13

CHAPTER -2

OVERVIEW OF ENGINEERING AND

CHEMICAL/PHARMACEUTICAL INDUSTRY IN INDIA

2.1 Engineering Industry in India

2.1.1 Introduction

India has a strong engineering and capital goods base. The engineering sector is the

largest sector among the industrial segments in India and provides direct and indirect

employment to a large number of skilled and non-skilled workers. It is a diverse

industry with a number of segments, and can be broadly categorized into two

segments, namely, heavy engineering and light engineering. The engineering sector is

relatively less fragmented at the top, as the competencies required are high, while it is

highly fragmented at the lower end (e.g. unbranded transformers for the retail

segment) and is dominated by smaller players.

The current size of Indian engineering sector indicates a faster growth rate and huge

potential towards employment opportunities and better scope for being a global

player. The latest talent management and recruitment trends in this sector have gone

through a metamorphic transformation. As far as the industry numbers are concerned,

the facts are available for all to see. India has emerged in No.1 spot amongst 33

countries in terms of hiring, as per the Manpower Employment Outlook Survey 2008.

With strong economic fundamentals, Indian Inc. is on a steady growth path.

Compensation markets have in the recent past been moving from different sectors in

the range of 12-14 percent on a total cost to company basis. The cost for talent

acquisition for top end talent even in engineering markets has been growing over a

period of time. Some of the best retention techniques hover around offering huge

project completion bonuses, short-term incentives programs, long term value creation

bonuses, stock option programs and such other retention tools, which are built around

strong performance management system.

Higher mobility, upward migration to other higher sectors are some of the differences

that can be seen. Arbitrage of talent from classical manufacturing sectors to

14

infrastructure, mining and construction sectors can be seen as these are the new

sunrise sectors of the new Indian economic development sector

The Indian economy expects higher growth in the coming future, The engineering,

oil and gas, manufacturing, power transmission and construction sectors/industries

will continue to rise in India, as these sectors are considered to be the backbone of the

economy and are intricately linked with umpteen other core sectors, for its demand.11

Following chart 2.1 depicts the Classification of Engineering industry in India

Chart 2.1

Source: Corporate Catalyst India; June 2011

The engineering industry in India manufactures a wide range of products, with heavy

engineering goods accounting for bulk of the production. Most of the leading players

are engaged in the production of heavy engineering goods and mainly produces high-

value products using high-end technology. Requirement of high level of capital

investment poses as a major entry barrier, because of which the small and

unorganized firms have a small market presence.12

11

Sree Rama Rao http://www.citeman.com/4117-future-of-indian- engineering-

dustry.html#ixzz2AIbgur3R on October 3, 2008, 25-10-2012 12

www.researchandmarkets.com/reports/.../engineering industry, 8th

October 2012,

Engineering Sector

Low-tech items like

Castings, forgings

and fasteners

Highly

sophisticated

microprocessor-

based process

control

equipment,

diagnostic

medical

Heavy

Engineering

Transport

Equipment

Light Engineering

Capital

Goods

Other

Machinery /

Equipment

15

Heavy industry has been performing well with the industrial sector recording a growth

rate of 10.3% during Apr-Oct 2010, manufacturing sector recorded a growth rate of

11% during the same period while mining registered 8.3% growth and electricity

recording a growth of 4.6%. Capital goods sector grew by an impressive 24% in Apr-

Oct 2010, consumer goods by 8.2%, basic goods by 5.8%, intermediate goods by

10.4% and consumer durables by 24.4% in the same period. At present, the capital

goods industry, including machine tools contributes 12% to the total manufacturing

activity and provides critical input, i.e. machinery and equipment to the remaining

sectors covered under the manufacturing activity. Manufacturing sector is

contributing about 16% to the GDP and has been standing steadily at this level for the

last few years. This is based on DHI statistics13

.

Looking at the index of industrial production (IIP) of heavy industry products, IIP

grew by more than 20% during Apr-Oct 2010 for these products – passenger cars,

tractors, lifts, air & gas compressors, cutting tools, electric generators, turbines,

commercial vehicles, printing machinery and dump loaders.

Many of the players in the heavy industry sector are public companies. Department of

Heavy Industry (DHI) invested US $ 2.8 billion in 2010 in 31 of these public sector

companies. These companies collectively generated revenue of US $ 9.4 billion in

2010-11 and are expected to be sized at US $ 10.75 billion in 2011-12, as per DHI

Annual Report of 2010-11.

The light engineering goods segment, on the other hand, uses medium to low-end

technology. Entry barrier is low on account of the comparatively lower requirement of

capital and technology. This segment is characterized by the dominance of small and

unorganized players which manufacture low-value added products. However, there

are few medium and large scale firms which manufacture high-value added products.

This segment is also characterized by small capacities and high level of competition

among the players.

13

http://dhi.nic.in/dhi_annual_rep1011_1-2.pdf Pg. 3

16

Table 2.1

Classification of the Engineering Sector in India

Sub-segments Number of organized Players

Heavy Engineering Sector

Cement Machinery 18

Sugar Machinery 27

Rubber Machinery 19

Metallurgical Machinery 39

Machine Tool 125

Material Handling Equipment 50

Mining Machinery 32

Dairy Machinery 16

Light Engineering Sector

Welded steel pipes & tubes 123

Process Control Instrument 26

Antifriction Roller Bearing 19

Plain paper copier 12

Source : Ministry of Heavy Industries as public enterprises, Annual Report 2007

and www.indianbusiness.inc.in

Heavy engineering industry comprises of textile machinery, cement machinery, sugar

machinery, rubber machinery, material handling equipments, oil field equipments,

metallurgical machinery, mining machinery, dairy machinery And machine tools. The

major end-user industries for heavy engineering goods are power, infrastructure, steel,

cement, petrochemicals, oil & gas, refineries, fertilisers, mining, railways,

automobiles, textiles, etc.

2.1.2 User Segments

The major end-user industries for heavy engineering goods are power, infrastructure,

steel, cement, petrochemicals, oil & gas, refineries, fertilisers, mining, railways,

automobiles, textiles, etc. Light engineering goods are essentially used as inputs by

the heavy engineering industry.

17

2.1.3 Key Growth Drivers of Indian Engineering Sector

The engineering sector in India has been growing because of growth in the user

industries and several new projects being undertaken in various core industries such

as railways, power, infrastructure, etc.14

Capacity creation in sectors such as infrastructure, oil & gas, power, mining,

automobiles, auto components, steel, refinery, consumer durables, etc, is driving

growth of the engineering industry.

Some of the Factors affecting growth of Indian engineering sector are:-

Growth of the key user-industries

Government‟s thrust on the power and construction industries

India being preferred by global companies as an outsourcing destination as it

enjoys lower labour cost and better designing capabilities.

The following table indicates the FDI inflows in the Engineering Sector – Aug 91 to

Dec 06

Table 2.2

FDI inflows in the Engineering Sector – Aug 91 to Dec 06

Sectors FDI (Rs mn) %age of total

inflows

Electrical Equipments* 302,558.2 17.03

Miscellaneous Mechanical & Engineering 21,624.0 1.22

Industrial Machinery 9,423.3 0.53

Machine Tools 8,210.5 0.46

Earth Moving Machinery 3,397.9 0.19

Prime Movers 1,055.7 0.06

Boilers & Steam Generating Plants 332.6 0.02

*Includes Computer Software & Electronics; Other than Electrical

Source: Department of Industrial Policy & Promotion, 2007

2.1.4 Heavy Engineering Sector

The heavy engineering sector can be classified into two broad segments – capital

goods/machinery (which is further classified as electrical machinery/equipment and

non-electrical machinery/equipment), and equipment segments.

14

http://www.smallb.in/sites/default/files/.../EngineeringMarketOpportunities.pdf

18

Electrical machinery includes the following: power generation, transmission and

distribution equipment such as generators and motors, transformers and switchgears.

Non-electrical machinery includes machine / equipment used in various sectors such

as material handling equipment (earth moving machinery, excavators, cranes, etc.),

boilers, etc.15

2.1.5 Heavy Electrical Industry

The fortunes of the heavy electrical industry have been closely linked to the

development of the power sector in India. The heavy electrical industry has under its

purview power generation, transmission, distribution and utilization equipment. These

include turbo generators, boilers, turbines, transformers, switchgears and other allied

items. These electrical equipment (transformers, switchgears, etc.) are used by almost

all the sectors. Some of the major areas where these are used include power

generation projects, petrochemical complexes, chemical plants, integrated steel plants,

non-ferrous metal units, etc.

The existing installed capacity of the India heavy electrical industry is 4,500 MW of

thermal, 1,345 MW of hydro and about 250 MW of gas-based power generation

equipment per annum. The industry has the capability to manufacture transmission

and distribution equipment up to 400 KV AC and high voltage DC.

2.1.6 The Heavy Electrical Industry can be classified into the following product

categories:

2.1.6. 1. Turbines and Generator Sets

The Indian industry has established a manufacturing capacity of various kinds of

turbines of more than 7,000 MW per annum. The PSE Bharat Heavy Electricals Ltd

(BHEL) has the largest installed capacity. There are units in the private sector also

which manufacture steam and hydro turbines for power generation and industrial use.

Domestic manufacturers of AC generators are capable of manufacturing AC generator

from 0.5 KVA to 25,000 KVA and above.

15

http://www.dnb.co.in/Engineering/overview.asp,

19

2.1.6. 2. Boilers

The Indian boilers industry has the capability to manufacture boilers with super

critical parameters up to 1,000 MW unit size. BHEL is the largest manufacturer of

boilers in the country, with a market share of over 60%. It has the capability to

manufacture boilers for super thermal power plants, apart from utility boilers and

industrial boilers.

