source: Planning Commission SAMPLE S

LIDES

Diesel subsidy issue

Diesel is the most extensively used fuel in DG sets used for stationery power application; an application where engines are used predominantly

Diesel is cheaper when compared to other liquid fuels like LDO, Naphtha and FO

In India Diesel is sold at a subsidised price, however, diesel prices are expected to be deregulated in a phased manner in the medium to long term

The first hike of 8% took place in June 11, clearly indicating government intent to phase out subsidy on diesel

This impact was some what offset as the government eliminated the 5% customs duty on crude oil, which brought down the customs duty on diesel from 7.5% to 2.5%

Moreover, the excise duty on the production of diesel was also reduced from Rs.4.6 per litre to Rs.2 per litre

This phasing of subsidy is likely to impact usage of HSD based DG sets

The domestic production of diesel in 2010-11 was 77.8 million tonnes while that of FO was 18.7 mt, indicating that fuel availability is not an issue

Despite all odds against the pricing side, Diesel is likely to continue to be a favored fuel option for DG sets as it has edge over other fuels in terms of ease of handling and relatively low emission levels

In all likely hood Diesel is headed towards a dual pricing regime as the concerns have been raised on diesel used in transportation getting subsidy and the same could be the case in point for diesel being used in diesel gensets government offices, banks, mobile phone towersSAMPLE

SLID

ES

Trend in Fuel price

Source: Petroleum Planning and Analysis Cell

Monthly International Prices of Indian Basket of Crude Oil ($ per barrel)

SAMPLE S

LIDES

Geographical presence of OEMs

ACE : Action Construction Equipment BEML : Bharat Earth Movers Ltd.SSL : Skid Steer Loaders

Construction Equipment

Material Handling Equipment

Faridabad, Haryana

Companies Products

Escorts Cranes

ACE1 Cranes

Ahmedabad, Gujarat

Companies Products

Shree conmix Transit mixer

Mumbai, Maharashtra

Companies Products

Greaves Cotton Transit mixer

Godrej Forklift trucks

Josts Engg. Forklift trucks

VoltasCranes

Forklift trucks

Dharwad, Karnataka

Companies Products

Telcon

Cranes

Backhoe loaders

Wheel loaders

Bangalore, Karnataka

Companies Products

Larsen &

ToubroBackhoe loaders

Volvo Wheel loaders

Ingersoll rand SSL3

BEML2 Graders

InditalCranes

Forklift trucks

Ballabgarh, Haryana

Companies Products

JCB

Backhoe loaders

SSL

Wheel loaders

Greater Noida, Uttar Pradesh

Companies Products

Terex Backhoe loaders

Kolkata, West Bengal

Companies Products

Tractor India

Ltd.

Cranes

Forklift trucks

Chennai

Companies Products

Schwing

StetterTransit mixer

Thiruvallur, Tamil Nadu

Companies Products

Caterpillar

Backhoe loaders

Wheel loaders

Graders

Komatsu Graders

SAMPLE S

LIDES

Overall Sales : Diesel vs. Gas engines

Volume

Volume – X,XXX units

Value

Value – INR XXX crs

CAT

SAMPLE S

LIDES

Overall Sales : By Capacity

Volume

Volume – X,XXX units

Value

Value – INR XXX crs

CAT

SAMPLE S

LIDES

Overall Sales : By segment

Volume

Volume – X,XXX units

CAT

SAMPLE S

LIDES

Diesel engines : By Capacity

Volume

Volume – X,XXX units

Value

Value – INR XX0 crs

CAT

SAMPLE S

LIDES