Cotton Greaves Final

8/3/2019 Cotton Greaves Final

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EXECUTIVE SUMMARY

The project on Accessing Market potential of Infrastructure equipments of Greaves CottonLtd and SWOT Analysis was carried out Greaves Cotton Ltd.. Infrastructure EquipmentsDepartment. Greaves Cotton Ltd. is a manufacturing giant of various machineries which wewill come across subsequently.

OBJECTIVES:

To have a clear knowledge about Greaves Cotton Limited

To reveal the market potential of Infrastructure equipments of Greaves Cotton Ltd

To perform a SWOT analysis in respect to Greaves Cotton Ltd.

TYPE OF RESEARCH:

Descriptive.

Exploratory.

RELEVANCE OF THE STUDY:

The study will focus on the existing market share and growth of the same in future

regarding infrastructure equipments in eastern region.

To assess the impact of various strategies and product features on sales volume.

To access the customer satisfaction level regarding the products concerned.

SCOPE OF STUDY:

To extend the study considering all the department of Greaves Cotton Ltd.

To study similar welfare schemes in other retail chains to get a comparative picture.


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2. Introduction

Greaves Cotton Limited, established in 1859, is one of India's leading and well-diversifiedengineering companies. It manufactures a wide range of industrial products to meet therequirement of core sectors in India and abroad. The Company's core competencies are inDiesel/Petrol Engines, Gen sets, Pump sets and Construction Equipment. In the recent years,Greaves has made rapid strides towards globalization. The Company exports several of itsproducts to various countries. Greaves has 10 Manufacturing Units located all over India, twooverseas offices in U.K. and China and one subsidiary company in Germany. The Company'smanufacturing plants are equipped with state-of-the-art production facilities, backed by in houseR&D. An extensive sales and service network manned by highly skilled and dedicated workforcekeeps Greaves in touch with its customers anytime, anywhere.

The business operations of the Company are divided into various divisions strategicallystructured to ensure maximum focus on each business area and yet retain a unique synergy in theoperations:

The Business Divisions are:

Agricultural Equipment

Automotive

Auxiliary Power

Construction Equipment

Industrial Engines

3. Company History

2011 Greaves sets up Light Engines Unit V at Aurangabad

2009 Greaves crosses two million mark in light diesel engines


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2008 A state-of-the-art Technology Centre and manufacturing facility for new G Series engines

opened in Pune. New Compaction Equipment plant opened in Gummidipoondi, Tamil Nadu. A new manufacturing facility for Agro Equipment inaugurated in Gummidipoondi, Tamil

Nadu.

2007 Greaves second Transit Mixer manufacturing facility opened near Chennai. Greaves acquires Bukh-Farymann GmbH Diesel, Germany Greaves sets up Light Engines Unit IV at Aurangabad

2006 Greaves sets up Light Engines Unit III at Aurangabad. Greaves opens a new Technology Centre to design and develop new generation engines at

Aurangabad.

2005 Eco friendly Light Diesel Engine complying with Bharat stage II (Euro II) emission

norms launched.

2004 Millionth Light Diesel Engine rolled out.

2001 Introduced concreting equipment in technical collaboration with CIFA of Italy.

2000 Launched lightweight diesel engine model GL 400, complying with Bharat Stage I (Euro

I) emission norms, for three wheelers.

1996 Launched Transit Mixer and Batching Plants.

1994 Acquired two Plants from Enfield India Ltd., to manufacture Petrol / Kerosene engines.

1986 Greaves Joint Venture with Morganite Crucible Ltd., U.K. to manufacture Silicon

Carbide Crucibles. Technical collaboration with BOMAG GmbH, Germany, to manufacture Vibratory

Compactors.

1980 Greaves started manufacturing high power MWM diesel engines needed for gensets and

marine propulsion.

1962


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Greaves Power Transmission Unit set up in Pune in collaboration with David Brown GearIndustries, U.K., and pioneered the manufacturing of industrial and marine Gearboxes inIndia.

1947 Pioneering industrialist Lala Karamchand Thapar bought Greaves Became an Indian

Company.

1939 Joint Venture with Ruston & Hornsby Ltd., U.K. and started manufacturing diesel engines

in India

1937 Greaves Cotton entered into a Joint Venture with Crompton Parkinson of England to

introduce ceiling fans and a range of other electrical products in India (now known asCrompton Greaves Limited).

1859 James Greaves and George Cotton founded the company.

4. Mission Statement:-

"To manufacture and market a wide range of high quality products, services and systems of worldclass technology to the total satisfaction of customers in domestic and overseas markets."


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Organizational Structure

Mr. Karan Thapar[Non-Executive Chairman] Sharp & Tannan

Mr. Sunil Pahilajani [Managing Director & CEO]

Mr. Vijay Rai

Mr. S. N. Talwar Crawford Bayley & Co

Mr. V. Tandon

Mr. S. D. Nayyar

Board of Directors

Bankers

Solicitors

Chief Auditors


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ABN-Amro Bank

Bank ofIndiaB.R. Raju Bank of

Maharashtra CanaraBank

Corporation BankICICI BankIDBI Bank Ltd

Standard Chartered Bank

W. Henriques State Bank of India

Syndicate Bank

Union Bank of IndiaVijaya Bank

6th Floor, CG House

Dr. Annie Besant Road

Worli, Mumbai 400 030

6. Financial Performance and Ownership Structure

6.1. Balance Sheet

Particular 03/11 06/10 06/09 06/08 06/07

Source of Funds

Share Capital 48.84 48.84 48.84 48.84 48.83Reserves & Surplus 477.21 392.42 359.79 326.38 250.44

Shareholders Funds 526.05 441.26 408.63 375.22 299.27

Secured Loans 2.29 0.37 9.27 18.82 33.03

Unsecured Loans 3.22 4.79 35.11 30.40 6.44

Total Debt 5.51 5.16 44.38 49.22 39.47

Total Liabilities 531.56 446.42 453.01 424.44 338.74

Application of Funds

Chief Financial Officer

Registered Office

Company Secretary


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Fixed Assets

Gross Block 435.51 394.67 380.88 335.99 294.80

Less : Accumulated Depreciation 171.38 156.87 132.07 111.45 120.69

Provision for impairment of Assets 0.00 0.00 0.00 0.00 0.00

Net Fixed Assets 264.13 237.80 248.81 224.54 174.11

Capital Work In Progress 23.30 28.18 17.22 36.72 41.92

Total Fixed Assets 287.43 265.98 266.03 261.26 216.03

Investments 83.84 130.13 65.85 102.07 78.48Current Assets

Inventories 186.84 153.29 140.74 137.35 105.92

Sundry Debtors 287.09 202.48 150.93 108.39 87.59

Cash & Bank Balances 61.55 21.85 17.77 28.51 38.60

Loans & Advances 103.07 100.34 76.25 76.01 83.04

Total Current Assets 638.55 477.96 385.69 350.26 315.15

Current Liabilities & Provisions

Current Liabilities 352.30 269.96 211.15 237.73 233.51

Provisions 99.60 133.19 28.14 41.56 36.30

Total Current Liabilities & Provision 451.90 403.15 239.29 279.29 269.81Net Current Assets 186.65 74.81 146.40 70.97 45.34