2.1.6. 3. Transformers

The domestic transformer industry has the capability to manufacture the whole range

of power and distribution transformers. Special types of transformers required for

furnaces, rectifiers, electric tract, etc, and series and shunt reactors as well as HVDC

transmission up to 500 KV are also being manufactured in India.

The Indian transformer industry exports to over 50 countries including the US,

Europe, South Africa, Cyprus, Syria, Iraq, and Far East countries.

2.1.6. 4. Switchgear and Control Gear

The switchgear and control gear industry in India is a fully developed one, producing

and supplying a wide variety of switchgear and control gear items required by the

industrial and power sectors. The entire range of circuit breakers from bulk oil,

minimum oil, airblast, vacuum to SF6 are manufactured to standard specification. The

range of products produced cover the entire voltage range for 240V to 800KV,

switchgear and control gear, MCBs, air circuit breakers, switches, rewireable fuses

and HRC fuses with their respective fuse bases, holders and starters.

2.1.6. 5. Electrical Furnaces

Electrical furnaces are used in Metallurgical and engineering industries such as

forging and foundry, machine tools, automobiles, etc.

2.1.6 6. Shunting Locomotives:

Shunting locomotives for internal transport facilities are essentially used in railways,

steel plants, thermal power plants, etc.

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2.1.7 Characteristics of the Indian Capital Goods Sector16

Fortune of this sector linked with that of the overall industry, because capital

goods are tangible assets, such as factories, machines and small tools

individuals or organizations use to make products and services. They are

manufactured means of production; with natural resources and human labor,

they are the basic components of the production process. Their purpose and

use distinguishes them from consumer products we use every day.

Manufacturing sector is the key end-user sector of capital goods, because any

manufacturing activity requires heavy machinery or even small scale

manufacturing industry do require some or the other machinery i.e. capital

goods.

Labour is highly cost-competitive as the capital goods have tendency to

replace labour and thus produce more than labour intensive industry which

reduces the cost.

Inputs/raw materials used are mainly local/domestic in origin so sourcing and

procurement of raw materials becomes easy.

While involving capital goods for manufacturing activity the industry

increases its chances to suffer from low technological competitiveness.

Capital goods sector in India Suffers from a Relative lack of sub-contracting

arrangements, despite large scale SME presence in engineering sector.

High incidence of indirect taxation (excise duty, octroi duty/entry tax), central

sales tax, sales tax, service tax, etc), as compared to other nations thus has a

greater impact on profits.

This Sector Lags in strong institutional mechanisms for export credit and

promotion which obstructs its growth story of sector and its international

presence.

Public Sector Enterprises (PSE) have dominance in heavy engineering,

machine tools, boiler manufacturing. On the other hand, private firms prevail

in industrial machinery segments such as cement, sugar and most other non-

16

http://www.ehow.com/info_8409717_characteristics-capital-goods.html

21

electrical machinery which leaves no room for competition and dearth of

innovation.

Output concentrated with top few companies in most product groups,

generally with large PSEs, followed by a middle layer of companies

comprising large private sector players and multi-national companies,

followed by a large number of small units at the bottom of the pyramid.

Presence of a large width of products, with almost all major capital goods

being manufactured locally thus giving easy availability of the goods and

reducing transportation time and cost.

Indian companies, in general, lack export thrust, as the focus is largely on the

domestic market and thus limiting their opportunities of going global.

Most items produced compare functionally with those manufactured elsewhere

in the world, but lag behind as far as finish is concerned thus not being 100%

quality Product.

Focus/investment in branding and marketing, but customer oriented approach

is low.

Table 2.3

Leading Players in Heavy Electrical Industry during the year 2004-2006

Categories Players

Transformers Crompton Greaves, BHEL, Vijay Electricals, Emco,

Bharat Bijlee

Switchgears ABB, Siemens, L&T, Crompton Greaves, BHEL, Areva

T& D India Ltd (formerly Alstom)

Steam & Hydro Turbines BHEL, Triveni Engineering & Inds., Belliss India

Generator/Generating Sets Honda Siel Power Products, Powerica, Kirloskar Electric

Co., Cummins India

Boilers BHEL, Thermax, Saraswati Industrial Syndicate,

Sterling Strips

Electric Furnaces Electrotherm (India) Ltd.

Source: Prowess; Compiled by D&B Research

22

2.1.8 Classification of the Heavy Engineering and Machine Tool Industry as per

the Department of Heavy Industries and Public Enterprises

2.1.8.1. Textile Machinery Industry

The textile machinery industry in India manufactures machinery needed for sorting,

cording, processing of yarns/ fabrics and weaving, along with the components, spares

and accessories. As per the Ministry of Heavy Industries, there are over 600 units

engaged in the manufacture of machinery and spares, and out of these, about 100 units

are manufacturing complete machinery.

With the buoyant outlook on textile exports, the Indian textile machinery industry is

gearing itself to take advantage of the vast opportunities of supplying machines

required to cater to export target of garment manufacturers, post the Multi-Fibre

Arrangement.

2.1.8.2. Cement Machinery Industry

The Indian cement machinery industry manufactures complete cement plants, based

on dry processing and pre-calcinations technology, for capacities up to 7500 TPD.

The existing installed capacity of the industry is estimated to be Rs 6 bn/annum.

According to the Ministry of Heavy Industries, presently there are 18 units in the

organised sector for the manufacture of complete cement plant machinery.

2.1.8.3. Sugar Machinery Industry

As per the estimates of the Ministry of Heavy Industries, there are presently 27

units in the organised sector for the manufacture of complete sugar plants and

components. The industry‟s installed capacity is estimated to be Rs 200 crore.

The industry can manufacture sugar plants for a capacity upto 10,000 TCD

(tonnes crushing per day).

2.1.8.4. Rubber Machinery Industry

The rubber machinery industry in India manufactures inters-mixer, tyre curing

presses, tyre moulds, tyre building machines, turnet servicer, bias cutters, rubber

injection moulding machine, bead wires, etc. According to the Ministry of Heavy

23

Industries, currently there are 19 units in the organised sector for the manufacture of

rubber machinery mainly required for tyre/tube industry.

2.1.8.5. Material Handling Equipment Industry

The Indian material handling equipment industry manufactures a range of equipment

including crushing and screening plants, coal/ore/ash handling plant and associated

equipment such as stackers, reclaimers, ship loaders / unloaders, wagon tipplers,

feeders, etc. The industry caters to the requirement of a host of core industries such as

coal, cement, power, port, mining, fertilizers and steel plants. The Ministry of Heavy

Industries estimates the presence of 50 units in the organized sector for the

manufacture of material handling equipment. Apart from the organized players, there

are a number of units present in the small scale sector.

Imports of material handling equipment exceed their exports. Though comparatively

much smaller than imports, exports have recorded buoyant growth in the recent years.

The following table depicts the trend in trade in material handling equipment:

2.1.8.6. Oil Field Equipment Industry

The oil field equipment manufacturing industry manufactures drilling rigs for on-

shore drilling. Offshore drilling equipment like jack-up rigs, etc., are not

manufactured indigenously. The industry however manufactures offshore platforms

and certain other technological structures domestically. Bharat Heavy Electricals,

Hindustan Shipyard, Mazagon Dock and Burn & Co. are some of the leading

producers. The recent couple of years have witnessed a surge in exports of oil field

equipment. However, the industry remains a net importer, as can be seen from the

table below:

2.1.8.7. Metallurgical Industry

According to the Ministry of Heavy Industries, currently there are 39 units in the

organised sector which are engaged in the manufacture of metallurgical machinery.

Metallurgical machinery includes equipment for mineral beneficiations, ore dressing,

size reduction, steel plant equipment, foundry equipment and furnaces.

24

2.1.8.8. Mining Machinery Industry

The various type of mining equipments include Longwall mining equipments, road

header, side dischargers loader, haulage winder, ventilation fan, load haul dumper,

coal cutter, conveyors, battery locos, pumps, friction prop, etc. The Ministry of Heavy

Industries estimates the presence of 32 manufacturers of mining machinery both in the

public and private sector for underground and surface mining equipments. Out of

these, 17 units manufacture underground mining equipments. Exports of mining

machinery were observed to be negligible, as compared to their imports.

2.1.8.9. Dairy Machinery Industry

The Indian dairy machinery manufacturers produce a range of equipments including

stainless steel dairy equipments, evaporators, milk refrigerators and storage tanks,

milk and cream deodorizers, centrifuges, clarifiers, agitators, homogenisers, spray

dryers and heat exchangers (tubular and plate type), etc. As per the Ministry of Heavy

Industries, presently there are 16 units manufacturing dairy machinery and equipment

in the organised sector, both in private and public sector.

The Indian engineering industry is highly competitive, with several companies having

a presence in each of the segments. Several multinational companies of the likes of

ABB, Siemens, Honda, Cummins, have entered the industry.17

Table 2.4

Leading Players in the Heavy Engineering Industry

Categories Players

Textile Machinery

Lakshmi Machine Works Ltd, Veejay Lakshmi Engg.