Miscellaneous Expenditure written off 0.00 0.00 0.00 0.00 0.00

Total Assets

531.56 446.42 453.01 424.44 338.74

6.2. Profit And Loss Statement

Particular 201103 201006 200906 200806 200706

Income

Sales 1368.24 1461.55 1155.51 1315.76 1215.83

Other Income 14.08 6.85 12.53 20.28 12.30

Increase/Decrease in stocks 6.28 5.34 8.75 14.92 2.05

Total Income 1388.60 1473.74 1176.79 1350.96 1230.18Expenditure

Total Expenditure 1176.78 1260.45 1049.64 1169.21 1052.02

Operating Profit 211.82 213.29 127.15 181.75 178.16

Interest 7.22 12.91 22.16 23.08 18.43

Gross Profit 204.60 200.38 104.99 158.67 159.73

Depreciation 20.98 27.03 25.18 20.72 16.01

Profit Before Tax 183.62 173.35 79.81 137.95 143.72


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Provision for Tax 54.48 56.15 7.38 17.69 15.00

Deferred Tax 1.86 -0.77 15.41 8.75 5.40

Fringe Benefit Tax 0.00 0.00 1.02 1.35 1.00

Net Profit 127.28 117.97 56.00 110.16 122.32

Adjustments Below Net Profit 0.00 0.00 0.00 0.00 0.00

Statutory Appropriations 0.00 0.00 0.00 0.00 0.00

Profit & Loss Brought Forward 134.25 126.55 118.03 82.15 38.95

Appropriations 67.44 110.27 47.48 74.28 79.12Profit & Loss Carried Forward 194.09 134.25 126.55 118.03 82.15

EPS (in Rs) 5.21 24.15 11.47 22.56 25.05

Book Value (in Rs) 21.37 89.49 82.79 75.93 60.34

Preference Dividend (in Rs) 0.00 0.00 0.00 0.00 0.00

Equity Dividend in % 75.00 150.00 40.00 60.00 70.00

Equity Dividend in (Rs.) 36.63 73.26 19.53 29.30 34.18

Corporate Dividend Tax 5.81 12.01 2.95 4.98 4.94

Contingent Liability 88.98 62.99 63.72 80.68 117.14

Extra-Ordinary Items 9.42 1.47 2.22 13.45 2.70

6.3. Financial Ratio

Particular 201103 201006 200906 200806 200706

Liquidity Ratios

Debt/Equity Ratio 0.01 0.06 0.12 0.13 0.19

Current Ratio 1.31 1.34 1.42 1.21 1.19

Turnover Ratios

Inventory Turnover Ratio 10.73 9.94 8.31 10.82 12.54

Fixed Assets Turnover Ratio 4.40 3.77 3.22 4.17 4.72

Debtors Turnover Ratio 7.45 8.27 8.91 13.43 13.54

Interest Coverage Ratios 26.43 14.43 4.60 6.98 8.80

Profitability Ratios

Operating Profit Margin 15.48 14.59 11.00 13.81 14.65

PAT/Total Income 9.17 8.00 4.76 8.15 9.94

NPM (Net Profit Margin) 9.30 8.07 4.85 8.37 10.06

Return on Capital Employed 52.49 41.81 23.47 42.70 54.00

Return on Networth 35.39 28.04 14.45 33.11 48.34


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6.4. Cash Flow

Particulars Mar'11

Jun'10

Jun'09

Jun'08

Jun'07

Profit Before Tax 183.68

173.40

79.87

138.01

143.72

Net Cash Flows from OperatingActivity

116.60

174.97

18.31

114.82

158.55

Net Cash Used in InvestingActivity

13.29

-87.77

14.69

-72.29

-81.12

Net Cash Used in FinancingActivity

-90.1

9

-83.

12

-43.

61

-52

.62

-72.35

Net Inc/Dec in Cash and CashEquivalent

39.70

4.08

-10.61

-10.09

5.08


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Cash and Cash Equivalent-Beginning of the Year

21.85

17.77

28.51

38.60

33.52

Cash and Equivalent - End of theYear

61.55

21.85

17.90

28.51

38.60

6.5. Share Holding Pattern

Holders Name No. of Shares %Share

Promoters 125972266 51.58%N Banks Mutual Funds 40216078 16.47%Financial Institutions 31036760 12.71%General Public 21068102 8.63%Foreign Institutions 17368037 7.11%

Other Companies 7186306 2.94%Foreign Ocb 775000 0.32%Foreign NRI 584246 0.24%


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7. Market Capitalization

7.1. Top Companies in India by Market Capitalization - BSE

Company Name Last Price % Chg 52 wk High 52 wkLow Market Cap(Rs.cr)

Cummins 358.90 4.61 566.30 322.00 9,948.71Greaves Cotton 80.15 1.52 100.85 69.50 1,957.32Kirloskar Oil 124.00 3.08 232.90 107.00 1,805.80Swaraj Engines 414.00 0.13 503.70 349.00 514.18

Kirloskar Ind 254.95 0.97 400.70 226.00 247.52

7.2. Top Companies in India by Net Sales BSE

Company Name Last Price Change % Change Net Sales(Rs. cr)Cummins 358.90 15.80 4.61 3,945.44Kirloskar Oil 124.00 3.70 3.08 2,392.99Greaves Cotton 80.15 1.20 1.52 1,253.32Swaraj Engines 414.00 0.55 0.13 360.63Kirloskar Ind 254.95 2.45 0.97 4.14

7.3. Top Companies in India by Net Profit BSE

Company Name Last Price Change % Change Net Profit(Rs. cr)Cummins 358.90 15.80 4.61 590.99Kirloskar Oil 124.00 3.70 3.08 173.73Greaves Cotton 80.15 1.20 1.52 127.28Kirloskar Ind 254.95 2.45 0.97 55.34Swaraj Engines 414.00 0.55 0.13 43.91

7.4. Top Companies in India by Total Assets BSE

Company Name Last Price % Chg Gross Block Net Block CWIPTotal Assets Cummins 358.90 4.61 914.45 441.07 0.001,814.69 Kirloskar Oil 124.00 3.08 1,052.47 590.6519.30 1,123.48 Greaves Cotton 80.15 1.52 435.51 264.1323.30 531.56 Kirloskar Ind 254.95 0.97 43.91 26.520.00 531.16

Swaraj Engines 414.00 0.13 77.63 23.95 2.47 152.22
http://www.moneycontrol.com/india/stockpricequote/engines/cumminsindia/CI02http://www.moneycontrol.com/india/stockpricequote/engines/greavescotton/GC20http://www.moneycontrol.com/india/stockpricequote/engines/greavescotton/KOE03http://www.moneycontrol.com/india/stockpricequote/engines/swarajengines/SEhttp://www.moneycontrol.com/india/stockpricequote/engines/kirloskarindustries/KOEhttp://www.moneycontrol.com/india/stockpricequote/engines/cumminsindia/CI02http://www.moneycontrol.com/india/stockpricequote/engines/cumminsindia/KOE03http://www.moneycontrol.com/india/stockpricequote/engines/greavescotton/GC20http://www.moneycontrol.com/india/stockpricequote/engines/swarajengines/SEhttp://www.moneycontrol.com/india/stockpricequote/engines/kirloskarindustries/KOEhttp://www.moneycontrol.com/india/stockpricequote/engines/cumminsindia/CI02http://www.moneycontrol.com/india/stockpricequote/engines/cumminsindia/KOE03http://www.moneycontrol.com/india/stockpricequote/engines/greavescotton/GC20http://www.moneycontrol.com/india/stockpricequote/engines/kirloskarindustries/KOEhttp://www.moneycontrol.com/india/stockpricequote/engines/swarajengines/SEhttp://www.moneycontrol.com/india/stockpricequote/engines/cumminsindia/CI02http://www.moneycontrol.com/india/stockpricequote/engines/cumminsindia/KOE03http://www.moneycontrol.com/india/stockpricequote/engines/greavescotton/GC20http://www.moneycontrol.com/india/stockpricequote/engines/kirloskarindustries/KOEhttp://www.moneycontrol.com/india/stockpricequote/engines/swarajengines/SEhttp://www.moneycontrol.com/india/stockpricequote/engines/greavescotton/GC20http://www.moneycontrol.com/india/stockpricequote/engines/greavescotton/KOE03http://www.moneycontrol.com/india/stockpricequote/engines/swarajengines/SEhttp://www.moneycontrol.com/india/stockpricequote/engines/kirloskarindustries/KOEhttp://www.moneycontrol.com/india/stockpricequote/engines/cumminsindia/CI02http://www.moneycontrol.com/india/stockpricequote/engines/cumminsindia/KOE03http://www.moneycontrol.com/india/stockpricequote/engines/greavescotton/GC20http://www.moneycontrol.com/india/stockpricequote/engines/swarajengines/SEhttp://www.moneycontrol.com/india/stockpricequote/engines/kirloskarindustries/KOEhttp://www.moneycontrol.com/india/stockpricequote/engines/cumminsindia/CI02http://www.moneycontrol.com/india/stockpricequote/engines/cumminsindia/KOE03http://www.moneycontrol.com/india/stockpricequote/engines/greavescotton/GC20http://www.moneycontrol.com/india/stockpricequote/engines/kirloskarindustries/KOEhttp://www.moneycontrol.com/india/stockpricequote/engines/swarajengines/SEhttp://www.moneycontrol.com/india/stockpricequote/engines/cumminsindia/CI02http://www.moneycontrol.com/india/stockpricequote/engines/cumminsindia/KOE03http://www.moneycontrol.com/india/stockpricequote/engines/greavescotton/GC20http://www.moneycontrol.com/india/stockpricequote/engines/kirloskarindustries/KOEhttp://www.moneycontrol.com/india/stockpricequote/engines/swarajengines/SEhttp://www.moneycontrol.com/india/stockpricequote/engines/cumminsindia/CI02


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8. Size in terms of employee & turnover

Number of Employees: Above 1000 People

Trade & Market

Main Markets:

North America

South America

Western Europe

Eastern Europe

Eastern Asia

Southeast Asia

Mid East

Africa

Oceania

Total Annual Sales Volume: Above US$100 Million

Factory Information

Number of R&D Staff: Above 50 People

Contract Manufacturing: OEM Service Offered


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9. Executive Profile

Name :- Ashok KumarDesignation/ Nature of Duties :- P. L. General ManagerGross Remuneration (Rs.) :- 27,09,228Qualifications :- B.E. (Mech), PGDBAExperience (years) :- 29

Date of commencement of employment :- 22.02.2007Age (years) :- 54Last Employment held :- Sundram Fasteners Ltd, Mfg. - CED

Name :- Bhattacharya S.Designation/ Nature of Duties :- Vice PresidentGross Remuneration (Rs.) :- 54,14,812Qualifications :- B.E. (Mech)Experience (years) :- 28Date of commencement of employment :- 01.12.2003Age (years) :- 51

Last Employment held :- R&D - AD Association of India

Name :- Chakravarty DDesignation/ Nature of Duties :- Group General ManagerGross Remuneration (Rs.) :- 38,78,898Qualifications :- B.Sc. Engg (Mech)Experience (years) :- 25Date of commencement of employment :- 19.09.2005Age (years) :- 47Last Employment held :- Fairfield Atlas Ltd., Mfg. - AD

Name :- Chaudhary R. P.Designation/ Nature of Duties :- Vice President IEDGross Remuneration (Rs.) :- 37,46,807Qualifications :- B.E. (Mech) DSMExperience (years) :- 28Date of commencement of employment :- 29.05.2007Age (years) :- 51Last Employment held :- International Auto Ltd.

10. Plant Locations:-


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Head Office :- Mumbai

Regional Offices :- Mumbai, Delhi, Kolkata, Chennai

Branch Offices :- Ahmedabad, Ranchi, Bengaluru, Kochi,Hyderabad, Jaipur, Lucknow, Patna,Guwahati, Chandigarh, Coimbatore andBhubaneshwar

Manufacturing Unit :- Pune(1), Auragabad(3), Gummidipoondi(4),Ranipet(1), Germany(1)

Overseas Offices/Distribution Networks :- Germany, UK, UAE, China

Over 1200 dealers throughout India

11. Joint Venture and Alliances

1922


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The Comp. was incorporated on 29th March, as a Private Ltd. company. It was convertedinto a Public Limited Comp. on 8th May, 1950.

The main objects of Comp. is to act as merchants, engineers & contractors. The Comp.has a large number of associated & subsidiary companies manufacturing various items ofelectrical & machinery products. It also acts as concessionaires for a large number offirms in U.K. The company manufactures paper cones & tubes for cotton textile industry& diamond drilling bits.

Equity shares were issued without payment in cash.

1958

Greaves Dronefield Comp. was floated in collaboration with Dronsfield Brothers Ltd.,Oldham for manufacture of their well-known 'Atals' brand emery fillets. It was registeredon 31st December, & it went into production soon thereafter.