Works Ltd, Lakshmi Automatic Loom Works Ltd,

Batliboi Ltd

Cement Machinery Larsen & Toubro Ltd, Walchandnagar Industries Ltd

Sugar Machinery K C P Ltd

Rubber Machinery Larsen & Toubro Ltd, Alfred Herbert Ltd

Material Handling

Equipment

Andhra Pradesh Heavy Machinery & Engg. Ltd, Bharat

Earth Movers Ltd, L & T-Komatsu Ltd., T R F Ltd, Telco

Construction Equipment Co. Ltd, W M I Cranes Ltd

Oil Field Equipment Sagar International Ltd

Metallurgical Machinery Tata Steel Ltd

Source: Prowess; Compiled by D&B Research

17

http://dipp.nic.in/English/Publications/Reports/cap_good.pdf

25

2.1.8.10. Machine Tool Industry

The machine tool industry is regarded as the backbone of the entire industrial

engineering industry. The Indian machine tool industry manufactures almost the

entire range of metal-cutting and metal-forming machine tools. Apart from

conventional machine tools and Computer Numerically Controlled (CNC)

machines, the Indian industry also offers other variants such as special purpose

machines, robotics, handling systems, and TPM-friendly machines.

The Ministry of Heavy Industries estimates the presence of around 150 machine tool

manufacturers in the organised sector and around 300 units in the small ancillary sector.

Nearly 73% of the total machine tools production in India is contributed by the leading 10

companies in the industry. The industry has an installed capacity of over Rs 10 bn and

employs a workforce (direct/indirect) of 65,000 skilled and unskilled persons.

The machine tool manufacturers in India produce general purpose machinery of

international standards (inj terms of quality, precision and reliability). However,

they lag behind in terms of design and engineering capability so as to be able to

undertake very high precision CNC.

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Leading Players in Machine Tools Industry as shown in Table – 2.5 (Year 2004-

2006)

Table 2.5

Players in Machine Tools Industry

Product

Categories

Players

CNC Lathes Ace Designers Ltd Lakshmi Machine

Works Ltd

HMT

Machine

Tools Ltd

Jyoti Askar

Microns

Pvt Ltd

Machining

Centres

Bharat Fritz Werner

Ltd

Ace

Manufacturing

Systems Ltd

HMT

Machine

Tools Ltd

Lakshmi

Machine

Works Ltd

Jyoti

Presses ISGEC Electropne-

umatics &

Hydraulics India

Pvt Ltd

Hindustan

Hydraulics

Pvt Ltd

Bemco

Hydraulics

Pvt Ltd

Grinding

Machines

Parishudh

Machines Pvt Ltd

Micromatic

Grinding

Technological

Ltd

HMT

Machine

Tools Ltd

PMT

Machine

Tools

Automatics

Ltd

Special

Purpose

Machines

Widia India Ltd Bharat Fritz

Werner Ltd

HMT

Machine

Tools Ltd

Motor

Industries

Co. Ltd

Lokesh

Machine

Ltd

Surface

Grinders

Praga Tools Ltd

Alex Machine

Tools Ltd

HMT Machine

Tools Ltd

Vertical

Turning

Boring

HMT Machine

Tools Ltd

Premier

Automobiles Ltd

Bending

Machine

Electropneumatics

& Hydraulics India

Pvt Ltd

Hindustan

Hydraulics Pvt

Ltd

ISGEC

Gear cutting Premier

Automobiles Ltd

HMT Machine

Tools Ltd

Source: Ministry of Heavy Industries; Compiled by D&B Research

Maharashtra (Mumbai and Pune), Punjab (Jalandhar and Ludhiana), Gujarat

(Ahmedabad, Baroda, Jamnagar and Rajkot), Tamil Nadu (Chennai and Coimbatore)

and Karnataka (Bangalore and Mysore), and some parts of eastern India are the hub of

manufacturing activities in the machine tools industry.

27

2.1.9 Light Engineering Industry

The Indian light engineering industry is highly diversified, comprising of a number of

distinctive sectors and sub-sectors. The product range in this industry varies from

highly sophisticated microprocessor based process control equipment and diagnostic

medical instruments to low-tech items such as castings, forgings, and fasteners,

among others. The sector also includes products such as bearings, steel pipes and

tubes, etc. Most of the products in the light engineering industry serve as inputs for

the capital goods industry. The health of the light engineering industry is therefore

dictated by the demand for capital goods.

2.1.10 The major sub-segments within this industry are:

2.1.10.1. Medical and Surgical Instruments

The medical and surgical instruments segment includes a wide array of equipments

and apparatuses. These include medical and surgical instruments, dental equipment,

electro-medical apparatus, orthopaedic appliances, physiotherapy equipments, X-ray

machines, among others. These instruments find application in diagnosis, therapy, and

patient monitoring and thus play a crucial role in the healthcare delivery system.

Output of the Indian medical and surgical instruments industry, which is around four

decades old, was very small until a few years back. In recent years, liberalisation and

growing health awareness has accelerated the growth of the domestic industry and

also led to a rise in imports of medical and surgical instruments into India. Domestic

production comprises of wide range of medical equipment including Electro-

Cardiograph (ECG) machines, X-ray machines, electro-surgical instruments, blood

chemistry analysers, among others. The domestic industry meets around 40% of the

demand for medical equipment, while the rest is met through imports. Demand for

sophisticated instruments such as nuclear magnetic resonance (NMR) scanners, multi-

channel monitors, among others are met through imports. Majority of the end-users

prefer to deal with foreign companies, as Indian manufacturers who are concentrated

in the small-scale sector are not able to provide after sales service.

Rising income levels, growing health consciousness, and rise of medical tourism are

expected to drive the demand for medical and surgical instruments. Government‟s

28

commitment to improve healthcare facilities and liberalization of trade and

investments laws would also expand the market for medical and surgical instruments.

2.1.10.2. Process Control Instruments

Process control instruments and systems are instruments and systems used for measurement

and control of process variables. Process variables are physical or chemical parameters, the

variations of which can affect the operation of a manufacturing process. These variables

include humidity, pressure, temperature, liquid level, flow, vacuum, vibration, specific

gravity, and chemical composition including pH, among others. Use of process control

instruments and systems is highly significant in large and sophisticated process industries

such as fertilisers, power plant, steel, cement plants, petroleum refineries, and petrochemical

industries, among others.

The industry is delicensed and 100% FDI is permitted in this sector. There are 26 units in

the organised sector engaged in the manufacture of process control instruments and

systems. Seven of these 26 units are capable of implementing the entire instrumentation

system including software required by the process industries. The domestic manufacturers

meet around two-thirds of India‟s demand for process control instruments and systems.

Transfer of technology has been the major cornerstone for the development of the

domestic process control instruments and system industry. There exists a gap between

technology adopted in India and contemporary international technology. Technology

presently used in the Indian industry is microprocessor based centralised control

system. The Indian industry is capable of handling open control systems and smart

control devices; however, latest developments such as total integrated management

and control approach, which are currently being adopted in the developed countries,

are yet to be adopted in the country.

Demand for these instruments and systems are dependant largely on the progress of

implementation of various mega projects in the fields of power, steel, fertilisers,

petrochemicals and refineries. Exports in this industry have not recorded significant

growth over the years. Technology gap between technology adopted in India and

international adopted technology combined with fast obsolescence, lack of

standardisation and quality control have all led to lower exports from the country.

29

2.1.10.3. Antifriction roller bearing

Roller bearings are components used to reduce or eliminate friction between moving

parts and thus reduce wear & tear of machines. They help improve machine

performance and are thus a critical component of any equipment that rotates. It finds

varied application, ranging from simple electric fans to complex space rockets.

Depending on its usage, a bearing may have to withstand prolonged use, high-speed

rotation, varied temperatures, or a corrosive environment. Bearings are available in

two distinctive shapes, ball, and roller. There are four different types of roller bearings

– cylindrical roller bearings, needle roller bearings, tapered roller bearings and

spherical roller bearings.

The Indian bearing industry has recorded good growth in the past few years. The

Indian manufacturers are able to meet around 70% of the demand for general purpose

bearings. The Indian bearing industry‟s product range comprises of around 500 types

of bearings. Indian manufacturers do not produce special purpose bearings as demand

for the same is low and investments required are huge as bearings is a capital

intensive industry. Special purpose bearings are therefore imported.

The bearings industry is highly fragmented. There are around 20 units in the

organised sector engaged in the manufacture of ball and roller bearings. The

organised sector caters to both the original equipment manufacturers and replacement

market. The unorganised sector, which manufacturers low quality small bearings

caters to the replacement market. The manufacturing activity of a few small-scale

units is restricted to assembly of imported components.

2.1.10.4. Industrial Fasteners

Industrial fasteners cover a wide range of products such as nuts, screws, bolts, studs,

rivets, nails, washers, etc. Fasteners can be broadly classified into two groups, high

tensile strength fasteners, and mild steel fasteners depending on their tensile strength.

Manufacturer of high tensile fasteners requires superior technology and are mainly

manufactured in the organised sector, while, manufacturing of mild steel fasteners is

concentrated in the unorganised sector. In fact, manufacture of all types of fasteners

except high tensile fasteners and special purpose fasteners are reserved for the SSI

sector. Fasteners are used in the assembly of engineering systems.

30

The automobile industry is the largest consumer of fasteners. The other major user-

segments are textile machinery, railway locomotives, construction, computer hardware and

general engineering. There exists huge export potential for Indian industrial fasteners,

however, poor product standardisation, relatively higher raw material costs, and low labour

productivity make Indian fasteners less competitive in the global market.

2.1.10.5. Ferrous Castings

Ferrous castings constitute essential intermediates for automobiles, industrial

machines, power plants, chemicals & fertiliser plants and cement plants, among

others. They are therefore vital for the growth and development of the engineering

industry. The domestic industry is well established. Being a highly polluting industry,

many of the developed countries are withdrawing from this industry. This gives rise to

a huge export potential for Indian manufacturers. To capitalise on this export demand,

leading manufacturers have undertaken modernisation and up gradation of their

manufacturing facilities to improve productivity and product quality and also

economise on production costs. Given the wide spread usage of castings across

industries and huge export potential, there exists considerable scope for establishing

additional capacity in this area.