1959 Mather Greaves Comp. was registered on 6th August, for manufacture of calender bowls.

1960

The Comp. concluded a technical collaboration agreement with Mandrills Ltd., of

Melbourne, Australia for manufacture of diamond tools. The Comp. was floated in collaboration with David Brown Industries Ltd., for

manufacture of Radicon worm reduction gears & geared motor units & was registered on6th June. Later, the Comp. was also licensed to manufacture David Brown marine gearboxes.

Draton Greaves concern was floated in collaboration with Drayton Regulator andInstrument Co. Ltd., of Middlesix for manufacture of steam traps & regulators &registered on 19th August.

1963 After consolidating the manufacture of calender bowls, the Comp. embarked on the

production of Schriner calenders, stenter clips, mangles, printing machines, etc. On 22nd April, it became a subsidiary of Comp. by virtue of such allotment of 425 shares

of Rs. 100 each to the Comp. in terms of collaboration agreement.

1965 Mather Greaves Ltd., undertook the entire marketing of its products resulting in the

termination of their Sole Concessionaires Agreement with Greaves Cotton and Co. Ltd.

1967 The other subsidiaries are Greaves Leasing and Finance Ltd., Rajpath Investment limited

Cannation Investment limited Greaves Midwest Engineering Co. limited & SIDVIM Ag.

1975 Greaves Lombardini Comp. in collaboration with Lombardini Motori of Italy promoted

Greaves Lombardini Ltd., for the manufacture of diesel engines. Greaves LombardiniLtd., was incorporated on 21st May, under the name & style of Greaves Diesels Ltd., &the name was subsequently changed to the present one.

1982 Consumption of emery fillets in the home market during the last quarter of 1982 & the

beginning of 1983 was less due to prolonged textile strike in the country.


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1983 5% tax-free Pref. shares made 13.5% taxable from 1.7.1983. 25,000-6% Pref. share

redeemed on 31.3.1984. 2,12,625 Bonus Equity shares issued in prop. 1:2 on 23.3.1984.

1984 Greaves Lombardini Ltd., was merged with Greaves Cotton and Co. Ltd.

1985 Consequent upon the purchase by Greaves Cotton and Co. Ltd., of 50% shares held by

Dronsfield Brothers Ltd., U.K. Greaves Dronsfield Ltd., became a wholly ownedsubsidiary of Greaves Cotton and Co. Ltd.

A technical collaboration agreement was entered into with David Brown Gear Industries,U.K., for manufacture of hardened and profile ground helical gear boxes. Governmentgave its approval.

20,265-15% Pref. & 19,250 No. of equity shares allotted without payment in cash tomembers of Greaves Lombardini, limited on its merger. These Pref. shares redeemable at1.7.1996 but before 15.6.1998 at the company option.

1988 25,000-15% Pref. C shares paid off. 3,28,562 Bonus Equity shares issued in proportion

1:2.1989

To improve exports further, it was proposed to open offices in the USSR & East Africa.The works at the Nasik plant resorted to go-slow & the Comp. was forced to declare alock-out of the plant effective from 14th June, 1990. The lockout was lifted on 20thOctober, 1990.

1990 During the year, the Comp. introduced Greaves portable light weight diesel Genset viz.,

Greaves-GD3000. The Comp. entered into an understanding with the Rajasthan State Industrial

Development & Investment Corporation Ltd. [RIICOs] for setting up of unit at Abu Roadin Rajasthan for manufacture of ABS Resins in collaboration with Technochim andPlastpererabotka [Russian partnerss].

The Comp. undertook to set up a 3-wheeler autorickshaw manufacturing unit at Baramati,Maharashtra.

During the year, the Comp. undertook to increase existing capacity of light weightengines unit at Aurangabad to 32,500 units from the existing 22,500 units.

Greaves Chitram, Ltd., [Chitrams] was amalgamated with the Company. The erstwhileshareholders of Chitram were allotted one equity share of Greaves Cotton Co., Ltd., forevery 412 shares held by them in Chitram.

1991

During the year, the Comp. had converted the representative office at Singapore into atrading office. The Comp. proposed to set up a joint venture Comp. with Frabelle Fishing Corporation,

Philippines to undertake deep sea tuna fishing in the exclusive economic zone ofterritorial waters of India.

Subject to necessary approvals being obtained, Greaves Semiconductors limited [GSLs], asubsidiary of company, was proposed to be amalgamated with the Comp. withretrospective effect from 1st April 1989.


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During April-May, the Comp. offered 32,89,488 - 12.5% secured fully convertibledebentures of Rs. 40 each on Rights basis in the proportion 1 debenture : 3 equity sharesheld [all were taken ups]: Additional 4,93,341 debentures were allotted to retain oversubscription.

Simultaneously, another 1,64,475 - 12.5% debentures of Rs. 40 each were issued toemployees including Indian working directors of Comp. on an equitable basis [only75,200 debentures taken ups]. UN subscribed portion of 89,275 debentures allowed tolapse.

Each debenture of Rs. 40 was fully & automatically converted into one equity share of Rs.10 each at a premium of Rs. 30 per share after 12 months from the date of allotment ofdebentures. Accordingly, 38,58,029 No. of equity shares were allotted in July 1992.

50 No. of equity shares allotted without payment in cash to members of Greaves ChitramLtd., on its merger.

1992 The company operations at Marol was suspended in October and the land & building had

since been disposed of. The Nashik plant was reported to be suffering from lack ofprofitable orders from the Government sector. Efforts were on to diversify the productportfolio.

The power transmission unit II [erstwhile David Brown Greaves Ltd.s] Falta, W. Bengalwas commissioned. During November the Comp. offered share on 1,37,14,949 No. of equity shares of each at

a premium of Rs. 70 per rights basis in the proportion 1:1. [all were taken ups]. Another6,85,747 No. of equity shares of Rs. 10 each at a premium of Rs. 70 each were offered tothe employees of Comp. on an equitable basis [only 26000 shares taken ups].

The Comp. offered for sale 26,82,240 No. of equity shares of Rs. 10 each of GreavesFosico limited at a premium of Rs. 60 per share.

Rajasthan, Polymers and Resins Ltd., an associate Comp. offered on preferential basis12,68,000 - 14.5% secured redeemable partly convertible debenture of Rs. 25 each of Rs.10 of face value was to be converted into 1 equity share on allotment of debenture Rs. 15was to be redeemed.

Subject to necessary approvals being obtained, the company proposed to issue1473,81,765 bonus equity shares in proportion 1:2.

28,552 No. of equity shares allotted to shareholders of erstwile Greaves Ltd., on itsamalgamation 19,91,903 No. of equity shares allotted on amalgamation of Ruston andHonnsberg limited & David Brown Greaves limited within company. 137,40,949 Rightsshares issued to shareholders & employees.

1993 The Comp. entered into a joint venture agreement with a few parties in Singapore for

trading in Vietnam & other parts of the world. A new Comp. was registered in Singaporein the name of Pacific Greaves Pte. Ltd.

It was also proposed to set up a joint venture Comp. with overseas consortium partners forinstallation & developed of part infrastructure in Russia. Effective 19th August, the name of Comp. was changed to Greaves Ltd., from Greaves

Cotton and Co. Ltd. 38,58,029 No. of equity shares [prem. Rs. 30s] was allotted in conversion of 12.5% fully

convertible debs. 28,552 No. of equity shares allotted to shareholders of erstwhileGreaves Semi-Conductors limited on its amalgamation. 19,91,903 No. of equity sharesallotted on amalgamation of Ruston and Hornsby Ltd. and David Brown limited with thecompany. 137,40,949 Rights equity shares allotted.


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1994 Two new products were launched viz., diesel three wheelers and sale of HIPS resins &

partly from the petrol engine unit at Thoraipakkam & Commencement of production ofdiesel engines at Ranipet, both acquired in January.

The Comp. undertook a project for manufacture of rolling cutter rock bits, used largely inoil well drilling & also for waterwell drilling in collaboration with Smith Tool Company,a division of Smith International, Los Angeles, U.S.A. For this purpose a new factory was

set up in the MIDC Industrial Estate at Nasik. Effective 31st January, the Comp. acquired the Thoraipakkam properties of Enfield India

Ltd., Chennai. The Comp. undertook to invest in the Ranipet complex to manufacturelight diesel engines which was originally planned for at Aurangabad.

The Comp. proposed to enter the field of agricultural tractor & associated diesel enginesmanufacture in Rankipet, Tamil Nadu in collaboration with a well known Italianmanufacturer.

The Comp. has signed a licence agreement in June to avail technology from SAME formanufacture of certain range of tractors.

1995

147,38,176 shares allotted as Bonus shares in prop. 1:2.

1996 The Comp. achieved 94% of installed capacity in the manufacture of Greaves Garuda

diesel 3-wheeler. However, the original plans for introducing the eco-friendly 4-strokepetrol engined 3-wheeler couldn't materialise during the year.

The Comp. proposed to set up an industrial park of international standard at Ranjangaonnear Pune in collaboration with Overseas consortium partners & in association withMaharashtra Government agencies viz., the SICOM and MIDC. The Comp. proposed tointroduce an eco-friendly 4-stroke Petrol engined 3 wheeler.

The Comp. entered into a technical collaboration with SAME Spa, Italy for manufactureof agricultural tractors & signed a joint venture agreement with SAME for manufacture of

diesel engines for tractors & other uses. The Comp. proposed to increase the capacity for manufacture of diesel generating sets at

Diesel Engines Unit in Chinchwad, Pune to cater to the enhanced demand in the market. The Comp. entered into a joint venture agreement with Same Deutz Fahr SPA of Italy for

manufacture of diesel engines.

1997 Greaves Ltd, the engineering arm of Thapar group, is entering into the automotive sector

with tractors & two models of three-wheelers - one a six-seater diesel versions & the othera three-seater petrol model.

The production capacity of high speed diesel engines manufactured at Aurangabad &

Ranipet will be increased form 60,000 engines per annum to 100,000 engines per annum. The Comp. is to launch the Garuda six-seater diesel three-wheeler which conforms to

1996 emissions norms & will be shortly introducing the Garuda four-stroke petrol three-wheeler.

In the transportation division, the manufacturing capacity of the diesel run three wheelergaruda is proposed to be increased to 60,000 from the present 24,000.

The Comp. proposes to launch the production of petrol version of Garuda in the firstquarter of 1997-98 incorporating new features such as electric start and four-strokeengines.


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Greaves proposes to later launch a six-seater diesel vehicle & flat bed load carriers in thecountry.

Piaggio, the Italian auto major, is close to tying up with Greaves for manufacturing arange of diesel three-and four-wheelers in the country. The two companies signed amemorandum of understanding & have already initiated a joint feasibility study.

The Power Transmission Division [PTDs] of Comp. is on the verge of signing two jointventures - one with the Singapore-based Team Asia for semiconductors & another withan Italian Comp. - Bonfigliloe - to manufacture higher ranges of transmission equipment

& various types of gear boxes, which are applicable in heavy engineering & earth-movingvehicles.

Rajasthan Polymers and Resins Ltd [RPRLs] is to be merged with Greaves Ltd with effectfrom April 1, as part of comprehensive rehabilitation package approved by Board forIndustrial & Financial Reconstruction [BIFRs].

1998 Greaves Ltd a LM Thapar group company, is doubling the manufacturing capacity of

internal combustion engines at its Thoraipakkam plant, near Chennai. Greaves Limited, which is the country largest manufacturer of diesel engines, proposes to

enhance the manufacturing capacity of spark ignition internal combustion piston engines -

diesel, petrol land kerosene versions-from one lakh to two lakh units per annum. The Italian automobile major has an existing tie-up with Greaves for manufacturing the

Ape range of three wheelers in the country. Greaves Ltd, is the largest manufacturer of diesel engines with factories located at Pune,

Aurangabad, Ranipet & Thoraipakkam, Chennai. Greaves has also emerged as the largestmanufacturer of IC engines in the country with a production of 1.8 lakh engines.

A memorandum of understanding [MoUs] was signed between the Thapar Comp. & theDutch transmission equipment giant; BTR European Holdings, in New Delhi.

The Comp. entered into a memorandum of understanding [MoUs] with BTR EuropeanHoldings of Netherlands [BTRs] recently to float a subsidiary which will be promoted inIndia by BTR or its associated companies.

Greaves Limited, the Thapar group company, launched a 50HP tractor, 'Same' Greaves

503, in Chandigarh.

1999 Greaves Ltd has joined hands with Piaggio S. P. A. of Italy to locally produce in India

compact engines with in-built gearboxes for three-wheelers which the two Companieswould be manufacturing under their joint venture.

Leading Auto manufacturer Greaves Ltd has tied up with two Chinese companies tomanufacture small tractors [power tillerss] & plans to sell the product at one third theprice of a normal tractor.

Greaves has entered into an agreement with a Chinese company Chang Chai & has alsoentered into an alliance with Dangefeng Agricultural Machinery Group Corporation for

manufacturing rest of machinery & body of power tiller. Greaves Ltd, engineering arm of Thapar group, has launched a new range of industrial

gearboxes for industry, making it the only Comp. to offer a wide end unique range ofgearboxes for different industries.

The Comp. has set up a plant at Baramati, Maharashtra, with a capacity to manufacture25,000 vehicles every year.

The Comp. currently produces the `APE' range of diesel three-wheelers under technicalguidance from Piaggio. The Comp. has just launched its APE range of three-wheelers inthe National Capital Region [NCRs] of Delhi.