2.1.10.6. Steel Forgings

The forging industry has emerged as one of the major contributors to the manufacturing

sector of the Indian economy. Depending on the scale of operations, the industry can be

categorised as large, medium, small, and tiny. SMEs comprise a major portion of this

industry. The industry consists of around 330 odd units, of which there are around 100

units in the medium and small sector, and only around 9-10 units are present in the large

scale. There are huge numbers of units functioning in the tiny sector.

Increasing globalisation has led to sharp rise in investments in the sector. This has led

to the industry becoming capital intensive from being labour intensive. Total

investment in the large and medium sectors of the forging industry is estimated to be

around US $ 600 mn. To expand their markets and have a global reach, the small-

scale units are also increasing their capital investments. The small-scale units have

upgraded their facilities in terms of technology and quality and a number of them are

now suppliers to Original Equipment Manufacturers (OEMs) in the automobile sector.

31

The automotive industry is the major end-user of the forging industry. The other user

industries include industrial machines, railways, oil & gas, power plants, and

chemical plants, among others.

2.1.10.7. Seamless Steel Pipes & Tubes

Seamless steel pipes & tubes find widespread usage in the hydrocarbon industries,

processing & general engineering industries. Boiler pipes, as the name suggests are

used in boilers, heat exchangers, super heaters, among others, while casing & tubing

are used for drilling of oil and gas. Seamless pipes find application in industries where

strength, resistance to corrosion and long shelf life are critical. The industry is

delicensed and 100% FDI is permitted in the sector under the automatic route.

The oil sector is the major end-user segment of seamless pipes & tubes. The other

user segments include boilers, ball bearings, automobiles, chemical plants, fertilisers,

petrochemical plants, industrial machinery, among others. The oil sector accounts for

around 60% of total demand, while, the bearings, automobiles, and boiler sector

account for around 30% of total demand. There could be a significant shift in the

demand pattern for seamless pipes and tubes due to the robust growth expected in the

power and automobile sectors.

2.1.10.8. Electrical Resistance Welded (ERW) Steel Pipes & Tubes

ERW steel pipes & tubes find widespread usage across industries and fields. In

addition to various engineering industries, they are used for water, oil and gas

distribution, line pipes, fencing, scaffolding, etc. They are also used for agricultural

purposes, drinking water supply, thermal power, for hand pumps for deep boring

wells and also as protection for cables (telecom), among others. Depending on the

requirement of the end user industry, ERW steel pipes & tubes are available in

various wall thicknesses, diameters, and qualities. The different types include line

precision pipes, tubular poles, electric poles, lightweight galvanised pipes for

sprinkler irrigation, among others. The industry has sufficient capacity to manufacture

the different types of pipes & tubes. High performance ERW steel pipes & tubes

possess high strength, toughness and are corrosion resistant.

32

In the manufacturing process of ERW steel pipes & tubes, the edges to be welded are

mechanically pressed together and electric resistance or electric induction is used to

generate the heat required for welding. With the adoption of better welding

technology, ERW pipes & tubes are now widely used in the oil & gas sector. A

number of ERW steel pipes & tubes production units are in the SSI sector. Higher

demand from the oil & gas industry, infrastructure, and automobile industries has led

to a healthy increase in production of ERW steel pipes.

2.1.10.9. Submerged-Arc Welded (SAW) Pipes

SAW pipes are mainly used for oil & gas transportation and water distribution. SAW

pipes are of two major types, longitudinal and helical welded SAW pipes. The later

are used for low-pressure application, while longitudinal SAW pipes are preferred for

high-pressure application such as gas pipes. Longitudinal SAW pipes are more than

25 mm in thickness. In terms of production costs, it costs less to manufacture helical

SAW pipes as compared to longitudinal SAW pipes.

In the manufacturing process of submerged-arc welded pipes, the heat necessary to

melt the edges of metal to be joined together is generated with the help of a concealed

arc with no pressure between the two sides of the weld.

2.1.10.10. Bicycle Industry

The Indian bicycle industry can be categorised into two segments, those

manufacturing bicycle parts, and those manufacturing complete bicycles. Majority of

bicycle parts and components are manufactured in the small-scale sector, since most

of the components other than free wheels and single piece hubs are reserved for the

small-scale sector. Large units are permitted to manufacture bicycle frames, chains,

rims, and that too only for captive consumption. Complete bicycles are manufactured

in the organised sector. Four companies account for over 90% of total bicycle

production in the country.

2.1.10.11. Sewing Machines

In India, the manufacture of conventional hand operated sewing machines is reserved

for the small-scale sector. Domestic demand for these is fully met by the Indian

manufacturers. There exists a huge potential for exports of sewing machines to

33

developing countries. During FY05, exports and imports of sewing machines were Rs

0.6 bn and Rs 4.8 bn respectively.

2.1.10.12. Plain Paper Copier

Plain paper copier, a device used for reproducing copies of documents, typescripts,

photographs, among others has become a very important office automation device. At

present, there are only 12 units in the country manufacturing this device and most of

them have technical collaboration with foreign companies. The introduction of the

low priced personal copier has altered the demand pattern for plain paper copiers. The

personal copiers are more users friendly and come with customer replaceable toner

cartridge and plate receptor drums.

The demand in the engineering sector will remain healthy because of the Government‟s

increased thrust on infrastructure development. The continuing growth of the

manufacturing sector and favourable regulatory policies would provide further boost to the

sector‟s growth. Fresh investments in the power equipment, metals, oil & gas, and

petrochemicals industries, coupled with robust industrial activity is expected to drive the

growth momentum in the capital goods industry in the near Future.

2.2 Clusters in India

A cluster is a sector targeted geographical concentration of micro and/ or small & medium

enterprises (MSMEs/MSMEs), service providers and institutions faced with common

opportunities and threats. In other words, a cluster of MSMEs is a concentration of

economic enterprises, producing a typical product/service or a complementary range of

products/services within a geographical area. The location of such enterprises can span over

a few villages, a town or a city and its surrounding areas. Thus a cluster of MSMEs,

hereafter referred to as “cluster”, is identified by the „product/service‟ that the micro and

small enterprises produce and the „place‟ where the enterprises are located. Foundation for

MSME Clusters assists institutions in undertaking cluster based local area development,

effectively and inclusively in developing and transition economies.

2.2.1 Features of Cluster

Give rise to collective benefits, for example through the spontaneous inflow of

suppliers of raw materials, components and machinery or the availability of workers

with sector specific skills.

34

Favour the creation of providers of specialised technical, administrative and financial

services.

Create a conducive environment for the development of inter-firm co-operation as

well as of co-operation among public and private institutions to promote local

production, innovation and collective learning.

2.2.2 Clusters: Some Facts

Around 1157 SME (industrial) and approx. 6000 artisan/micro enterprises clusters are

estimated to exist in India.

The micro and SME clusters in India are estimated to have a significantly high share

in employment generation.

Table 2.6

Region Wise Distribution of Clusters in India

Region Traditional

Manufacturing

Micro Enterprise

Handicraft Handloom Others

NO. % NO. % NO. % NO. %

North 123 31.7 716 25.75 140 23.56 698 24.11

East 36 9.28 645 23.19 43 7.24 464 16.02

West 140 36.09 764 27.47 134 22.57 787 27.17

South 89 22.95 502 18.05 214 36.02 858 29.62

North-East 0 0 153 5.51 63 10.61 89 3.08

Total 388 100 2780 100 594 100 2896 100

Source: http://www.msmefoundation.org/Cluster_India.aspx

Some of the Engineering clusters are presented below which is not exclusive list.

35

2.2.3 Engineering Clusters in India

Table 2.7

Engineering Clusters in India

Sr.

No.

State District Segment

1 Haryana Karnal Agricultural Implement

2 Maharashtra Jalgaon Agricultural Implement

3 Punjab Jalandhar Agricultural Implement

4 Punjab Patiala Agricultural Implement

5 Tamil Nadu Coimbatore Agricultural Implement

6 Uttar Pradesh Varanasi Agricultural Implement

7 Karnataka Dharwad Agricultural Implements and

Tractor Trailer

8 Delhi Okhla Auto Components

9 Haryana Faridabad Auto Components

10 Haryana Gurgaon Auto Components

11 Jharkhand Adityapur Auto Components

12 Madhya Pradesh Pithampur Auto Components

13 Maharashtra Ahmednagar Auto Components

14 Maharashtra Aurangabad Auto Components

15 Maharashtra Pune Auto Components

16 Punjab Ludhiana Auto Components

17 Tamil Nadu Chennai Auto Components

18 Gujarat Ahmedabad Auto Components

19 Rajasthan Jaipur Ball Bearing

20 Punjab Ludhiana Bicycle Parts

21 Gujarat Ahmedabad Castings & Forging

22 Gujarat Rajkot Castings & Forging

23 Maharashtra Gadchiroli Castings & Forging

24 Punjab Batala Castings & Forging

25 Tamil Nadu Coimbatore Castings & Forging

26 Chattisgarh Raipur Castings & Metal Fabrication

27 Maharashtra Sindhudurg Copper Coated Wires

36

28 Punjab Patiala Cutting Tools

29 Gujarat Rajkot Electric Motors

30 Delhi Naraina Electrical Equipment

31 Haryana Gurgaon Electrical Equipment

32 Rajasthan Jaipur Electrical Equipment

33 Uttar Pradesh Noida Electrical Equipment

34 Madhya Pradesh Dewas Electronic Goods

35 Andhra Pradesh Hyderabad Electronic Goods

36 Delhi Naraina Electronic Goods

37 Gujarat Ahmedabad Electronic Goods

38 Haryana Gurgaon Electronic Goods

39 Karnataka Bangalore Electronic Goods

40 Maharashtra Mumbai Electronic Goods

41 Maharashtra Pune Electronic Goods

42 Uttar Pradesh Noida Electronic Goods

43 Bihar Barauni Engineering & Fabrication

44 Jharkhand Bokaro Engineering & Fabrication

45 Jharkhand Jamshedpur Engineering & Fabrication

46 Maharashtra Nagpur Engineering & Fabrication

47 Orissa Cuttack Engineering & Fabrication

48 Haryana Faridabad Engineering Equipment

49 Haryana Pinjore Engineering Equipment

50 Himachal Pradesh Parwanoo Engineering Equipment

51 Madhya Pradesh Bhopal Engineering Equipment

52 Maharashtra Jalna Engineering Equipment

53 Maharashtra Mumbai Engineering Equipment

54 Tamil Nadu Tiruchirappalli Engineering Equipment

55 Punjab Ludhiana Forging

56 Andhra Pradesh Hyderabad Foundry

57 Haryana Samalkha Foundry

58 Karnataka Belgaum Foundry

59 Maharashtra Kolhapur Foundry

60 Uttar Pradesh Agra Foundry

61 West Bengal Howrah Foundry

37

62 Andhra Pradesh Hyderabad Hand Pumpsets

63 Maharashtra Mumbai Handtools

64 Maharashtra Nagpur Handtools

65 Punjab Jalandhar Handtools

66 Punjab Ludhiana Handtools

67 Rajasthan Nagpur Handtools

68 West Bengal Jhalda Proper Handtools

69 Punjab Ludhiana Industrial Fasteners

70 Karnataka Bangalore Light Engineering

71 Maharashtra Sangli M S Rods

72 Andhra Pradesh Balanagar Machine Tools

73 Gujarat Ahmedabad Machine Tools

74 Gujarat Bhavnagar Machine Tools

75 Gujarat Rajkot Machine Tools

76 Karnataka Bangalore Machine Tools

77 Maharashtra Mumbai Machine Tools

78 Punjab Batala Machine Tools

79 Punjab Ludhiana Machine Tools

80 Tamil Nadu Coimbatore Machine Tools

81 Delhi Okhla Mechanical Engineering

Equipment

82 Haryana Gurgaon Mechanical Engineering

Equipment

83 Rajasthan Jaipur Mechanical Engineering

Equipment

84 Uttar Pradesh Agra Mechanical Engineering

Equipment

85 Uttar Pradesh Ghaziabad Mechanical Engineering

Equipment

86 Uttar Pradesh Noida Mechanical Engineering

Equipment

87 West Bengal Taltala Mechanical Engineering

Equipment

88 Delhi Mayapuri Metal Fabrication

89 Haryana Rohtak Nuts/Bolts

90 Gujarat Rajkot Oil Mills Machinery

38

91 Haryana Ambala Scientific Instruments

92 Uttar Pradesh Hathras Sheetwork (Globe, Lamp)

93 Uttar Pradesh Varanasi Sheetwork (Globe, Lamp)

94 Chattisgarh Raipur Steel Re-rolling

95 Gujarat Bhavnagar Steel Re-rolling

96 Jammu & Kashmir Jammu Steel Re-rolling

97 Punjab Mandi Govingarh Steel Re-rolling

98 West Bengal Howrah Steel Re-rolling

99 Punjab Jalandhar Surgical Instruments

100 West Bengal Kalyanpur Surgical Instruments

101 Uttaranchal Roorkee Survey Instruments

102 Gujarat Surat Textile Machinery

103 Gujarat Ahmedabad Textile Machinery Parts

104 Tamil Nadu Coimbatore Wet Grinding Machines

Note: Not an exhaustive list

Source: UNIDO, SIDO; Compiled by D&B Research, http://www.sido.go.tz

The above list depicts the distributions of various engineering sectors all over the country.

Out of these, this study is confined to Andhra Pradesh and Gujarat, two states with a better

presence of industries as shown in table – 2.7.

2.4 Overview of Chemical and Pharmaceutical Industry of India

2.4.1 Chemical Industry of India

A key constituent of the Indian economy that accounts for about five percent of the

GDP, the Indian chemical industry is the eighth largest sector in the world and the

third largest in Asia by volumes, after China and Japan. The country‟s chemical

industry was estimated at USD 91 billion in 2011 and its believed that it has the

potential to reach USD 134 billion by 2015 growing at a CAGR of 10 percent. The

growth is expected to be driven by rising demand in end-use segments and expanding

exports fuelled by increasing export competitiveness.

The industry is a multi-product and multi-faceted one that comprises of basic

chemicals, pharmaceuticals, petrochemicals, specialty chemicals, agrochemicals and

biotechnology and their sub segments. Within the sub segments, the petrochemicals

39

industry is growing at the rate of around 15 percent annually (2011). In India, the per-

capita consumption of most of the finished products under the chemicals sector is far

below the world average, which demonstrates the industry‟s enormous potential for

growth. The government of India plans to invest USD 34 billion in three approved

Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs); it also plans

to establish port-based chemical parks in special economic zones (SEZs) in the next

five years.18

The Indian Chemical Industry is made up of both small and large-scale units. The

fiscal concessions granted to the small-scale sector in mid-eighties led to

establishment of a large number of units in the Small Scale Industries (SSI) sector.

Currently, the Indian Chemical industry is in the midst of a phase of major

restructuring and consolidation. With the shift in emphasis on product innovation,

brand building and environmental friendliness, this industry is increasingly moving

towards greater customer orientation. Even though India enjoys an abundant supply of

basic raw materials, it will have to build upon technical services and marketing

capabilities to face global competition and increase its share of exports

According to the world bank report of December 2011,the GDP per capita, adjusted

by purchasing power parity , in India was 3582 USD. Past data shows that purchasing

power of an Indian consumer is continuously growing and thereby the demand of

goods and services are increasing though the inflation rate is increasing at 7.23% (last

reported in April Q3, 2012)19

2.4.2 Industry segmentation

The chemical sector of India directly or indirectly acts as a supplier of many of the

commodities of daily use. It is extremely scientific in its approach and facilitates the

provision of many of the important chemicals which are the basic materials for end-

products like paper, leather, paint, varnish, textile, and so on. The chemical sector in

India supports the agrarian and industrial development .The chemical industry is

comprised of a wide variety of products ranging from commodity chemicals to

18

Gyan Research and Analytics Pvt. Ltd., 2012

19 Annual Report 2011-2012, Chemgovt,FICCI,2012

40

research driven specialized chemicals. It‟s basically comprised of three categories:

basic, specialty and knowledge chemicals 20

Table 2.8

Various segments of chemical industries along with their constituent industries

and characteristics

Segments Characteristics Constituent industries

Basic

High Volume, low value-added

Limited product differentiation across

manufactures

High entry barriers on account of high

capital spend and stringent regulations

Petrochemicals

Fertilisers

Inorganic chemicals

Other industrial

chemicals

Speciality

High product differentiation and value-addition

Typically smaller production units with

more flexibility

Low capital investment levels

Adhesive sealants

Catalysts

Industrial gases

Plastic additives

Knowledge

Differentiated chemical and biological

substances used to induce specific

outcomes in humans, animals plants and

other life forms

High investments I R&D and marketing

Agrochemicals

Pharmaceuticals

Biotechnology

Chemical Industry of India is also fragmented according to its application in various

fields.

1) Agro chemicals

2) Fine chemicals

3) Specialty chemicals

4) Dyes

2.4.3 Agro chemicals

As an allied industry of agriculture, which accounts for about one fifth of India's

GDP, the agrochemicals industry is a significant industry for the Indian economy. The

Indian agrochemicals market grew at around 10%-11% over the last five years to

reach ~$ 3.4 Bn in financial year 2012. India is the fourth largest producer of

agrochemicals in the world after USA, Japan and China With 125 technical grade

manufacturers and 800 formulators. Indian agrochemical exports have shown an

impressive growth in the past few years due to excess capacity and availability of

20

Tracy Ma. Et., al, 2012

41

cheap labor. Exports account for almost 53% of the industry revenues and

manufacturing cost-competitiveness whereas in developed economies, exports is

expected to grow by 15% annually in the next decade. Government‟s focus on

achieving food grain self-sufficiency coupled with limited farmland availability is

expected to provide a further boost to the industry.

The agrochemicals/ crop protection market in India is characterized by a high degree

of fragmentation. In India, there are about 125 technical grade manufacturers (ten

multinationals), 800 formulators and over 145,000 distributors. Indian industry

manufactures 60 technical grade pesticides indigenously. Technical grade

manufacturers sell high purity chemicals in bulk (generally in drums of 200-250 Kg)

to formulators. Formulators, in turn, prepare formulations by adding inert carriers,

solvents, surface active agents, deodorants etc.

The industry suffers from high inventory (owing to seasonal & irregular demand on

account of monsoons) and long credit periods to farmers, thus making it a 'working

capital' intensive industry. India due to its inherent strength of low-cost manufacturing

and qualified low-cost manpower is a net exporter of pesticides to countries such as

USA and some European & African countries.

Exports formed ~50% of total industry turnover in FY08 with 29% CAGR from FY04

to FY0821

2.4.4 Key Segments

Insecticides: Insecticides are used to ward off or kill insects. Consumption of

insecticides for cotton has come down to 50% from 63% of total volume after

introduction of BT cotton.