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Greaves, which had entered the industry with 50 hp tractor during end-1998, willmanufacture `Solaris' tractors in the range of 25, 35, 45 hp at its Ranipet plant in TamilNadu.

2000 Greaves Ltd has decided to set up a 50:50 joint venture company with its existing

technical collaborator Same Deutz SpA of Italy to manufacture tractors ranging from 25hp to 70 hp.

The capacity of petrol/kerosene engines manufactured at Chennai will be increased to120,000 engines from the current capacity of 80,000 engines.

The Comp. have approved, in principle, the amalgamation of Rajpath Investments limiteda wholly owned subsidiary of company with Carnation Investment limited also anotherowned subsidiary of the company.

The Greaves engineering arm of Thapar Group, has entered into a technical collaborationwith Italian Construction equipment giant Cifa Spa for manufacturing ready mix concreteequipment.

Greaves limited has converted its tractor manufacturing operations in Ranipet nearChennai, which was earlier a technical collaboration with SAME of Italy, into a 50:50joint venture with the Italian tractor major.

2001 Italian diesel engine major, Lombardini acquires engine manufacturing facility of Thapar

group company, Greaves, at Aurangabad for a consideration of Rs 11 crore

2002 Greaves Ltd has informed that Mr K K Nohria has resigned from the office of Director of

Company, in view of his pre-occupation.The Board of Directors of Comp. at its Meetingsheld on March 21, 2002 has appointed Mr Vijay Rai as a Director to fill the casualvacancy caused by resignation of Mr K K Nohria.

Italian auto firm Same Deutz Fahr Group SPA has taken over its Indian partner, GreavesLtd, for Rs 26.9 crore from its two tie-up, one to manufacture tractors & the other for

tractor engines

2003 Solaris Chemtech Limited acquires 950,000 equity shares of Rs 10 each of Crompton

Greaves Limited from Greaves Ltd., stake increases to 10.83% in the company Greaves Ltd to go back to its erstwhile name Greaves Cotton

2004 Greaves Cotton, part of B M Thapar group has appointed Karan Thapar as the chairman

of company Greaves Cotton signs MoU with Premium Energy Transmissions

Inks MoU with Corporation Bank for financing farm machines to farmers

2005 Launches of an all-new Greaves Metro Pump for construction industry Greaves Cotton unveils four new products Greaves Cotton Limited has appointed Mr. Vikram Tandon as a Director of Comp. to fill

the casual vacancy caused by resignation of Gautam Thapar.

2007


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Greaves Cotton Ltd has informed that the Board of Directors of Company, has appointedMr. S D Nayyar as Additional Director of Company, effective from September 26, 2007.

12. Business Status

Following two years of the global economic downturn, the world seems to be regainingeconomic stability. In the developed world, there are definite signs of a recovery. Bycontrast, in the developing world, China, India and other Asian countries are registeringstrong growth with robust domestic markets. The Indian economy grew at 10.4% in thecalendar year 2010 as reported in IMFs World Economic Outlook. Household income hasincreased significantly resulting in higher consumption and demand. Manufacturing andother core sectors registered good growth which led to an overall buoyancy in the market.The infrastructure sector however, although performing better than the previous year, isyet to achieve its 2007-08 performance level.

The financial period 2010-11 was a year of opportunities particularly for the autoindustry. This resulted in our Automotive Division reporting excellent performance.Against this backdrop, Greaves Cotton was able to achieve good growth in both top andbottom lines, reporting a Profit after Tax of Rs. 127.28 crores for financial period of nine

months ended March 31, 2011. This PAT for the nine month Financial Year is higher thanthe PAT for the 12 month FY 2009-10. The Companys Balance Sheet is quite healthywith practically no debt. Our relationship with customers remains strong on account ofour proven products, evolved in-house with contemporary technology and backed by awide sales and service network.

Going forward, there are many challenges before the Government as it combats highinflation. RBI has already effected several increases in interest rates. Rising crude andother commodity prices are also a matter of serious concern which will certainly have animpact on corporates profitable business growth. However, overall demand is strong, and


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therefore, I am cautiously optimistic about FY 2012 with respect to the potential ofgrowth in markets and the business environment as a whole.

Corporate sustainability has become an important agenda for the Industry. Your Companyalso clearly sees a trend of business sustainability. Consequently, our emphasis for thefuture is on continued sustainability and capital efficient growth. In order to meet thegrowing demand from the auto sector, we have started the process to set up a newmanufacturing facility at Shendra, Aurangabad, which will be operational in July thisyear. In addition, the Company also plans to invest significantly in building engineering

and R&D capabilities across all its businesses. Recognising that our employees are our core strength, we are focusing on developing

their capabilities. In addition to the ongoing programmes, our Human Resources Teamhas undertaken various development initiatives to enhance the skill - sets of high potentialemployees.

To accelerate the pace of sustainable growth, Greaves Cotton has chalked out its strategicmoves for the next three years. I am confident that the Management Team with theinvaluable guidance of the Board will achieve its Goals & Objectives.

13. PESTEL ANALYSIS

PESTEL analysis for Greaves Cotton Limited

13.1. Political Factors:

1. Taxation Policies: CE machinery is mobile and is transported to different locations

countrywide depending on the requirement. However, due to different taxation structures in

different states like different rates of VAT, entry taxes, octrois, local levies etc., the

prevailing entry permits and RTO rules, the manufacturers and the customers face lot of

obstacles in running a smooth business while moving across the country.

2. Foreign Trade Regulations: Another intriguing factor is related to imported machinery. In

India, the imported machinery can easily be RTO registered anywhere without the need ofadequate testing at State Transport Authorities in different states, while, the machinery

manufactured in India has to be tested as well as registered this naturally does not provide

level playing field for Indian manufacturers.

13.2. Economical Factors:

1. Business Cycle: Indian construction equipment industry has gone ahead and built up big

capacities looking into the boom in infrastructure.

2. Fluctuations in prices of inputs: Steel prices have gone up by over 25 per cent. Steel is

one of the major inputs for all construction equipment and their aggregate inputs. Hence

there is a major impact of input cost increase for all Indian construction equipmentmanufacturers.

3. Exchange Rate: The rupee till recently was hardening against world majors. The recent

loss in strength of the rupee has also made inputs of construction equipment costlier.

4. Interest rates: Due to inflation Government and RBI has tightened liquidity by increasing

CRR and planning to increase interest rates and this would have an effect of reducing funds

available for not only consumption but also investment. This would adversely affect


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demand for construction equipment. It has already affected demand for smaller equipment

like backhoe loaders.

13.3. Social Factors:

1. Geographical Location: As these machineries are very heavy, they are not useful in hilly

areas or fertile land.

13.4. Technological Factors:

1. Government and industrys focus on technology: Technology for manufacturingspecial machineries like earth moving equipments is not available in India. Therefore it is

necessary to permit the import of technology from international reputed manufactures.

2. Speed of Technology Transfer: As seen in the recent years foreign engineering

companies are planning to set up manufacturing base in India. Already 20 have either set

up their plant her whereas are being represented through dealers.

13.5. Environmental Factors:

1. Some equipment is used for mining and excavating purpose which cause imbalance in

layers of land which may enhance probability of earthquake.

2. These machineries are running by diesel or oil, which create noise and air pollution.

13.6 Legal Factors:

1. Policies related to Import and Export: Government of India has already initiated

several steps for arresting the inflation spiral and support growth. For instance, import

duties on steel are being reduced or eliminated. Export of steel is being discouraged so as

to improve steel availability for domestic consumption.

14. Industry Overview and Analysis

14.1. Porters FIVE FORCES ANALYSISMichael Porter's famous Five Forces of Competitive Position model provides a simpleperspective for assessing and analyzing the competitive strength and position of a corporation or

business organization.


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Porters five forces analysis

14.1.1 Entry Barriers

In construction equipment industry threat of new entrants is very low because this industry

requires huge capital investment for setting up manufacturing unit as well as working capital for

manufacturing machineries. For manufacturing construction equipments knowledge of advance

technology is essential which also creates entry barrier.

14.1.2 Bargaining Power of Buyers

Before 1960s when competition among players is very little, buyers had limited bargaining

power. But after 1991 due to entry of new players this trend is changing and now buyers have

moderate bargaining power.

14.1.3 Threat of Substitutes

Threat of substitute is very low because every construction equipment has specific purpose hence

it can be not easily replaced by anyone else. Substitution is only possible through value addition

like increase in efficiency or new technology etc.

14.1.4 Bargaining Power of Suppliers

Demand for construction equipment is increasing day by day due to increase in infrastructural

and mining activities where as supply of such equipments is limited so suppliers have high

bargaining power.

14.1.5 Competitive Rivalry within an industry

Competition among suppliers is moderate because demand is high and supply is low. There iscompetition between players for better maintenance service, timely delivery, Price etc.


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Well-established players and recognized players

Cheaper imports can reduce the market share of present manufacturers

Increasing growth in demand

Players with technological know-how can succeed, as technology is the major entry

barrier

Capital intensive industry

Barriers of

entry

LOW

Bargaining power of buyersMODERATE

Price and service are the differentiators

Lack in sharp differentiation leading to competition in

price

Huge demand for construction equipment in future

Inter-firm rivalryMODERATE

Earlier, manufacturers/sellers held sway because of huge

demand

With the entry of new players, this trends expected to change

Manufacturers now are providing end-to-end

Bargaining power of suppliersHIGH

ers have not kept pace with growth in demand, leading to delayed

ries

of some critical components

ity of steel prices impacting production cost

Threat of

substitute

LOW

ery construction equipment has a specific purpose

bstitutes could only be through value addition through technology, comfort maintenance etc.

mplete substitution may not happen in near future. Product replacement or enhancement is

sible

26

Porters five forces analysis for Greaves Cotton Limited


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2. Capacity Expansion: Capacity expansion in the steel, cement, oil refining and power

sectors to meet growing infrastructure investments in India, is also expected to generate

demand for construction equipment.

3. Export Opportunities: The export opportunity is expected to grow on the back of rising

cost pressures on developed countries and due to the emergence of low-cost competitive

suppliers and original equipment manufacturers (OEMs) in India.

15.4 Threats:

1. Government have drawn robust plan for infrastructure development but still poor quality

of existing infrastructure acts as a bottle neck as significant resource is utilized for its

repairs and maintenance. This acts as a hurdle for implementation of new projects, which

also hampers the overall economic development of the economy and the sector.

2. Equipment Rental industry: Equipment rental business is currently pegged at around 7-

8 per cent of the total construction equipment industry is expected to grow appreciably in

the coming years.

16. Marketing Strategies AnalysisMarket Definition


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The construction and engineering industry is composed of civil engineering companies and large-

scale contractors, but excludes companies involved in home-building. The market value is

calculated as the revenues of those companies whose primary activity is the construction of non-

residential buildings and non-buildings construction (civil engineering).

MARKETING STRATEGIESconstruction image by Sandra Henderson from

Fotolia.com

Whether in the remodeling business or new construction, you always run into plenty of

competition for construction work. Marketing ensures that you have plenty of work, even when

construction jobs are scarce. Use a variety of marketing efforts. This gets your name out much

more quickly to a larger audience.

Construction Equipment marketing process can be divided into 4 quadrants. They are as follows:

1. Face-to-face marketing or, the people quadrant.

2. Direct Response marketing.

3. Media and traditional advertising.

4. Web based marketing.

Prioritize Customers

In the construction business, it takes only a few good customers to make up the substantial part of

your income. Define who your best customers are and stage your advertising around them.

Narrowing your prospects ensures that your marketing dollars do not go to waste.

Localize Marketing

When you are on-site in a lived-in neighborhood, there are potential customers all around. Place a

sign on the corner with your name and tag line. Distribute door hangers that tell a little more

about your services. You can even ring doorbells while placing door hangers to present a more

personal message.

Create a Website

You need an online presence. Your website should have contact information and a digital resume.

Feature your best work and let your potential customers know what your benefits are. Include

customer testimonials and your own credentials. Include pricing and information on the costs of

building and remodeling.

Become an Expert

If you have worked in construction very long, you are sure to have a few tips and tricks in your

pocket. Offer a newsletter with advice and information. A weekly or monthly email newsletter

doesn't cost much and keeps you on your customers' minds. Write blogs and articles for

placement online with your name and website listed in the "About the Author" section. You may

need to hire a writer; to keep costs low, hire a local college student at a lower price than a

professional.

Reward Referrals

Referrals are one of the best ways to gain customers. Offer your current customers a gift card or

cash when they bring you business. When your business is strong and your customer service is

excellent, the referrals will not be hard to come by. Print business cards to make referrals easy for
http://www.fotolia.com/http://www.ehow.com/business/http://www.ehow.com/careers/http://www.ehow.com/education/http://www.fotolia.com/http://www.ehow.com/business/http://www.ehow.com/careers/http://www.ehow.com/education/


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your customers. Simply hand out extras and ask customers to give them out when referring your

business to others.

Sell Your Specialty

Your company provides a service in a way that others do not. You may work special hours thataccommodate customers better. You may have a large crew and finish jobs in amazingly shortperiods. Or you may do specialty work that is not offered in your area. However you are unique,advertise that quality by talking about it or creating a tag line that can be placed on marketing

materials such as door hangers and business cards.

PRICING POLICY

Production of a product depends on various factors like raw material, manpower, machinery,

energy consumption etc. With the combination of all the factors of productions the final products

is produced. These factors are to be paid in terms of wages, salaries, interest, dividends, profits

etc. So while pricing the product all these factors are taken into consideration.