Fungicides: Fungicides are used to control disease attacks on crops. The

growing horticulture market in India owing to the government support has given

a boost to fungicide usage. The market share of fungicides has increased from

16% in 2004 to 20% in 2009.

Herbicides: Herbicides are the fastest growing segment of agrochemicals. Their

main competition is cheap labor which is employed to manually pull out weeds.

Sales are seasonal, owing to the fact that weeds flourish in damp, warm weather

and die in cold spells.

21

Agro FICCI Report, 2012

42

Bio-pesticides: Bio-pesticides are pesticides derived from natural substances

like animals, plants, bacteria and certain minerals. Currently a small segment,

bio-pesticides market is expected to grow in the future owing to government

support and increasing awareness about use of non-toxic, environment friendly

pesticides.

Table 2.9

Profile of selected players of the industry

Bayer Cropscience India www.bayergroupindia.com

Company overview Bayer cropscience is one of the world‟s leading crop

science companies in the world with presence in 122

countries

Sales revenue in

FY2011 Rs. 2,127 Cr (Includes revenue from other product

segments), 88% of revenue through domestic sales

Key brands

Insecticides: Confided or, Calypso

Fungicides: Antracol, Baycor

Herbicides: Atlantis, Basta

Seed treatment: Gaucho, Raxil

Manufacturing locations

Three manufacturing locations at thane, Himmatnagar

& Ankleshwar

Total Production capacity of 5770 MT of active

ingredients and formulation capacity of 10,025 KL &

3650 Mt for liquids & solids respectively.

Key Mergers/

Acquisitions

Merger with Aventis Cropscience Limited worldwide,

2002

Acquisition of Biotech Company Athenix Crop., 2009

Rallis India www.rallis.co.in

Company overview Rallis is one of the leading Indian agrochemical

companies

Sales Revenue in

FY2011 Rs. 1,127 Cr (Includes revenue from other product

segments) with 22% from outside India

Key brands Insecticides: Asataf, Koranda

Herbicides: Dhar, Fatch

Fungicides: Blitof, Contaf

Manufacturing locations

Five manufacturing plants at Turbhe, Akola,

Ankleshwar, Lote & Patancheru

Total installed capacity of pesticides is 16,720 MT

for solids & 12,500 MT for liquids

Key

Mergers/Acquisitions

Acquired majority stake in Metahetix Life, 2010

Co-marketing alliances with several companies such

as Dupont, Syngenta, Bayer, FMC, Makhteshim

Chemical works, Grada Chemicals, etc

43

Fine chemicals: The size of Indian pharmaceutical industry was at nearly $

21.4 Bn in 2011, 40% of which was accounted for by fine chemicals. The fine

chemicals market is poised for rapid growth in the next decade driven by

increased focus on contract manufacturing (CRAMS) by global players to

reduce costs and increasing exports to innovators (as opposed to generics). The

market size is expected to exceed $ 45 Bn in 2016. The developed markets,

which have been the traditional stronghold of innovator companies, are expected

to witness lower growth rates. Higher R&D costs relatively dry pipeline for new

drugs, increasing penetration of generics and pressure from governments for

reduced healthcare costs are putting a lot of pressure on global pharmaceutical

companies, Future growth is expected to be primarily in generics and emerging

markets. The global pharmaceutical market is expected to grow at 6% CAGR to

reach $ 1,100 Bn in 201422

Chart – 2.2

Year wise global pharmaceutical market growth along with the estimate for the

year 2011

Source: Industry report, CRISIL, Gol Task Force, Tata Strategic estimates.

22

Asia Chloro Alkali Weekly, Vol-12, Apr 2012

605 649

712 773

837 856 880

0

100

200

300

400

500

600

700

800

900

1000

2005 2006 2007 2008 2009 2010 2011E

Global Pharmaceticals Market ($ Bn)

44

The top 10 players account for over 42% of total global sales. Pfizer is the market leader,

followed by Glaxo Smithkine and Novartis AG. Lipitor is the largest selling drug followed

by Plavix and Nexium. Oncology continues to be the leading therapy class globally

followed by lipid regulators.

Specialty chemicals

Specialty chemicals are defined as a "group of relatively high value, low volume

chemicals known for their end use applications and/ or performance enhancing

properties." In contrast to base or commodity chemicals, specialty chemicals are

recognized for 'what they do' and not 'what they are'. Specialty chemicals

provide the required 'solution' to meet the customer application needs. It is a

highly knowledge driven industry with raw materials cost (measured as

percentage of net sales) much lower than for commodity chemicals. The critical

success factors for the industry include understanding of customer needs and

product/ application development to meet the same at a favorable price

performance ratio. Other specialty chemicals primarily consist of paints &

coatings chemicals, construction chemicals, polymer additives, water treatment

chemicals and aroma chemicals. Paints & coatings is the largest segment, with a

market size of $ 3.4 Bn in 2011. Other key segments include water treatment

chemicals valued at $ 540 Mn, construction chemicals valued at $ 400 Mn,

aroma chemicals valued at $ 300 Mn, and polymer additives valued at $ 300

Mn in 2011. All these segments are expected to grow at rates above the

chemical industry average, based on growth in their respective end use

industries, evolving applications and changing regulatory environment 23

23

Rick Mullin, Et al., 2012

45

Chart 2.3

India’s Chemical market growth along with estimates in this particular segments

Source: Tata Strategic Estimates

2.4.5 Key segments

Construction chemicals

The Indian construction chemicals market, valued at ~$ 400 Mn in 2010, consists

of a variety of products ranging from admixtures to sealants to flooring

chemicals. However, the market is still very small when compared to other global

markets like the United States which is estimated at $7.7 Bn. Admixtures form

the biggest segment with 35% share followed by flooring chemicals and water

proofing chemicals.

0

10

20

30

40

50

60

70

80

90

fy06 FY10 FY20

India's Speciality and Knowledge Chemcial market ( USD Bn)

46

Major industry players are mentioned below: 24

Chart 2.4

Market share of few selected construction chemical manufacturers in terms of

revenues during the year 2009

Source: Tata Strategic analysis

Table 2.10

Profile of few selected players

Fosroc India www. Fosroc.com

Company overview Wholly owned subsidiary of Fosroc International

Key products Admixtures, joint sealants, Surface treatments

Manufacturing locations Bangalore

Ankleshwar

Rudrapur

SIKA India www.sika.in

Company overview Convened India operations in 1987

Subsidiary of Switzerland – based parent company

Key products Waterproofing: Sikacim

Tiling: Sika Tilofix

Sealing: SikaBoom

Manufacturing locations

Kalyani, west Bengal

Goa

Jaipur

Blending units in Mumbai and chennai

24

Industry report Tata Strategic Analysis, 2010

FOSROC 14%

SIKA India 13%

Base 12%

Pidlite 6%

SWC 5%

Others 50%

Market Share by revenue: 2009

47

Water treatment chemicals

Water treatment chemicals are used for a wide range of industrial and in-process

applications such as reducing effluent toxicity, controlling Biological Oxygen

Demand (BOD) & Chemical Oxygen Demand (COD) and disinfecting water for

potable purpose. The Indian water treatment chemicals‟ market was ~$ 560 Mn in

2011. Coagulants and flocculants form the largest segment with ~40% market share

followed by biocides and disinfectants with ~17% market share. Apart from use in

potable water, the customer base is widespread across diverse industries ranging from

large power plants, refineries and fertilizer factories to pharmaceuticals, food and

beverages, electronic and automobile. The market is highly competitive, and

participants include private companies, MNCs, as well as joint ventures. Around 60%

of the market is dominated by the organized sector, largely multinationals and large-

scale domestic companies like Nalco Chemicals India Ltd., Thermax Ltd. and Ion

Exchange (India) Ltd. These companies have a diverse product portfolio and a strong

distribution network in the Indian market.

Table 2.11

Profile of selected players in industry

Nalco www.nalco.com

Company overview Formed in 1964 as a subsidiary of Permutit, UK

Became independent in 1985

Sales Revenue in FY2009 Rs. 195 crore

Key products lines Treatment solutions for boiler water, cooling

water, wastewater, pollutant control

Manufacturing locations Konnagar, West Bengal

Paints and coating chemicals

The Indian paints and coatings market was estimated to be ~$ 3.4 Bn in 2011. The

industry can be broadly classified into two product segments: decorative paints

and industrial paints.

48

Decorative Paints segment primarily caters to the residential and commercial

buildings and accounts for 70% of the total paint industry. Enamels are the most

widely used followed by distempers and emulsions. Interior and exterior paints

account for 75% and 25% of the decorative paints respectively. Industrial paints

segment includes paints used in automobiles, auto ancillaries, consumer durables,

containers, etc. This segment requires technological expertise and therefore it is

largely served by the organized sector. It accounts for 30% of the overall market.

Table 2.12

Profiles of selected players in industry

Polymer additives

Polymer additives are specialty chemicals added to the base polymer to enhance

certain properties or improve processing. The Indian polymer additives market

was at ~ $ 300 Mn in 2011. Plasticizers form the largest segment with 43% market

share followed by heat stabilizers with 21% market share. From the applications

perspective, PVC consumes the maximum amount of additives accounting for

40% of the total market followed by poly-olefins with 20%. However, this does

Rhodia Specialty Chemicals India Ltd. www.rhodia.com

Company overview Formerly Albright & Wilson Chemicals India

Ltd. (acquired in 2000 by Rhodia)

Sales Revenue in CY2010 Rs. 174 crore

Key products Alkamuls OR 36, lgepal BC, Rhodafac/

Manufacturing locations Roha, Maharashtra

BASF Coatings India www.basf-india.com

Company overview Independent division of BASF India

Prominent in automotive Coatings

Sales Revenue in FY2011 Rs. 3,229 crore (BASF India)

Key products lines Electrode position coating, Primer Surface, top

Coats, base coats, Paint system for Plastic

components

Manufacturing locations Dadra & Nagar Haveli

49

not include the master batches segment, which separately accounted for a market

of approximately $ 400 Mn in 2010.