Construction equipments are generally priced depending on its capacity it uses and its working

life. They are very expensive and generally its price ranges from thousands to lakhs of rupees perequipments. Generally companies allow payments on installments basis. Some credit period is

also given to loyal customers. As there are several major players in this industry, they price their

equipment at higher rates than other companies.

PROMOTION SCHEMES

Promotional schemes are always a good tool to attract customers. However the kind of

promotional activities that one carries out differs for each industry. The promotional activities

carried out for consumer durables are different than those for engineering industry.

Promotional activities that can be carried out in this industry are: Price cut due to competition

Free services are given for one or two years after the equipment is installed

Transportation charges are beared by the company manufacturing the equipment.

Free spare parts are given along with the equipment for replacement purpose.

DISTRIBUTION CHANNEL

Most producers do not sell their goods directly to their final users; between them stands a set of

intermediaries performing a variety of functions. These intermediaries constitute a marketing

channel which is also called as trade channel or distribution channel. Formally, distribution

channels are sets of interdependent organizations involved in the process of making a product or

service available for use. They are the set of pathways a product or service follows after

production, culminating in purchase and use by the final end user.


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The producer and the final customer are part of every cannel. For industrial goods and products

the customers are also other industries. There are generally four types of Industrial distribution

channel which are as follow:

a) Zero level

b) One level

c) Two level

d) Three levelIn India the whole Glasslining industry uses the zero level distribution channels. Here the

manufacturer directly sells the equipment to the final industrial customer. Here the customers are

various industries like Pharma, Chemical, Beverages, etc. These industries directly approaches

the companys manufacturing Glasslined equipments with their specific product requirements.

All the three Glasslined equipment manufacturing companies have their branch offices in major

metropolitan cities for taking orders and for providing customer services.

16. CSR Activities

Trust / Foundation for CSR No

CSR Areas 1. Community Welfare2. Education3. Vocational Training

Three main CSR activities 1. Community welfare2. Education3. Vocational Training

Publish Sustainability Report No

Corporate Social Responsibility


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Continuously endeavouring to make a positive contribution to society, Greaves has developedCorporate Social Responsibility as an important part of its business.

The Company is actively involved in the empowerment of the disadvantaged and weaker sectionsof the society in Aurangabad and Ranipet.

Education, along with intellectual and skill development, is a key thrust area of the CompanysCSR profile in these regions, with its initiatives including:

Educational scholarship to students and later engaging them as apprentice/trainees in ourplants.

On-the-job training to make people job-worthy.

Specific skill development programmes for wives of Greaves workmen, such as cookeryclasses, stitching classes and computer literacy classes.

17 . New Marketing Opportunities

Worlds seventh largest country by area and second biggest by population makes India one of the

most dynamically growing and still, largely untapped construction equipment industry. The

country has witnessed massive investment in the construction industry from both public and

private enterprises in recent years. With Prime Minister Manmohan Singh projecting investments

of $320 billion in the infrastructure sectors like constructing roads, ports, power plants,

telecommunication sector, urban infrastructural developments, etc over the next few years have

paved the way for construction equipments demand to grow substantially in recent years. Asconstruction equipments account for 4%-24% of the total construction costs in various sectors,

the industry recorded strong revenue grew.

According to research report Booming Construction Equipment Market in India, the

construction equipment industry in India has witnessed consistent double digit CAGR growth

over the past few years. The global economic slowdown had its moderate effects on the industry,

but it regained growth momentum in FY 2010 and showed positive year-on-year growth.


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Particularly, the earth moving segment is driving the overall industry with strong demand

emanating from government backed infrastructure projects. The segment is poised for an

unprecedented CAGR of around 18% during FY 2011 FY 2014.

The report has also studied the high growth potential of equipment rental industry. The

construction equipment rental market is small, but it has seen impressive growth results over the

past few years. Sensing the inorganic demand for rental equipments, OEMs also forayed into

renting their equipments to consultants and to independent builders. In coming 3-4 years, thesector is expected to transform in a fully fledged industry providing significant boost to overall

industry developments.

Over the last 3-4 years, various new entrants made inroad to the Indian construction equipment

industry. Some of the biggest names belong to Japan, the US and Korea. Besides, a number of

domestic companies are either expanding their domestic capacities or diversifying their product

portfolio. With the emergence of new market players and expansion plans underway, the industry

is expected to become more competitive and fragmented. However, these new capacities will find

their home quite comfortably in the domestic market amid growing mechanization and proposed

large infrastructural projects.The industrys expectations of the future evolution in this sector are represented here in graphical

form. Most of the current players expect that new players will enter the Indian market.

Industrys Future Evoluti on

Future market situation and demand

Domestic demand was Rs 7000 crores and exports were Rs 330 crores in previous a year which is

expected to grow in future. Construction and road making industry would be experiencing

comparatively more growth than other units because of some major projects in the pipeline. This

would also result in the huge demand of such machinery.

The construction equipment industry can contribute a lot by bringing in new technology andmodernization of project management.


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Future Prospects

Greaves Cotton is focusing on export markets such as Middle East and Africa. It is also focusingon strengthening its dealers /distributors network to tap the potential market for engines, gensetsand construction equipment. In its IT front, the company is planning to implement SAP ERPsystem.

Key Factors of Greaves presence expected to sustain growth in the year ahead

1. AUTOMOTIVE SECTOR

Continued growth in domestic market, coupled with strong exports, expected to support volumegrowth in FY12

3-Wheeled and 4-Wheeled SCV segment expected to grow rapidly in FY12 due to additionalthrust from rural marketing and further development of hub & spoke transport model

However, increasing oil & commodity prices and tight liquidity situation may impact growth

2. INFRASTRUCTURE & CONSTRUCTION SECTOR

High growth in infrastructure sector over the medium term expected based on the number ofprojects in pipeline and underway, however, long running concerns over the level of investmentfiltering through to projects on the ground need to be addressed

Power plants and transmission grids along with Transport sector (rail, road, airport) expected tobe the growth drivers in the next few years

3. INDUSTRIAL SECTOR

Industrial activity likely to continue during FY12 on account of growth in domestic consumptionand global demand for Indian manufactured produccts

Shortage of power and the need to maintain back up generation will ensure high rate of growthin the demand for generating sets

However, high crude oil prices and rising interest rates coupled with the high base of previousyear might limit the pace of industrial growth in FY12.

4. AGRICULTURE

A relatively plentiful monsoon in 2010 and forecasts of a normal monsoon in 2011 augurs wellfor continued growth of the agricultural sector

Government thrust on improving efficiencies in the agricultural sector, shortage of farm labour,coupled with increased buying power of farmers with better agri-product prices are will increasemechanization and grow the agri-equipment business

Documents

Cotton Greaves Final