Table 2.13

Profile of selected players in industry

Aroma Chemicals

Aroma chemicals, also commonly called flavours & fragrances are the essential

ingredients used as additives in a variety of food, personal and home care products for

adding taste and smell. Globally, the aroma chemicals industry size was $ 19.8 Bn in

2011, roughly equally split between flavours and fragrances. The five largest global

manufacturers of aroma chemicals are Givaudan, International Flavors & Fragrances

(IFF), Firmenich, Symrise and Quest International. The Indian aroma chemicals market

size is of $ 300 Mn, with fragrances accounting for ~55% of the market.

Lanxess India www.lanxess.in

Company overview

India subsidiary of laxness GmbH

13 Business Units in the fields of Performance

Polymers,

Advanced Intermediates and Performance Chemicals

Sales Revenue in CY2010 Rs. 8.16 crore

Key products lines Antioxidants for polymers, blowing agents, polymer

auxiliaries, plasticizers for polymers

Manufacturing locations Jhagadia, Gujarat

Nagda, Madhya Pragesh

Baerlocher India www.baerlocher.com

Company overview Entered India through acquiring Dewas polymer additive

unit of National Peroxide Ltd.

Key products lines PVC plasticizers: Baeropan, Baerostab, Baerolub

Non-PVC Plasticizers

Manufacturing locations Dewas, Madhya Pradesh

50

Table 2.14

Profile of best selected players

Personal care ingredients

The Indian personal care industry was at ~$ 6 Bn in 2011. It can be categorized

into distinct product segments such as bath & shower products, hair care, skin

care, oral care, fragrances etc. The Indian personal care ingredients market stood

at ~$ 400 Mn in 2010 and can be divided into active and inactive ingredients.

Actives and inactives account for 40% and 60% by value of the total personal care

ingredients market respectively.

S H Kelkar www.kelkargroup.com

Company overview Largest Indian flavours and fragrances manufacture in

business for over nine decades

Sales revenue in FY 2009 Rs. 228 crore

Key end-use customer

segments Flavours: Dairy products, bakery, savouries,

pharma

Fragrances: Personal care, hair care, fabric care

Manufacturing locations Patalganga, Maharashtra

Sachee Aromatics www.sachee.com

Company overview Started by Mr. Manoj Arora, A leading aroma

Chemical Manufacture for five decades

Key end-use customer

segments Personal wash, personal care, fabric care, incense

sticks, aerosols, candles, tobacco products

Manufacturing locations Delhi

Paris

51

Table 2.15

Profile of selected players in industry

Dyes and pigments

There are two types of colorants - dyes and pigments. Dyes are soluble substances

used to pass color to the substrate and find applications primarily in textiles and

leather. There are several types of dyes, however in India disperse, reactive and

direct dyes are most commonly used. Pigments are insoluble substances and could

either be in powdered or granular form. They impart colour by reflecting only

certain light rays. Their major end use industries are paints and inks. Pigments can

be broadly classified as organic and inorganic. The Indian colorants industry was

nearly $ 3.5 Bn in 2011 with exports accounting for 68%. It is expected to grow

between 11% and 15% to $ 10 Bn to $ 14 Bn by 2020. The steep growth is

Vivimed Labs www.vivimediabs.com

Company overview Sales footprint across 50 geographies with SBUs

in USA, Europe and a marketing office in china

Sales Revenue in FY2011 Rs. 211 crore

Key Products line Oral care: Anti-bacterial, enamel protection

Skin care: Anti-agening, skin lightening

Hair care: Jarocol, dyes, anti –dandruff, UV filters

Manufacturing locations Bonthapally, Bidar, Jeedimetia (Andhra Pradesh)

Haridwar, Kashipur (Uttarakhand)

Sami Labs Ltd. www.samilabs.com

Company overview Established 1991 in Bangalore

Sales footprint and strategic alliances in USA,

Europe, Japan, Austrilia, Middle East, South

Africa, China,

Key Products Alpha lipolic acid

Cococin

Ellagic acid

Manufacturing locations Bangalore (4 Plants)

Hyderabad

Utah, USA

52

expected to be driven by boom in infrastructure market and consumer products in

India and increasing scope for manufacturing for exports.

Chart 2.5

Consumption of pigment by the various end user industries, in term of volume

Source: Industry reports.

Chart - 2.5 shows the consumption of pigment by the various end user industries, in

term of volume.

Table 2.16

Profile of selected players in industry

Atul Industries www.atul.co.in

Company overview Diversified company with presence in colours,

aromatics, agrochemicals, polymers and pharma

intermediaries

Sales Revenue in FY2011 Rs. 1,600 crore

Key brands

Vat dyes: Novatic

Acid dyes: Tulacid

Direct dyes: Tuladir

Manufacturing locations Atul and Ankleshwar (Gujarat)

Inks 47%

Coatings 24%

Textiles 10%

Plastics 10%

Other 9%

Pigments by end use (% Volume)

Sudarshan India www.sudarshan.com

Company overview Largest pigment and sole effect pigment

manufacture

Present in business for over 50 years

Sales Revenue in FY2011 Rs. 747 crore

Key brands Colours: Sudaperm, Sudafast, Sudacolor

Effects: Sumica, Sumicos

Manufacturing locations Roha and Mahad (Maharashatra)

53

2.5 Pharmaceutical industry of India

The Indian pharmaceutical industry is ranked 3rd in the world in terms of production

volume and 14th in terms of domestic consumption value.25

The Indian

pharmaceutical industry was at $ 21.4 Bn in FY11. Formulations account for ~65%

and bulk drugs for the balance 35% in value terms. The industry is expected to reach

$ 46 Bn in FY15. Bulk drug exports are expected to grow the fastest at ~35%

followed by formulation exports at ~25%. The domestic formulation market is

expected to grow at ~11% due to increased per capita expenditure on

pharmaceuticals, improved medical infrastructure, greater health insurance

penetration and increasing prevalence of lifestyle diseases. Today the Indian

pharmaceutical sector meets 95% of the country's medical needs. The Indian

pharmaceutical industry consists of both domestic companies and subsidiaries of

multinational corporations. Indian companies manufacture a wide range of generic

drugs (branded and non-branded), intermediates and bulk drugs/Active

Pharmaceutical Ingredients (API). Among the product segments, anti-infectives is the

largest segment, accounting for 17% of the domestic formulations market. The other

large segments are cardio-vascular and gastro-intestinal.

25

"Pharma to topple IT as big paymaster". The Economic Times. 8 June 2010.

http://economictimes.indiatimes.com/News/News-By-Industry/Jobs/Pharma-

engineering-to-topple-IT-as-big-paymaster/articleshow/6022202.cms?curpg=1.

Retrieved 8 Jun 2010.

54

Chart 2.6

Revenue generated by few leading segment- domestic formulations In India

during the year 2010.

Source: IMS Health, Crisil Research, analysis by Tata Strategic

Chart 2.6 shows the revenue generated by few leading segment- domestic

formulations in India during the year 2010.

McKinsey & Company‟s reported that, “India Pharma 2020: Propelling access and

acceptance, realizing true potential,” predicted that the Indian pharmaceuticals market

will grow to US$55 billion in 2020; and if aggressive growth strategies are

implemented, it has further potential to reach US$70 billion by 2020. While, Market

Research firm Cygnus‟ report forecasts that the Indian bulk drug industry will expand

at an annual growth rate of 21 percent to reach $16.91 billion by 2014. The report also

noted that India ranks third in terms of volume among the top 15 drug manufacturing

countries.

1602

1053 1000 838 804 711

533 516 516 509

0200400600800

10001200140016001800

Leading Segment- domestic formulations, India, FY10

55

Table 2.17

Sales generated by few selected Pharmaceutical/ Chemical organizations during

the year 2010-2011

Company Sales in US $Mn Year End

Cipla 6,368.06 March 2011

Ranbaxy Lab 5,687.33 December 2010

Dr Reddy's Labs 5,285.80 March 2011

Sun Pharma 1,985.78 March 2011

LupinLtd 4,527.12 March 2011

Aurobindo Pharma 4,229.99 March 2011

Piramal Health 1,619.74 March 2011

Cadila Health 2,213.70 March 2011

Matrix Labs 1,894.30 March 2010

Wockhardt 651.72 December 2011

Source : economictimes.indiatimes.com

Table 2.17 shows the sales generated by few selected Pharmaceutical/ Chemical

organizations during the year 2010-2011

Further, McKinsey reports Healthcare grew from 4 per cent of average household

income in 1995 to 7 per cent in 2005 and is expected to grow to 13 per cent by 2025.

The demand for pharmaceutical products in India is significant and is driven by

many factors like low drug penetration, rising middle-class & disposable income,

increased government & private spending on healthcare infrastructure, increasing

medical insurance penetration, changing demographic pattern and rise in chronic

lifestyle-related diseases; adoption of product patents, and aggressive market

penetration driven by the relatively smaller companies. India based

pharmaceutical companies are not only catering to the domestic market and

fulfilling the country‟s demands, they are also exporting to around 220 countries.

They are exporting high quality, low cost drugs to countries such as the US,

Kenya, Malaysia, Nigeria, Russia, Singapore, South Africa, Ukraine, Vietnam,

and more. Currently, the US is the biggest customer and accounts for 22 percent

of the sector‟s exports, while Africa accounts for 16 percent and the

Commonwealth of Independent States (CIS) places around eight percent of

orders, as per Research and Market report.

56

Leading Indian Players by Sales , agro FICCI report 2012

Table 2.18

Profile of Selected Players In Industry

Dr. Reddy’s Laboratories Ltd. www.drreddys.com

Company overview Integrated global Pharma company, established

1984

Three businesses: Pharmaceutical Services &

Active Intergredients, Global Generis and

Proprietary Products

Sales Revenue in FY2011 Rs. 1,965 crore (Pharma Services & APIs

SBU)

Key API lines Cardiovascular, oncology, Anti –diabetic,

gastro-intestinal ophthalmic, expectorant,

steroids, anti –allergic, etc.

Manufacturing locations India: Six Plants

USA: One plant, Mexico : One plant

Lupin www.lupinworld.com

Company overview “Innovation led transnational pharmaceutical

company producing a wide range of quality,

affordable generic and branded formulation and

APIs”

Sales Revenue in FY2011 Rs. 777 crore ( API business)

Key API lines Antibiotics, cardiovascular, central nervous

system, anti -TB

Manufacturing locations Ankleshwar, Baroda (Gujarat)

Mandideep (Madhya Pardesh)

Tarapur (Maharashtra)

2.6 Overview of Gujarat State

Gujarat located on the western most part of India, has one third of coastline of the country.

Since inception of the state, the structure of its economy has changed significantly. Not only

the State‟s GSDP and Per Capita GSDP have increased but it has shown all signs of a

57

developed and urbanised economy. The State emerged stronger and a beacon of hope for

the rest of the country in terms of economic and industrial development.26

Gross state domestic product Growth rate:

y-o-y (2010-11) : 10.23%

CAGR (2005-10) : 10.27%

Share of Industry in GDP

(2009-10): 40.7%

Per capita income : Rs. 49,030

(National Average: Rs. 33,731)

Per capita income Growth rate:

y-o-y (2009-10) : 9.3%

CAGR(2005-10) : 8.89%

Per capita Electricity Consumption:

(2008-09): 1446 KWH

(National Average 733.54 KWH)

Urbanisation: 37.4%

Gujarat accounts for about 30 per cent of India‟s stock market capitalisation, 22 per

cent of exports and 9.5 per cent of the workforce. The State is the world‟s largest

producer of castor and cumin, has the largest gas-based single location sponge iron

plant, the largest producer of processed diamonds and the third largest denim

producer. Besides, it also has Asia‟s largest grassroots petroleum refinery at Jamnagar

and the country‟s only LNG import terminals at Hazira and Dahej.

2.6.1 Industrial Growth

In terms of its presence across sectors, Gujarat contributes significantly to the

country‟s soda ash production (98 per cent), salt production (78 per cent), diamond

processing (80 per cent), plastic industry (65 per cent), Petrochemical production( 62

per cent), Onshore Crude oil (53 per cent), Onshore natural gas (31 per cent), Mineral

production (10 per cent) , chemicals (51 per cent), groundnut (37 per cent),

pharmaceuticals (35 per cent), cotton (31 per cent) and Textiles (31 per cent).27

26

www.dtpt.com/pdfs/Gujarat KPMG report.pdf

27 http://www.gujaratindia.com/business/investment-destination.htm

58

The investment climate and industry friendly policies of Gujarat have made it

industrially Vibrant State. Gujarat is among the top few States in India to attract

investments and create jobs. In particular, the State Government began organising the

now-famous, biennial Vibrant Gujarat Global Investment Summit (VGGIS) from

2003 onwards to showcase the State as a major investment destination. In the five

such events held so far, investments worth rupees lakhs of crores have been promised

and many projects are at various stages of implementation across the State. On the

industrial infrastructure front, the state has moved from traditional industrial clusters

to industrial estates and advanced further to establish 60 SEZs. The State is further

moving to set up truly world-class huge-sized Special Investment Regions which we

call the SIRs.

They will be supported by world-class infrastructure, premium civic amenities and an

exemplary policy environment. Setting up of these SIRs is in line with the upcoming

Dedicated Freight Corridor between Delhi and Mumbai (DFC) and the Delhi-Mumbai

Industrial Corridor (DMIC). Similarly, these SIRs will have a great synergy with our

upcoming International Finance Tech-City popularly known as Gujarat International

Finance Tech-City (GIFT).

The State has also made tremendous progress on socio-economic front through

strategic interventions in social sectors. The centers of excellence in forms of IIM,

NID, NIFT, CEPT, IIT, Law University, Forensic University and Pandit Deen Dayal

Upadhyaya Petroleum University for higher education and concerted action through

“School Enrollment Programme”, “Girl Child Education Programme” and ,

„Gunotsav‟ has given fillip to the principle of quality education for all, right from

elementary education to higher education.

2.6.2 Pharmaceuticals and Chemicals

The state of Gujarat accounts for 40 percent of India‟s total pharmaceutical

production and 17 percent of its exports. Gujarat‟s pharma industry is valued at USD

3.6 billion. There exist over 3,000 drug manufacturing units. The State houses several

established companies such as Torrent Pharma, Zydus Cadila, Alembic Pharma, Sun

Pharma and Dishman Pharmaceuticals, which have operations in the world‟s major

pharma markets. The State contributes to around 20 percent of India‟s total chemical

59

production. It produces about 98 percent of total soda ash, 90 percent of liquid

chlorine and 66 percent of phosphatic fertilizers. Gujarat also houses India‟s only

chemical port terminal, which has a capacity of 3 million metric tonnes.28

2.6.3 Engineering and Auto

The Vibrant Summit has catapult immense growth for the automobile cluster. Low

cost, low risk and high efficiency Auto cars and car component units set its pace in

Gujarat. The Nano Car, Sanand and CEAT company‟s new radial tyre plant in Halol

are evident to fact that the Automobile sector is bound to emerge as significant

contributor to massive employment generation. Even, General Motors Car

manufacturing unit at Halol indicates Auto Hub Growth Sector.

9,607 Industrial Entrepreneurs Memoranda (IEM) filed till June 2010 with an

estimated investment of Rs 7,702 billion and employment potential of 1,941,374.

Engineering products where Gujarat‟s share is greater than 10% in India include:

Sponge Iron, Electric Motors, Compressors, Steel Pipes, Ball and Roller Bearings,

Construction Machinery, Casting Copper Rods, Textile Machinery, Transmission line

Towers, TV Picture Tubes, Submersible Pumps, Environment Control Equipment,

Gears.

Ahmedabad, Anand, Rajkot, Vadodara, Surendranagar, Jamnagar, Mehsana,

Panchmahal and Kutch have emerged as important locations of Engineering Industries

2.7 Overview of Andhra Pradesh

Located in the Southern part of India, Andhra Pradesh is bounded in north by Orissa

and Madhya Pradesh, west by Maharashtra and Karnataka, in the south by Tamil

Nadu and east by Bay of Bengal. The State has a coast line of 974 kms. The State

came into existence on November 1st, 1956 with the merger of Hyderabad and

Andhra State.29

28

http://ic.gujarat.gov.in/?page_id=112

29"History of Andhra Pradesh "Government of Andhra Pradesh”

60

Andhra Pradesh Economic Statistics Economic Activity30

: Services-

Manufacturing- 17%; Services- 43%; Agriculture -40%

Investor Profile: Govt. 48.7%; Foreign 21.2%; Indian 30.1%

State Priority Areas: Food processing; Software; Financial services; Electronics;

Power; Textiles; Tourism

Investment Strengths: Reform-oriented state, improved governance and

administration; fourth largest market in the nation; relatively high purchasing power

2.7.1 Infrastructure

The State is well connected by road, rail, air and sea. Visakhapatnam is a major port

in the State. Hyderabad, Tirupati, and Visakhapatnam are air-linked. National and

international flights link the state with important world locations.

Hydel and thermal power projects in the state eets the power requirements of the State.

Number of new power projects are coming up in the State which is expected to generate

additional power capacity in the State.

2.7.2 Industries

Several major industries are in opeation around Hyderabad, which has now been

nicknamed as Cyberabad due to its Information Technology foray and location of

major software industries in the city. Another industrial location is Visakhapatnam

which is also one of the major sea ports of India. The State is promoting Information

Technology in a big way and has one of the IT parks in Hyderabad.

2.7.3 Active Industries in Andhra Pradesh

Automobile And Auto Components Industry,

Mines And Minerals ,

Textiles And Apparels

30

"State Domestic Product of India 2010-11 | State-Wise GDP 2010 | District GDP of

India | State-wise Population 2011 | VMW Analytic Services". Unidow.com.

61

It Industry

Bulk Drugs And Pharmaceuticals

Horticulture ,

Poultry Farming

It Industry

2.7.4 Resources

Andhra Pradesh has the largest deposits of quality Chrysolite Asbestos in India. It

accounts for about 93 percent of India's total production of Barites. Other important

minerals in the state are copper ore, manganese, mica, coal and limestone.31

Having discussed the resources and availability of various industries, and further

development of I.T., industry and use of advanced technology in both the states,

Gujarat and Andhra Pradesh, were considered for the scope of this study.

It will allow researcher to compare the Human Resource Practices in these two states

with some similarities and differences.

31

http://www.aponline.gov.in/quick%20links/apfactfile/apfactmain.html. Retrieved 3

March 2009.